Determining the guaranteed energy purchase price for Distributed Generation in electricity distribution networks

With widespread installation of Distributed Generation (DG) in distribution networks and considering their impact on the network, distribution companies (DisCos) have the option of supplying loads from these resources as well as the wholesale market. In the presence of DG, an incentive scheme is required to determine the reasonable purchasing price of energy from DG owners based on benefits to the DisCos. These prices should be determined in such a way that the risk to the DisCo can be controlled. Considering the guaranteed energy purchase price (GEPP) of DG as a risk-management option, this paper addresses the GEPP for a specified future period. The proposed methodology determines the GEPP based on expected loss reduction and reliability improvement achieved by DG. Due to uncertainties associated with load, market price, and future investment, Monte-Carlo simulation is used to determine the GEPP. The performance of the proposed methodology is evaluated for a 33-bus distribution test system and results are discussed for different cases. The obtained GEPP guides investors and planners toward an optimum place and size for installation of DG, which leads to maximum network benefits as well as profits.