Calculation of the Critical Value Price of Distributed Generation Considering Transmission Loss Cost

For the open electricity market, the price of distributed generation (DG) will directly affect power producers and power supply enterprises operating costs. Generation cost of DG is higher than conventional power, in the absence of policy support and financial subsidies, there is not enough power to buy electric from DG; However, because of its characteristics, DG could reduce transmission losses to a certain extent, thereby reducing the cost of power grid. So generation cost difference between DG and conventional power generation does not accurately reflect the amount of subsidies, the pricing and subsidy policies is essential. In this paper, only considering transmission losses, on this premise, DG pricing critical value is proposed and calculated aiming at the transmission cost does not increase after fixing DG basing on node transmission cost analysis based on power dependency trace. If DG price is equal to the critical value, which indicate that benefits by reducing the transmission loss is enough to compensate for the losses caused by higher costs. If the price is higher than the critical value price, power system should be subsidized, and accurately calculate the amount of subsidies. Finally, IEEE9 node system example shows the feasibility of the method.