Market mechanism for DSO-based distribution system considering uncertainties by scenario tree

With the appearing of energy aggregators (EAs) consisting of the load and distributed energy resources, distribution system needs new models to allocate energy and deal with uncertainty. In this study, a new mechanism is designed to handle the energy exchange between distribution system operator (DSO) and EAs considering reactive power and voltage. The uncertainty of new energy is expressed by a scenario tree. The energy exchange between DSO and EAs is a Stackelberg equilibrium problem, which is described by a two-layer model. The DSO is the leader and EAs are the followers. DSO decides the price for the EAs, with the objective of minimising the cost in wholesale market, the EAs decide how much electricity to buy or sell from DSO. The unbalanced electricity in distribution network is balanced by electricity from wholesale market. Through the Karush–Kuhn–Tucker (KKT) condition, the lower-layer EA model is transferred into the constraints of the upper-layer DSO model. Then, a mixed integer linear problem (MILP) is obtained by strong duality and the Big M method. The effectiveness of the proposed methodology is demonstrated by a modified IEEE 33-node distribution system. The influence by EAs of different components is revealed.