Two Stage Optimization for Customer Fiscal Incentive in Local Electricity Market

A major advantage of Local Electricity Market (LEM) is to provide opportunity of local energy trading to participants and thus empowering small prosumers. A distribution system operator (DSO) and aggregator responsible for creating a market policy framework which can be a win-win situation for all agents involved in the LEM operation. Additionally, the expansion of LEM system should be focused to enhance the system stability and reliability. By providing prosumers with more fiscal income can be an important factor to attract other customers to get involved and expand the LEM system. This paper proposes a two stage optimization in LEM operation. The first stage optimization reduces the system cost and provides the optimized power export by prosumers. This optimized power export is used in second stage optimization to classify the prosumers in three different levels. The objective of second stage optimization is to increase the fiscal incentive provided to prosumers according to their classified level. In proposed LEM model, for a system under study with 33 prosumers, the cost saving of 10.67% is achieved in first stage and fiscal income increment of 16.39% is achieved in second stage.