Vision, Framework, and Decision-making for Integrating Distributed Energy Resources in the Next-generation Retail Electricity Market

The increasing adoption of distributed energy resources (DERs) and smart grid technologies has impacted significantly both technical and economic operations in the distribution grid and changed the roles, responsibilities, and capabilities of the retail electricity market agents. The next-generation retail electricity market will promote decentralization, efficiency, and competitiveness by accommodating existing and new agents through new business models and transactive approaches in an advanced metering infrastructure. In this dissertation research, a comprehensive vision and integrating framework of the next-generation retail electricity market in the context of DERs was initially developed. This vision describes the main expected characteristics, challenges, needs, and future research topics to be addressed. Then, based on the proposed vision, three research objectives were set. The first objective is to develop a market mechanism to integrate short-term demand response (DR) in the retail market. The second objective is to develop a liberalized distributed renewable energy (DRE) market mechanism in the retail market. The third objective is to develop a distribution system market clearing and settlement model for a distribution system operator (DSO). To achieve the first objective, this research developed a short-term DR trading mechanism for retail customers and integrated it in the decision-making model of an electricity retailer considering different sources of uncertainties. With the proposed model, retailers can avoid unfavorable prices in the wholesale market and retail customers can reduce their electricity procurement cost by participating in the proposed DR mechanism. To achieve the second objective, a stochastic bilevel model for an electricity retailer participating in a liberalized short-term DRE market was developed by considering the uncertainties related to wholesale market prices, electricity demand, DRE production, and the price bids of the retailer’s competitors in the proposed DRE market. Through the proposed model, electricity retailers can avoid high price fluctuations in the wholesale electricity market and fulfill their green energy portfolio requirements within a prespecified risk-aversion level. Finally, to achieve the third objective, this research developed a stochastic-optimization-based energy and reserve market clearing and settlement model for a DSO while considering the uncertainties of DRE at different nodes of the distribution grid