Electricity market management through optimum installation of distributed generation sources and optimum placement based on LMP and ISC

Document Type : Original Article


1 Department of Electrical Engineering, Mehran University of Engineeringand Technology, SZAB Campus, Khairpur Mirs66020,Pakistan

2 Department of Mechatronics and Control Engineering, University of Engineering and Technology, Lahore 54890, Pakistan


In this paper, a novel method based on LMP with the title of system cost index is presented for optimum placement of distributed generation (DG) sources in the electricity market based on optimum power flow. Along with optimum placement, the optimum size of these sources is also calculated. Desirable locations are determined for optimum order of DGs based on local margin price (LMP). The LMP index is defined in the Lagrange coefficient of active power flow in each bus. Another index used to find desirable locations for DG placement is the customer payment (CP) index, which can be calculated for each bus by multiplying of LMP in busload. The proposed method is implemented on the modified IEEE 9-bus system. The simulation results suggest that the proposed method satisfies the engineering aspect of operation and the economic aspect of the process in the market. The optimum placement of DGs in the market environment leads to a decrease in the system cost and management of line congestion.