Electricity trading based on distribution locational marginal price

Zhenhao Li, Chun Sing Lai*, Xu Xu, Zhuoli Zhao, Loi Lei Lai

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)


This paper presents a novel day-ahead power market for distribution systems. Based on the linearized AC power flow model, the distribution locational marginal price for coupled active and reactive power can be calculated and decomposed into five components, i.e. (1) energy price; (2) loss price caused by nodal active power; (3) loss price caused by nodal reactive power; (4) congestion price and (5) voltage support price, which can provide price signals for distributed generator and aggregator in a distribution system to respond. The energy hub at different nodes can trade with each other and optimize their profit based on distribution locational marginal prices. Game theory is applied to solve the energy trading payment problem. The energy trading problem is decomposed into two subproblems, i.e. operation cost minimization problem and trading payment bargaining problem. The effectiveness and validity of the proposed method are illustrated with a modified IEEE 33-bus system.

Original languageEnglish
Article number106322
JournalInternational Journal of Electrical Power and Energy Systems
Publication statusPublished - Jan 2021
Externally publishedYes


  • Day-ahead market
  • Distribution locational marginal price
  • Electricity trading
  • Energy hub


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