Analysis and modeling of the distributed generation impact on electricity market prices

Distributed energy (DG) resources are very common in today's power networks. Penetration of DG resources has many impacts on the network and the consumers. Many researchers have studied these impacts. Most of these studies involve issues such as stability, security and other technical items, while very few studies discussed electricity retail market. Many consumers install photovoltaic cells (PV), combined heat and power (CHP) systems, or other types of DG systems to reduce the amount of power they buy from the grid. This leads to lower income for utility companies, who in-turn increase their rates to compensate. Higher rates of electricity, as a positive feedback, acts as an incentive for even more consumers to adopt DG. This study aims to discuss this positive feedback and impact of other parameters on electricity retail price.