Distribution Network Cost Allocation Based on Nodal Price

The operation and trade of the electricity distribution market must develop based on a clear distribution pricing mechanism. Current nodal price generally does not include distribution network costs, which is not conducive to the establishment of distribution market and the efficient use of distribution network. Therefore, based on the Ramsay criterion and further considering the influence of reactive power, a method of allocating the distribution network cost to the nodal price is proposed in this paper. The main innovation in this paper is that a calculation method of price elasticity of reactive power demand is established. Consequently, the cost of the distribution network is allocated to the nodes according to not only active power distributed but also reactive power distributed. A 12-node system modified from the IEEE 33-node distribution network is used to do simulation. Results validate the feasibility and effectiveness of the method. Moreover, comparative analysis with MW-Mile method shows that the method can provide better economic information for network users.