Design of Price Functions Incorporating Line-Loss in Electricity Market Using Cournot Model

Abstract

A novel Cournot model design for trading price functions, incorporating line-losses in the electricity market (EM), is proposed in this paper. The proposed transactive EM framework has a major EM and a local market (LM) inside a microgrid. The protagonist in major EM is the transmission network operator, which buys electric units from a generating company and sells them to different buses connected to various loads. The LM is constructed in one of these buses. LM operator is the price-deciding entity in this market, where electricity is traded between prosumers, which facilitate solar photovoltaic (SPV) installations, and the LM operator. In order to articulate the effectiveness of SPV utilization in EM, the present work considers that the LM operator owns an SPV plant in LM. A cost-benefit analysis determines the period to recoup the initial investment for establishing the SPV plant in LM. The electricity status of a prosumer determines its role at a particular time in LM: either as seller or buyer of electric units. The design of a penalty mechanism for prosumers in LM using Gaussian process regression is proposed to minimize the reduction in the operator's profit during trading hours.