A game theoretic framework for DG optimal contract pricing

This paper presents a new approach based on multi leader follower game in order to find the optimal contract price of distributed generation in distribution network considering competition among them. The leader problems correspond to the independent DG units who decide to maximize the individual profits, while the follower problem refers to the distribution company (DisCo) which seeks the minimization of the payments incurred in attending the expected demand while satisfying network constraints. Disco can purchase energy either from the transmission network through the substations or from the DG units within its network. The DisCo minimization problem acts as a constraint into the each DG maximization problem. Substituting the Karush-Kuhn-Tachker (KKT) optimally conditions of the DisCo for its optimization problem, each DG owner problem becomes a Mathematical Program with Equilibrium Constraints (MPEC). Using diagonalization technique, all MPEC is solved by standard NLP solvers and the optimal contract prices are found. This model is implemented on the 6 bus and the modified IEEE 34 bus distribution network to accentuate the advantage of the proposed model.