Distribution network cost allocation using a locational and temporal cost reflective methodology

As the deployment of distributed energy resources (DERs) spread widely into distribution networks, traditional network cost allocation methodologies need to be reformed. This paper proposes a new distribution network cost allocation methodology that consists of two parts, first using distribution locational marginal prices (DLMPs) to price energy consumption/injection at each network node, and secondly, using either postage stamp (PS) or marginal participation (MP) method to allocate distribution network costs to each network user. The proposed methodology is cost reflective, ensures cost recovery and sends efficient short term and long term economic signals to network users. Moreover, the methodology is implemented on the IEEE 34-node test system illustrating its performance in the case of high penetration of photovoltaic (PV) self-generation in comparison to traditional cost allocation methodologies.