Equitable dynamic electricity pricing via implicitly constrained dual and subgradient methods

TL;DR

This paper proposes a novel dynamic nodal pricing scheme that ensures equity in electricity distribution, leveraging market mechanisms and algorithms to outperform traditional pricing methods while maintaining grid stability.

Contribution

It introduces a new market-based pricing scheme with algorithms that incorporate equity constraints, improving upon existing utility time-of-use pricing.

Findings

Algorithms satisfy voltage and equity constraints

Outperform utility time-of-use pricing by at least 45%

Provides a scalable, equitable pricing mechanism for grid management

Abstract

Coordination of distributed energy resources is critical for electricity grid management. Although nodal pricing schemes can mitigate congestion and voltage deviations, the resulting prices are not necessarily equitable. In this work, we leverage market mechanisms for DER coordination and propose a daily dynamic nodal pricing scheme that incorporates equity. We introduce a pricing "oracle," which we call the Power Distribution Authority, that sets equitable prices to manage the grid. We present two algorithms for executing this scheme and show that both methods are able to set prices that satisfy both voltage and equity constraints. Both proposed algorithms also outperform the common utility time-of-use pricing schemes by at least 45%. New market mechanisms are needed as the grid is transforming, and power system operators may leverage these methods for pricing electricity in a grid-aware, equitable fashion.