System and method for operating an electric power system with distributed generation and demand responsive resources based on distribution locational marginal prices

A method for operating a power system, wherein the power system includes a transmission system operated by a transmission system operator (TSO) and multiple distribution systems, such that each a distribution system is operated by a distribution system operator (DSO), comprising iterative steps:

• solving, by the DSO, an balanced single-phase alternating current (AC) optimal power flow (OPF) problem based on locational marginal prices (LMP) for power usage for each distribution system, wherein the DSO provides an input on a user input interface to one or more processor in communication with the user input interface and a network, when the DSO cannot obtain an aggregated demand curve at the distribution level, so as to update aggregated demand information for each distribution system in the power system, wherein the one or more processor is in communication with other processors of the one or more processor that receive measured electrical values of each distribution system including voltages and phase angles;
• and
• solving, by the TSO, a balanced single-phase direct current (DC) OPF problem to update the LMP for each distribution system, to minimize power generation and distributing cost based on the updated aggregated demand information, iteratively, until a competitive equilibrium reaches a predetermined threshold between aggregated demand and the LMP that results at a market clearing price and demand for energy (MCPDE) for the distribution system.

A system for operating an electric power system, wherein the electric power system includes a transmission system operated by a transmission system operator (TSO) and multiple distribution systems, such that each distribution system is operated by a distribution system operator (DSO), comprising:

• one or more processor in communication with input interfaces and a network used by the DSO is configured to solve an unbalanced three-phase alternating current (AC) optimal power flow (OPF) problem based on locational marginal prices (LMP) for power usage for each distribution system, wherein the DSO provides an input on a user input interface to the one or more processor in communication with the user input interface and a network, when the DSO cannot obtain an aggregated demand curve at the distribution level, so as to update aggregated demand information for each distribution system in the electric power system, wherein the one or more processor is in communication with other processors of the one or more processor that receive measured electrical values of each distribution system including voltages and phase angles;
• and
• using another processor of the one or more processor in communication with an input interface of the input interfaces and the network by the TSO, the TSO is configured to solve a balanced single-phase direct current (DC) OPF problem to update the LMP for each distribution system, to minimize power generation and distributing cost based on the updated aggregated demand information, iteratively, until a competitive equilibrium reaches a predetermined threshold between aggregated demand and the LMP that results at a market clearing price and demand for energy (MCPDE) for the distribution system.