Spatiotemporal Marginal-Cost-Based Retail Electricity Markets: Efficiency, Structure and Feasibility

Abstract— We 1 address the extension of spatiotemporal marginal-cost-based Wholesale Transmission markets to Retail Distribution markets. Key challenges include (i) a broader range of significant cost components and requirements such as real and reactive power marginal losses, transformer life degradation, and voltage control, (ii) higher order of magnitude of retail market participants, some with complex needs and capabilities such as flexible loads (e.g. EVs, HVAC with inter-temporal consumption utility) and distributed generators and resources (e.g. power electronics whose excess capacity can provide reactive power compensation and voltage control), and (iii) the need to model inherently non-convex AC load flow relationships to represent the aforementioned costs and requirements. To this end, we define the detailed distribution market clearing problem and solve it to derive real and reactive power Distribution Location-Marginal-Prices (DLMPs). Using industrial and commercial/residential distribution feeders adapted from real Southern California Edison data we derive day-ahead market solutions for several scenarios and use the associated 24 hour DLMP trajectories to discuss the broader efficiency and sustainability impact of dynamic distribution/retail markets.