A bi-level optimization framework for investment planning of distributed generation resources in coordination with demand response

In this study, a multiyear distributed generation (DG) and battery energy storage system (BESS) investment planning with the coordination of demand response (DR) is presented for the distribution system. This coordinated system planning problem aims to maximize the net present value (NPV) profit related to the cost of energy purchased from the grid, energy losses, emission penalty cost, demand deviation penalty, operation and maintenance (OM) cost as well as investment cost of renewable power generation. To handle the high complexity of the investment planning problem, a bi-level optimization framework is used. The level-1 determines the optimal sizing of multiple BESS in presence of high penetration of PVs into the system. This level is used to minimize the net present cost (NPC) for energy consumption, greenhouse gas (GHG) emission, load deviation penalty, energy loss, investment and OM cost of PVs and BESS. In level-2, the optimal BESS power dispatch in coordination with the DR aggregator is obtained. The level-2 framework is used to minimize NPC for voltage deviation penalty and network losses with the scheduling of BESS and DR only. The proposed framework is simulated on the 33-bus distribution system to obtain the best investment plan for the distribution system operator (DSO). The results show that the NPV benefits of the proposed DR model with optimal integration of BESSs and PVs are 17.94 M$ and payback period of 9 years of the 20 years of planning horizons which is very significant compared to non-DR-based investment planning besides other technical benefits of DR implementation such as improvement in mean voltages, power loss, etc.