Abstract
The deployment of smart grids has facilitated the integration of a variety of investor assets into power distribution systems, giving rise to the consequent necessity for positive and active interaction between those investors and local distribution companies (LDCs). This paper proposes a novel incentive-based distribution system expansion planning model that enables an LDC and distributed generation (DG) investors to work in a collaborative way for their mutual benefit. Using the proposed model, the LDC would establish a bus-wise incentive program based on long-term contracts, which would encourage DG investors to integrate their projects at specific system buses that would benefit both parties. The model guarantees that the LDC will incur minimum expansion and operation costs while concurrently ensuring the feasibility of DG investors' projects. To derive appropriate incentives for each project, the model enforces several economic metrics including internal rate of return, profit investment ratio, and discounted payback period. All investment plans committed to by the LDC and the DG investors for the full extent of the planning period are then coordinated accordingly. Several linearization approaches are applied to convert the proposed model into an MILP model. The intermittent nature of both system demand and wind-and PV-based DG output power is handled probabilistically, and a number of DG technologies are taken into account. Case study results have demonstrated the value of the proposed model.