Fairness considered aggregation mechanism for consumers and prosumers in electricity distribution networks

• A new mechanism is proposed for aggregating electricity prosumers and consumers. • Trade-off between efficiency and fairness is achieved in the aggregation methods. • Network constraints are incorporated in the proposed pricing and dispatching model. • Numerical simulations are conducted to validate proposed models and algorithms. Efficiently realizing a decarbonized energy system relies on effectively aggregating and equitably allocating cost to consumers and prosumers in distribution networks. This is crucial for fostering flexibility in transitioning to a sustainable, low-carbon energy system with increased renewable integration. This paper proposed an innovative aggregation mechanism for prosumers and consumers, emphasizing fairness and equality in their aggregation via proper pricing and efficient dispatching. The approach aims to enhance participant retention and attract investments by analysing characteristics, operation models, and operational impact on end users. The proposed two-level model underscores fairness and equity on different scopes. The upper-level model incorporates distributed nodal pricing (DNP) to facilitate fair dispatch among nodes, accounting for transmission congestion impacts. Simultaneously, the lower-level model addresses the efficiency-fairness trade-off, emphasizing equity in the energy sector and utilizing user satisfaction levels as the reference index. To validate the proposed aggregation mechanism, an example system is employed, with numerical studies illustrating its potential to enhance efficiency and fairness in the aggregation. A substantial improvement in the fairness index is observed when the efficiency-vs-fairness ratio changes from 1 to 0.9, indicating that even a modest emphasis on equity indicators can significantly enhance energy fairness.