Multi-Objective DER Planning Framework as a TEP Alternative: An Augmented Epsilon-Constraint Approach

Recently, the construction of new transmission lines has faced extreme challenges due to ever-increasing environmental concerns and construction costs. Investing in distributed energy resources (DERs) offers a viable alternative to reduce reliance on new transmission lines. This study introduces a multi-objective bi-level DER planning model as an alternative to transmission network reinforcement. The upper-level problem aims to minimize the total cost of DERs, mitigate the congestion cost of the transmission network, and improve the system reliability while ensuring the profitability of the DER investment. In the lower-level problem, the wholesale electricity market is cleared to determine the optimal locational marginal prices and the operational status of the bulk power system. A scenario-based approach is employed to account for uncertainties in future loads, renewable generation, and generator bid prices. The bi-level problem is reformulated as a single-level optimization using the strong duality condition, with non-linear terms linearized through the big-M method and complementary slackness conditions. The augmented epsilon-constraint method is then employed to solve the multi-objective optimization problem. Finally, the effectiveness and applicability of the proposed DER planning model are evaluated using the IEEE 24-bus test system, offering insights from both system operators and DER investors.