  An effective distribution electricity market (DEM) is required to manage the
rapidly growing small-scale distributed energy resources (DERs) in distribution
systems (DSs). This paper proposes a day-ahead DEM clearing and pricing
mechanism to account for the uncertainty of DERs and the coordination with the
wholesale electricity market (WEM) through a bi-level model. The upper-level
model clears the WEM in the transmission system (TS) and forms the locational
marginal price (LMP) and uncertainty LMP (ULMP) for energy and
uncertainty/reserve, respectively. In the lower level, a robust scheduling
model considering WEM-DEM coordination and uncertainties is proposed to clear
the DEM. Accordingly, the distribution LMPs (DLMPs) for active power, reactive
power and uncertainty/reserve are derived to reward the energy/reserve
provision and charge uncertain resources in the DEM, which provide effective
price signals for managing not only the voltage and congestion, but also the
uncertainty in DSs. A heterogeneous decomposition (HGD) algorithm is utilized
to solve the bi-level model in a decentralized manner with limited information
interaction between TS and DSs, which guarantees the solution efficiency and
information privacy. The effectiveness of the proposed method is verified via
numerous case studies.
