  The burgeoning integration of distributed energy resources (DER) poses new
challenges for the economic and safe operation of the electricity system. The
current distribution-side policy is largely based on mandatory regulations and
incentives, rather than the design of a competitive market mechanism to arouse
DERs to freely compete in the retail market. To address this issue, we proposed
a transactive retail market mechanism to attract the active participation of
profit-driven DER retailers in a deregulated way. Considering the limited
competitive property of the retail market, a bi-level DSO-dominated framework
is constructed to simulate the virtual game between distribution system
operator (DSO) and DER retailers. Specifically, the flexible interval pricing
of retailers is modeled as a series of binary revenue constraints to influence
the DSO's centralized economic dispatch decisions, where the time-varying
distribution locational marginal price is adopted to settle energy activities
at different locations over the time horizon. Due to the uncertain power flow
path during the coordinated decision-making process, we proposed a general
undirected second-order cone-based AC radial power flow model and provided
sufficient conditions to ensure its exactness. Also, we applied a series of
approximation and relaxation techniques to transform the bi-level mixed-integer
quadratic framework with highly discrete induced domains into a solvable
mixed-integer semidefinite programming problem. It is demonstrated in the case
study that the proposed mechanism can not only improve market efficiency but
also eliminate market power and the resulting market failures.
