  Distributed Generation (DG) units are increasingly installed in the power
systems. Distribution Companies (DisCo) can opt to purchase the electricity
from DG in an energy purchase contract to supply the customer demand and reduce
energy loss. This paper proposes a framework for optimal contract pricing of
independent dispatchable DG units considering competition among them. While DG
units tend to increase their profit from the energy purchase contract, DisCo
minimizes the demand supply cost. Multi-leader follower game theory concept is
used to analyze the situation in which competing DG units offer the energy
price to DisCo and DisCo determines the DG generation. A bi-level approach is
used to formulate the competition in which each DG problem is the upper-level
problem and the DisCo problem is considered as the lower-level one. Combining
the optimality conditions ofall upper-level problems with the lower level
problem results in a multi-DG equilibrium problem formulated as an equilibrium
problem with equilibrium constraints (EPEC). Using a nonlinear approach, the
EPEC problem is reformulated as a single nonlinear optimization model which is
simultaneously solved for all independent DG units. The proposed framework was
applied to the Modified IEEE 34-Bus Distribution Test System. Performance and
robustness of the proposed framework in determining econo-technically fare DG
contract price has been demonstrated through a series of analyses.
