IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 28, NO. 4, NOVEMBER 2013 4209 Probabilistic Assessment of the Impact of Wind Energy Integration Into Distribution Networks Pierluigi Siano, Member, IEEE, and Geev Mokryani, Member, IEEE Abstract—Combined Monte Carlo simulation (MCS) and market-based optimal power flow (OPF) considering different combinations of wind generation and load demand over a year are used to evaluate wind turbines (WTs) integration into distribution systems. MCS is used to model the uncertainties related to the stochastic variations of wind power generation and load demand while the social welfare is maximized by means of market-based OPF with inter-temporal constraints. The proposed probabilistic methodology allows evaluating the amount of wind power that can be injected into the grid as well as the impact of wind power penetration on the social welfare and on distribution-locational marginal prices. Market-based OPF is solved by using step-con- trolled primal dual interior point method considering network constraints. The effectiveness of the proposed probabilistic method in assessing the impact of wind generation penetration in terms of both technical and economic effects is demonstrated with an 84-bus 11.4-kV radial distribution system. Index Terms—Distribution-locational marginal prices, Monte Carlo simulation, optimal power flow, social welfare maximiza- tion, wind turbines. I. INTRODUCTION A. Motivation and Approach R ECENT researches have indicated the potential of distributed generation (DG) in offering an alternative ap- proach to utilities to satisfy demand locally and incrementally. Indeed, DG may determine various benefits, such as a positive capacity margin, and, if properly allocated, may allow losses reduction, energy savings, flattening of the peak, voltage con- trol, ancillary services, transmission and distribution capacity deferral, higher power quality and lowering the loss of load probability [1]–[4]. On the other end, the international concern over climate change is driving many governments to reduce carbon-dioxide emissions and to increase the percentage share of the total electrical supply energy from renewable energy source (RES). Among other RES, wind energy represents the lowest risk and most established technology, also thanks to re- cent technical developments, financing options and incentives. The connection of large amounts of wind turbines (WTs) to distribution systems presents, however, a number of technical challenges to distribution network operators (DNOs). The impacts on the networks depend on several parameters, such as: Manuscript received November 10, 2012; revised February 26, 2013 and May 14, 2013; accepted June 14, 2013. Date of publication July 09, 2013; date of current version October 17, 2013. Paper no. TPWRS-01179-2012. The authors are with the Department of Industrial Engineering, Uni- versity of Salerno, 84084 Fisciano (SA), Italy (e-mail: psiano@unisa.it; gmokryani@gmail.com) Digital Object Identifier 10.1109/TPWRS.2013.2270378 size, type and location of the new connections; the density of installations and proximity to the load; the pattern and timing of output; the state of the network and the overall amount of capacity, etc. [4]. The intermittent nature of wind power generation also introduces additional technical and economic challenges that must be addressed by DNOs [1], [4]. DNOs have, therefore, to carry out a rational operating strategy that takes into account dispatching DG, interrupting loads while keeping system security. In the approach presented here, the DNO is defined as the market operator of the DNO acquisition market, which deter- mines the price estimation and the optimization process for the hourly acquisition of active power [3]. Assuming that the purpose of DNOs is to maximize their benefits, two different regulatory cases can be, indeed, considered: 1) DG-owning DNO—permitted to possess DG and can exploit the financial benefits brought by considering new generation as an option for distribution system investments, 2) Unbundled DNO—pro- hibited from DG ownership but can maximize benefits based on a set of incentives [4], [5]. European Directive 2003/54/EC describes the technical and legal existing limitations among different market actors of European electricity markets. Par- ticularly, it establishes the unbundling regulations that DNOs have to be unbundled from generation interests, hence, pro- hibiting DNOs from DG ownership. It separates the electricity distribution from retail supply where distribution utilities are not responsible to sell power to customers. The US approach for the ownership of DG is driven, instead, by the traditional structure of distribution networks in which they are respon- sible for supplying consumers throughout purchasing power from various sources in addition to owning and operating the wires. The financial profits of DG allocation to the utility from deferred generation and distribution investments are well recognized and utilities are permitted to site DG at strategic places on the grid to defer network upgrade costs and reduce peak-hour supply costs [4]–[9]. This paper provides a probabilistic methodology for evalu- ating the amount of wind power that can be injected into the grid as well as the impact of wind power penetration on the so- cial welfare (SW) and on distribution-locational marginal prices (D-LMPs) within a DNO acquisition market environment con- sidering uncertainties related to both load demand and wind speed. In the proposed approach it has been assumed that WTs and dispatchable loads (DLs) are owned or managed by the DG-owning DNO that is also the market operator of its acquisi- tion market. Market-based optimal power flow (OPF), consid- ering inter-temporal constraints, is used to maximize the SW and to calculate the D-LMPs. The uncertainties related to the 0885-8950 © 2013 IEEE