Distribution Network Congestion Management via Strategic Aggregator Intervention in Local Energy Markets

Abstract

High penetration of distributed energy resources increasingly creates congestion in low-voltage distribution networks, while local energy markets (LEMs) optimise community welfare without explicitly internalising network constraints. This paper investigates whether a profit-seeking aggregator embedded within a welfare-oriented LEM can partially internalise distribution-level congestion through market participation. We develop a post-clearing, price-protected intervention in which the aggregator injects additional supply and triggers re-clearing, with network feasibility validated using nonlinear AC power flow subject to a non-deterioration constraint on maximum line loading. The mechanism is benchmarked against Distribution System Operator (DSO)-only corrective control and a hybrid regime with residual DSO action following aggregator intervention. Results on a UK LV feeder show that aggregator participation reduces thermal loading and preserves community welfare relative to DSO-only control, though it does not fully restore compliance under severe stress. The hybrid regime achieves the strongest technical performance while maintaining lower welfare loss. Overall, aggregator intervention remains privately profitable, indicating partial incentive alignment.