With the development of smart grid technologies, some of the electric demands which are traditionally considered fixed and inflexible will become promising distributed energy resources (DERs) in future power systems. However, the participation of small scale or household energy sources into balancing power might challenge the operation of electric distribution systems and cause congestions. This paper presents a distribution congestion price (DCP) based market mechanism to alleviate possible distribution system congestions. By employing the loca-tional marginal pricing (LMP) model, the proposed DCPs are able to reflect the real congestion cost and further direct the schedule of the responses of electric demands. Based on the NordPool Spot market structure, the interactions between aggregators and the distribution system operator (DSO) are discussed, and the procedure for calculating DCPs is proposed. Finally, a practical Danish 60kV/10.5kV distribution system is employed as the test case to verify the proposed method for mitigating congestion.
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