Abstract: “As a result of restructuring in the electric power sector economic as well as environmental issues have led increased interest in distributed resources. Distributed generation (DG) is not entirely new concept but it is emerging approach for providing electric power in the heart of power system. It mainly depends upon the installation and operation of a portfolio of small size, compact, and clean electric power generation units at or near the load (customer). The increased penetration level of DG in the distribution network has changed its characteristics from passive to active .Therefore it is relevant to consider the applicability of some pricing mechanism in distribution network that are finding application in short term operation of transmission networks. In this paper a methodology is proposed for nodal pricing of distributed resources for different type of loads. The method recommends significantly greater revenue under nodal pricing reflecting its contribution to reduced losses.”

Keywords: Distributed generation (DG), Nodal