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• A local electricity-heat integrated energy market clearing method is proposed. • Local electricity and heat markets are cleared simultaneously. • The equilibrium between DSO and TSO is considered. • The model is transformed into an MISOCP problem. With the increasing interconnection of active distribution network (ADN) with the integration of distributed generations (DGs) and district heating network (DHN), local electricity-heat integrated energy market provides the opportunity of coordinated energy pricing and trading with transmission system operator (TSO). The market clearing results of distribution system operator (DSO) on local electricity and heating markets will be affected wholesale market clearing. This paper proposes a bi-level optimization model for local electricity-heat integrated energy market clearing for integrated ADN and DHN, and distribution locational marginal pricing coordinated with the wholesale market clearing of transmission system. In the proposed model, the upper-level model indicates the local electricity-heat integrated market clearing by DSO and the lower-level model indicates the wholesale electricity market clearing by TSO. The locational marginal price (LMP) of the substation of the PCC point will affect the market clearing of ADN and DHN, and further affect the distribution locational marginal price (DLMP). Moreover, the market clearing actions of DSO would affect the wholesale electricity market clearing and LMP. The equilibrium of DSO and TSO is found by transforming the proposed bi-level model into a mathematical program with equilibrium constraint (MPEC) model. The MPEC formulation is further converted into mixed integer second order cone programming (MISOCP) for effectively solving. The effectiveness of the proposed model on reducing the DLMP and improving economy of ADN and DHN are demonstrated through case studies. [ABSTRACT FROM AUTHOR]

• A leader-followers-type bi-level model for energy management of microgrids in distribution market is developed. • The interaction between distribution system operator and microgrid operators is explored. • Stackelberg game is introduced and the existence of equilibrium is analyzed. • Distribution locational marginal prices are utilized as price signals for microgrids. With the increasing penetration of distributed energy resources (DERs) into distribution systems, microgrids can participate in the market clearing of distribution-level electricity market. This paper proposes a leader-followers-type bi-level model for energy management and market clearing of distribution system with microgrids based on Stackelberg game. Distribution system operator (DSO) is considered as the leader, and microgrid operators (MOs) as followers. In the proposed model, market clearing problem of distribution system is modeled in the upper level, while the energy management problem of microgrids is modeled in the lower level. The distribution locational marginal price (DLMP) is obtained in the upper level model and then transmitted to the lower level model as price signals for microgrids. The model is then reformulated as a Mathematical Program with Equilibrium Constraints (MPEC) problem and the stochastic MPEC model is constructed with the uncertainty of PVs in microgrids. Existence of equilibrium of the proposed single leader multi-follower game is analyzed. Numerical results demonstrate the effectiveness of the proposed model. [ABSTRACT FROM AUTHOR]