Rise in distributed energy resources has prompted a shift in the way electricity market operators function. Traditionally, centralized optimization techniques are used by such operators to plan for economic dispatches of power tominimize the overall operational costs and increase system social welfare. Due to the dispersed nature of renewable energy sources as scattered nodes in a system, it can get difficult to accommodate them in a centralized optimization problem. Also, sharing of complete information for such nodes can create privacy issues. This motivates research in the field of distributed optimization techniques. This thesis aims to develop a distributed optimization algorithm for a DC distribution system which would take into account network congestion and line losses and ultimately provide a more precise optimal solution. Based on past research for distributed optimization approaches for AC systems, the Consensus and Innovations approach was used to model an algorithm and provide nodal optimization for a DC system with minimal data exchange. The developed model was implemented on various DC network topologies like meshed grids, single line networks, T Shaped networks, etc. and a converged output of system variables was accomplished. The results were also compared with a centralized optimization approach to check for deviations. The decision variables for the developed approach were found to be well within the deviation range of 2 percent. The algorithm managed to provide distributed optimization within a DC system while minimizing power generator operational costs and cost associated with network losses.

Rural area electrification is one of the challenging issues to be solved by the engineer as it is often constrained by several issues such as geographical condition and underdeveloped infrastructures. As a result, off-grid DC system is expected to answer the need of electricity in these areas.

Solar Home System (SHS) as one of the practical implementation of off-grid DC system has been used widely due to the low operating cost of PV panel which requires no fuel to operate. Besides that, this system offers more modularity rather than conventional power generator due to the absence of frequency and reactive power parameter in the static component. Decentralized control for energy management between component is preferred rather than centralized, so it does not require additional communication lines. Moreover, it allows each component to work independently when there is a failure or disturbance in the distribution lines. Equal power balance for multiple batteries is maintained by the additional controller in each local battery converter. Thus, the batteries rate of charge and discharge will be adjusted on their capacity.

Optimization of the individual SHS is conducted by interconnecting them as an attempt to form a low voltage DC off-grid network. It enables power-sharing mechanism to happen within connected houses. Additional power converters are required to provide bi-directional power flow within coupled houses, and decentralized secondary control needs to be introduced to give an equal independence level between these houses. Direct interconnection on the same voltage level allows the system to be simply coupled through cables, yet the current in the interconnection cable could increase sharply according to the sum of total connected SHS. On the other hand, interconnection in higher voltage level requires additional bi-directional converter between SHS and interconnection cables. However, the current is much lower and, thus provides a better location for high power-consuming loads to be installed.