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In this chapter, we presented an optimal scheduling model for a microgrid participating in the electricity distribution market in interaction with a Distribution Market Operator (DMO). The DMO administers the established electricity market in the distribution level, sets electricity prices, determines the amount of the power exchange among market participants, and interacts with the Independent System Operator. Considering a predetermined main grid power transfer to the microgrid, the microgrid scheduling problem aims at balancing the power supply and demand while taking financial objectives into account. Case studies were conducted to demonstrate the application and the effectiveness of the market‐based microgrid scheduling model. In addition, the model was benchmarked by comparing it with the commonly used price‐based scheduling model to further demonstrate its merits. Results showed that the market …