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Increasing penetration of distributed renewable energy sources (DRESs) has resulted in the emergence of distributed energy resource aggregators (DERAs). A DERA participates in the transmission-level market operated by a transmission system operator (TSO), and the DERA’s resources are connected to a jurisdiction of the distribution system operator (DSO). Inspired by the structure of the Korean power industry, this study assumes a minimal DSO that cannot directly dispatch the resources in its system. In this study, we develop a detailed procedure for prequalification wherein the DSO checks the DERA’s bids that are submitted to the TSO markets. The proposed prequalification enables the DSO to secure the reliability of its system by providing limited network information to the DERA. The DERA modifies its bid until potential overvoltage and overflow problems are resolved, even in the worst case, including uncertainties. The proposed prequalification process is verified using the IEEE 33-bus distribution network. Compared to previous studies, the results demonstrate that the proposed prequalification can deal with distribution system constraints, even though uncertainties are included. The proposed prequalification process can be applied to power industries where the DSO does not have the full dispatch authority on DRESs.

In modern power systems high penetration of renewable energy sources and decentralized paradigm are regarded as the path toward more sustainable electricity landscape. This includes distributed energy resources whose intermittency and uncertainty may cause issues to the system operators. Distribution system operators have an obligation to ensure secure and stable system operation. Hence, they seek the most efficient methods to deal with these challenges. Flexibility procurement is considered as one of the prerequisites for painless and successful integration of renewable sources. Furthermore, distribution-level flexibility markets are modeled and tested to trade flexibility locally, solve congestion issues and defer grid expansion. This paper surveys the ongoing research in the field of flexibility markets, its design, open questions and most promising research projects. The key stakeholders are identified, overview of the current trends in the power system and research initiatives are presented, accompanied with the dilemmas being discussed in the power systems community.

Renewable portfolio standards are targeting high levels of variable solar photovoltaics (PV) in electric distribution systems, which makes reliability more challenging to maintain for distribution system operators (DSOs). Distributed energy resources (DERs), including smart, connected appliances and PV inverters, represent responsive grid resources that can provide flexibility to support the DSO in actively managing their networks to facilitate reliability under extreme levels of solar PV. This flexibility can also be used to optimize system operations with respect to economic signals from wholesale energy and ancillary service markets. Here, we present a novel hierarchical scheme that actively controls behind-the-meter DERs to reliably manage each unbalanced distribution feeder and exploits the available flexibility to ensure reliable operation and economically optimizes the entire distribution network. Each layer of the scheme employs advanced optimization methods at different timescales to ensure that the system operates within both grid and device limits. The hierarchy is validated in a large-scale realistic simulation based on data from the industry. Simulation results show that coordination of flexibility improves both system reliability and economics, and enables greater penetration of solar PV. Discussion is also provided on the practical viability of the required communications and controls to implement the presented scheme within a large DSO.

The diffusion of distributed energy resources (DERs) has changed the supply-demand balance of power systems. One option to modernize the management of the electricity distribution is to operate the distribution system with interconnected micro-grids (MGs). However, the MG participation in wholesale energy and ancillary service markets creates several challenges in the interactions among the energy market managing entities. To solve these problems, local energy markets (LEMs) have been proposed, where the MGs can trade energy with each other under the management of the LEM manager (LEMM) to minimize their operation cost. In this paper, a local energy market is modeled for multi-MGs (MMGs) to minimize the operation cost of MGs individually and their social welfare in cooperation with each other. In such model, the optimal scheduling of the DERs in each MG is done through the market clearing process. To investigate the effectiveness of the proposed approach, the local energy market is applied to a distribution network with three MGs.

Challenges in the coordination between the transmission system operator (TSO) and the distribution system operator (DSO) have risen continuously with the integration of distributed energy resources (DER). These technologies have the possibility to provide reactive power support for system operators. Considering the Portuguese reactive power policy as an example of the regulatory framework, this paper proposes a methodology for proactive reactive power management of the DSO using the renewable energy sources (RES) considering forecast uncertainty available in the distribution system. The proposed method applies a stochastic sequential alternative current (AC)-optimal power flow (SOPF) that returns trustworthy solutions for the DSO and optimizes the use of reactive power between the DSO and DER. The method is validated using a 37-bus distribution network considering real data. Results proved that the method improves the reactive power management by taking advantage of the full capabilities of the DER and by reducing the injection of reactive power by the TSO in the distribution network and, therefore, reducing losses.

Future energy ecosystems need new market structures and interactions between TSO and DSOs, in order to realise distributed ancillary services. This paper estimates and compares ICT costs of several TSO-DSO coordination and market aggangements proposed in the SmartNet project. A hybrid cost estimation methodology, which utilizes constructive cost model methodology, expert estimates, a national DSO regulation model, and implementation of a simulator, is employed to estimate the development costs of aggregation and market clearing systems needed to realise the market schemes. ICT costs of different arrangements turn out to be at the same level and they are minor in comparison to energy-related costs. However, depending on the overall design of the markets for distributed flexibility, aggregators may have the largest ICT costs and investment needs.

The European energy transition is leading to a transformed electricity system, where Distributed Energy Resources (DERs) will play a substantial role. Renewable Energy Sources (RES) will challenge the key operational obligation of real-time balancing and the need for flexibility will consequently increase. The introduction of a local flexibility market (LFM) would allow the trading of flexibility supplied by both producing and consuming units at the distribution level, providing market access to DERs, a support tool for Distribution System Operators (DSOs) and a value stream for energy suppliers. Aggregators and DSOs for different reasons can enhance the valuation of flexible DERs. Several research papers have assumed aggregators fully interacting with the electricity markets and DSOs contracting services with power system actors. These interactions are still not allowed in many European countries. This article aims to analyze the European regulation to identify the most important enablers and pave the way towards the full exploitation of DER flexibility, culminating in the establishment of an LFM. Therefore, three main stages, emerging from the progressive withdrawal of the current regulatory and market barriers, are identified: (1) enabling the aggregator’s trading, (2) evolution of the DSO’s role, and (3) key-design challenges of an LFM.

Increasing distributed generation and intermittency, along with the increasing frequency of extreme weather events, impose a serious challenge for the electric power supply security. Understanding the costs of interruption is vital in terms of enhancing the power system infrastructure and planning the distribution grid. On the other hand, customer rights and demand response techniques are further reasons to study the worth of power reliability. In this paper, the authors make use of directional distance function and shadow pricing method for a case study from Finland. The aim is to calculate the cost of one minute of power interruption from the distribution network operator perspective. The sample consists of 78 distribution network operators from Finland with cost and network information between 2013 and 2015.

Increase in electricity demand, mostly due to integration of new technologies electrifying heat and transport, as well as increasing share of distributed generation, create new challenges for distribution system operator (DSO) in terms of reliability and quality of power supply. This is particularly manifested during daily extremes, suggesting there is insufficient capacity of the distribution grid. To avoid expensive and unnecessary investments in new cables and transformers (since events that require network reinforcement are short and rare), the DSO can define a methodology for implementation of so called non-grid solutions. This paper analyses a concept in which the DSO signs a contract with the aggregator of flexible resources, offering incentives, such as reduced network fee, for using battery storage when necessary. Since the aggregator is looking for a feasible business case due to high investment cost of storage, the incentives given by the DSO provide a cost-effective investment for the aggregator. The aggregator uses battery storage to minimize the cost of purchasing electricity on the market while the DSO is utilizing it to postpone network reinforcement. The problem is cast as a bilevel problem where the operation of the distribution grid is modelled by Second-Order-Cone- Programming (SOCP) relaxation of optimal power flows bidding for the right to use aggregator’s battery for preventing violating networks technical constraints. Over a set of scenarios, we demonstrate how coordinated usage of battery storage can postpone network reinforcement while ensuring secure power supply, as well as bring additional cost benefits for the aggregator.

Distributed energy resources are able to provide services to grid operators, possibly with competing objectives. With the development of active distribution grid management, various market designs arise. Here, a reference market framework is considered, which allocates the available flexibility products according to requests coming from both distribution and transmission system operators. The goal of this paper is to provide an identification procedure that is able to detect,identify and catalogue possible conflicts among the involved stakeholders that take place when requesting and/or acquiring ancillary services from flexible units. The investigation is carried out considering a 3-area power system which allows to take into account local constraints as well as system-wide needs. As outcome, this paper identifies the conflicts from both a theoretical and a practical point of view, by means of descriptions/identification procedure and by visual examples, respectively.

The transformation progress of the smart grid challenges the market players' business models. One of those market players is the Distribution System Operators (DSOs). This paper aims to elaborate how smart grid influences the DSOs' business models with case studies of two Danish DSOs — EnergiFyn and TREFOR. The main findings indicate that the Danish smart grid transformation process influences the Danish DSOs' business models via four smart grid related factors: (1) smart meters, (2) Distributed Energy Resources (DERs), (3) Bidirectional electricity flow, and (4) R&D. Therefore, the results show that the smart grid incrementally not revolutionary influences the Danish DSOs' business models, and the smart grid transformation of the Danish electricity grid is slower than the agenda of the official Danish smart grid development strategy.

The smart grid concept increases the observability and controllability of the distribution system, which creates conditions for bi-directional control of Distributed Energy Resources (DER). The high penetration of Renewable Energy Resources (RES) in the distribution grid may create technical problems (e.g., voltage problems, branch congestion) in both transmission and distribution systems. The flexibility from DER can be explored to minimize RES curtailment and increase its hosting capacity. This paper explores the use of the Monte Carlo Simulation to estimate the flexibility range of active and reactive power at the boundary nodes between transmission and distribution systems, considering the available flexibility at the distribution grid level (e.g., demand response, on-load tap changer transformers). The obtained results suggest the formulation of an optimization problem in order to overcome the limitations of the Monte Carlo Simulation, increasing the capability to find extreme points of the flexibility map and reducing the computational effort.

In last decades the rapid development of distributed generation can be observed. It is caused, among others, by legal circumstances, liberalization of the energy market and increasing demand of electrical energy. The presence of many various distributed generators in the power system is a big challenge for the transmission and distribution system operators. Optimization methods, which state-of-the-art is the subject and aim of this paper, can be very helpful in planning and decision making about the reinforcement of the networks. In the paper the most common optimization methods, objective functions and constraints will be described. The current trends in optimization of distributed generation will be presented.