Facilitating DER participation in wholesale electricity market through TSO‐DSO coordination

Abstract

Abstract In this study, a novel coordinated market scheme is proposed, enabling the participation of distributed energy resources (DERs) in the wholesale as well as local energy market (LEM). First, a day‐ahead energy market framework is proposed that is operated by a distribution system operator (DSO) in coordination with the transmission system operator (TSO). The DERs present in a distribution system have the freedom to select among the local or wholesale electricity markets (WEM) to offer their energy. The DSO aggregates all DERs' services and power demand to represent them in a WEM operated at the transmission level. The proposed model allows the DSO to select more economical ways of allocating the resources utilising the TSO‐DSO coordination strategy. The objective is to maximise social welfare in light of network constraints. Furthermore, a practical method is developed for DSOs to redistribute any monetary surplus among different DERs participating in the WEM. Numerical simulations indicate the proposed model's economic effectiveness compared to the scenario where DERs are allocated only at the local market level.

Keywords

• distributed energy resources
• local energy market
• locational marginal price
• TSO‐DSO coordination
• wholesale electricity market