Skip to main content

Advertisement

SpringerLink
Log in

Integrating Distributed Energy Resources into the Independent System Operators’ Energy Market: a Review

  • Zero-Marginal-Cost Market Design (R Sioshansi and S Mousavian, Section Editors)
  • Published:
Current Sustainable/Renewable Energy Reports Aims and scope Submit manuscript

Abstract

Purpose of Review

In recent years, the rapid growth of distributed energy resources (DER) is bringing up a future of coexisting opportunities and challenges to independent system operators (ISO) as well as DER aggregators as market participants. This paper intends to overview the integration of DERs into the ISO’s energy market from three aspects of (i) ISOs’ existing DER integration programs, (ii) DER aggregators, and (iii) transmission system operator (TSO) and distribution system operator (DSO) coordination.

Recent Findings

ISOs and academic researchers have been actively preparing to embrace a high DER penetration future. ISOs’ current programs do not fully consider the interaction and coordination with distribution systems, which otherwise could accommodate an even deeper DER integration. Academia has done a lot of research on this aspect, while practical applicability and jurisdiction considerations are still among the important aspects to be further explored.

Summary

Small scales and dispersed locations of DERs make DER aggregation and TSO-DSO coordination inevitably a focus of research, which has been receiving more and more attentions with the increasing of DERs.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

Papers of particular interest, published recently, have been highlighted as: • Of importance •• Of major importance

  1. •• Birk M, Chaves-Ávila JP, Gómez T, Tabors R. TSO/DSO coordination in a context of distributed energy resource penetration. 2017. Online available: http://ceepr.mit.edu/files/papers/2017-017.pdf. Accessed 30 Jul 2021. A comprehensive overview of many aspects of TSO-DSO coordination.

  2. • MISO. MISO and DER: framing and discussion document. 2021. Online available: https://cdn.misoenergy.org/DER%20Framing%20Report%202019397951.pdf. Accessed 30 Jul 2021. Clearly introduces the current status of MISO and the challenges of deeper DER penetration from the ISO’s perspective.

  3. MISO. MISO and DER: Ensuring grid reliability through visibility and communication. 2021. Online available: https://cdn.misoenergy.org/MISO%20DER%20Ensuring%20Grid%20Reliability495153.pdf. Accessed 30 Jul 2021.

  4. PJM. Distributed energy resources. 2019. Online available: https://www.pjm.com/-/media/about-pjm/newsroom/fact-sheets/distributed-energy-resources.ashx. Accessed 30 Jul 2021.

  5. Tansy T, Nelson R, Moy K Martinez S. Analysis report of wholesale energy market participation by distributed energy resources (DERs) in California. 2018. Online available: http://sunspec.org/wp-content/uploads/2019/08/4.0EPC-14-036AnalysisReportofWholesaleEnergyMarketParticipationbyDERinCA.pdf. Accessed 30 Jul 2021.

  6. ERCOT. Distributed Energy Resources (DERs) in ERCOT. 2019. Online available: http://www.ercot.com/content/wcm/lists/164134/DER_OnePager_2019_FINAL.pdf. Accessed 30 Jul 2021.

  7. Liu Y, Li J, Wu L. Coordinated optimal network reconfiguration and voltage regulator/DER control for unbalanced distribution systems. IEEE Trans Smart Grid. 2019;10(3):2912–22.

    Article  Google Scholar 

  8. Karagiannopoulos S, Mylonas C, Aristidou P, Hug G. Active distribution grids providing voltage support: The Swiss case. IEEE Trans Smart Grid. 2021;12(1):268–78.

    Article  Google Scholar 

  9. CAISO. Multi-stage generation (MSG) model overview. 2012. Online available: https://www.caiso.com/Documents/Multi-StageGenerationModelOverview.pdf. Accessed 30 Jul 2021.

  10. Wu L, Liu Y, Yang Y, Chen Y. Future resource studies in the MISO system. 2020. Online available: https://cdn.misoenergy.org/Future%20Resource%20Studies%20in%20the%20MISO%20System539337.pdf. Accessed 30 Jul 2021.

  11. •• CAISO, PG&E, SCE, SDG&E. Coordination of transmission and distribution operations in a high distributed energy resource electric grid. 2017. Online available: http://gridworks.org/wp-content/uploads/2017/01/Gridworks_CoordinationTransmission.pdf. Accessed 30 Jul 2021. A clear, profound, and comprehensive discussion on the challenges, developments, and future of TSO-DSO coordination.

  12. •• NYISO. Distributed energy resources roadmap for New York’s wholesale electricity markets. 2017. Online available: https://www.nyiso.com/documents/20142/1391862/Distributed_Energy_Resources_Roadmap.pdf. Accessed 30 Jul 2021. Comprehensive descriptions of NYISO’s DER programs. Very helpful to understand other ISOs’ situation.

  13. Hadusha SY, Meeusa L. DSO-TSO cooperation issues and solutions for distribution grid congestion management. Energy Policy. 2018;120:610–21.

    Article  Google Scholar 

  14. Verzijlbergh RA, Vries LJD, Lukszo Z. Renewable energy sources and responsive demand. Do we need congestion management in the distribution grid? IEEE Trans Power Syst. 2014;29(5):2119–28.

    Article  Google Scholar 

  15. Ferrante A, Constantinescu N, Jackson JA. Lines of convergence: R&D for transmission and distribution: coordination and the regulatory challenge. IEEE Power Energy Mag. 2015;11(1):52–9.

    Article  Google Scholar 

  16. Gerard H, Rivero E, Six D. Basic schemes for TSO-DSO coordination and ancillary services provision. 2016. Online available: http://smartnet-project.eu/wp-content/uploads/2016/12/D1.3_20161202_V1.0.pdf. Accessed 30 Jul 2021.

  17. MISO. Business practices manual demand response. 2020. Online available: https://www.misoenergy.org/legal/business-practice-manuals/. Accessed 30 Jul 2021.

  18. Kumar MS. New York market orientation course (NYMOC) webinar: demand response. 2021. Online available: https://www.nyiso.com/documents/20142/3037451/9-Demand-Response.pdf. Accessed 30 Jul 2021.

  19. Walawalkar R, Fernands S, Thakur N, Chevva KR. Evolution and current status of demand response (DR) in electricity markets: insights from PJM and NYISO. Energy. 2010;35:1553–60.

    Article  Google Scholar 

  20. ISONE. Distribution-connected generation guidance. 2017. Online available: https://www.iso-ne.com/static-assets/documents/2017/07/a5_distributed_connected_generation_guidance.pdf. Accessed 30 Jul 2021.

  21. CAISO. Distributed energy resource provider participation guide with checklist. 2016. Online available: https://www.caiso.com/Documents/DistributedEnergyResourceProviderParticipationGuideandChecklist.pdf. Accessed 30 Jul 2021.

  22. • Siano P. Demand response and smart grids–a survey. Renew Sust Energ Rev. 2014;30:461–78. Comprehensive review of demand response that is worth reading.

    Article  Google Scholar 

  23. Hatziargyriou ND, Asimakopoulou GE. DER integration through a monopoly DER aggregator. Energy Policy. 2020;237:111124.

    Article  Google Scholar 

  24. Mashhour E, Moghaddas-Tafreshi SM. Bidding strategy of virtual power plant for participating in energy and spinning reserve markets–part I: Problem formulation. IEEE Trans Power Syst. 2011;26(2):949–56.

    Article  Google Scholar 

  25. Kardakos EG, Simoglou CK, Bakirtzis AG. Optimal offering strategy of a virtual power plant: a stochastic bi-level approach. IEEE Trans Smart Grid. 2016;7(2):794–806.

    Google Scholar 

  26. Somma MD, Graditi G, Siano P. Optimal bidding strategy for a DER aggregator in the day-ahead market in the presence of demand flexibility. IEEE Trans Ind Electron. 2019;66(2):1509–19.

    Article  Google Scholar 

  27. Wei C, Xu J, Liao S, Sun Y. Aggregation and scheduling models for electric vehicles in distribution networks considering power fluctuations and load rebound. IEEE Trans Sustain Energy. 2020;11(4):2755–64.

    Article  Google Scholar 

  28. Liu Z, Wang D, Jia H, Djilali N, Zhang W. Aggregation and bidirectional charging power control of plug-in hybrid electric vehicles: generation system adequacy analysis. IEEE Trans Sustain Energy. 2015;6(2):325–35.

    Article  Google Scholar 

  29. • Lu X, Li K, Wang F, Mi Z, Sun R, Wang X, Lai J. Optimal bidding strategy of DER aggregator considering dual uncertainty via information gap decision theory. IEEE Trans Ind Appl. 2021;57(1):158–68. Intelligibly introduces the information gap decision theory and proposes an interesting model based on it.

    Article  Google Scholar 

  30. Li B, Wang X, Shahidehpour M, Jiang C, Li Z. DER aggregator’s data-driven bidding strategy using the information gap decision theory in a non-cooperative electricity market. IEEE Trans Smart Grid. 2019;10(6):6756–67.

    Article  Google Scholar 

  31. Anjos MF, Lodi A, Tanneau M. A decentralized framework for the optimal coordination of distributed energy resources. IEEE Trans Power Syst. 2019;34(1):349–59.

    Article  Google Scholar 

  32. Asimakopoulou GE, Hatziargyriou ND. Evaluation of economic benefits of DER aggregation. IEEE Trans Sustain Energy. 2018;9(2):499–510.

    Article  Google Scholar 

  33. Zhang C, Wang Q, Wang J, Korpås M, Khodayar ME. Strategy-making for a proactive distribution company in the real-time market with demand response. Appl Energy. 2016;181:540–8.

    Article  Google Scholar 

  34. Safdarian A, Fotuhi-Firuzabad M, Lehtonen M, Aminifar F. Optimal electricity procurement in smart grids with autonomous distributed energy resources. IEEE Trans Smart Grid. 2015;6(6):2975–84.

    Article  Google Scholar 

  35. Yi Z, Xu Y, Zhou J, Wu W, Sun H. Bi-Level programming for optimal operation of an active distribution network with multiple virtual power plants. IEEE Trans Sustain Energy. 2020;11(4):2855–69.

    Article  Google Scholar 

  36. Yazdani-Damavandi M, Neyestani N, Chicco G, Shafie-khah M, Catalão JPS. Aggregation of distributed energy resources under the concept of multienergy players in local energy systems. IEEE Trans Sustain Energy. 2017;8(4):1679–93.

    Article  Google Scholar 

  37. Alshehri K, Ndrio M, Bose S, Başar T. Quantifying market efficiency impacts of aggregated distributed energy resources. IEEE Trans Power Syst. 2020;35(5):4067–77.

    Article  Google Scholar 

  38. Wang Y, Ai X, Tan Z, Yan L, Liu S. Interactive dispatch modes and bidding strategy of multiple virtual power plants based on demand response and game theory. IEEE Trans Smart Grid. 2016;7(1):510–9.

    Article  Google Scholar 

  39. Givisieza AG, Petroua K, Ochoaa LF. A review on TSO-DSO coordination models and solution techniques. Electr Pow Syst Res. 2020;189:106659.

    Article  Google Scholar 

  40. Papavasiliou A, Mezghani Y. Coordination schemes for the integration of transmission and distribution system operations. 2018 Power Systems Computation Conference (PSCC) 2018 Jun 11 (pp. 1–7). IEEE.

  41. • Yuan Z, Hesamzadeh MR. Hierarchical coordination of TSO-DSO economic dispatch considering large-scale integration of distributed energy resources. Appl Energy. 2017;195:600–15. An interesting and enlightening idea of constructing cost functions.

    Article  Google Scholar 

  42. Li Z, Xu T, Guo Q, Sun H,Wang J. A response-function-based coordination method for transmission-distribution-coupled AC OPF. 2018 IEEE/PES Transmission and Distribution Conference and Exposition (T&D) 2018 Apr 16 (pp. 1–5). IEEE.

  43. Silva J, Sumaili J, Bessa RJ, Seca L, Matos M, Miranda V. The challenges of estimating the impact of distributed energy resources flexibility on the TSO/DSO boundary node operating points. Comput Oper Res. 2018;96:294–304.

    Article  MATH  Google Scholar 

  44. • Silva J, Sumaili J, Bessa JJ, Seca L, Matos MA, Miranda V, Caujolle M, Goncer B, Sebastian-Viana M. Estimating the active and reactive power flexibility area at the TSO-DSO interface. IEEE Trans Power Syst. 2018;33(5):4741–50. Pioneer paper on this topic and provides the clear problem statement.

    Article  Google Scholar 

  45. Capitanescu F. TSO–DSO interaction: active distribution network power chart for TSO ancillary services provision. Electr Pow Syst Res. 2018;163:226–30.

    Article  Google Scholar 

  46. Stanković S, Södera L, Hagemannb Z, Rehtanzb C. Reactive power support adequacy at the DSO/TSO interface. Electr Pow Syst Res. 2021;180:106661.

    Article  Google Scholar 

  47. Kalantar-Neyestanaki M, Sossan F, Bozorg M, Cherkaoui R. Characterizing the reserve provision capability area of active distribution networks: a linear robust optimization method. IEEE Trans Smart Grid. 2020;11(3):2464–75.

    Article  Google Scholar 

  48. Contreras DA, Rudion K. Improved assessment of the flexibility range of distribution grids using linear optimization. 2018 Power Systems Computation Conference (PSCC) 2018 Jun 11 (pp. 1–6). IEEE.

  49. Liu Y, Wu L, Chen Y, Li J. Integrating DERs into ISO energy market clearing via feasible region projection. IEEE Trans Power Syst. 2021;36(3):2262–72.

    Article  Google Scholar 

  50. Liu Y, Wu L, Chen Y, Li J, Yang Y. On accurate and compact model of high DER-PENETRATED distribution systems in ISO energy market. IEEE Trans Sustain Energy. 2021;12(2):810–20.

    Article  Google Scholar 

  51. Tan Z, Zhong H, Wang J, Xia Q, Kang C. Enforcing intra-regional constraints in tie-line scheduling: A projection-based framework. IEEE Trans Power Syst. 2019;34(6):4751–61.

    Article  Google Scholar 

  52. Tan Z, Zhong H, Wang J, Xia Q, Kang C, Wang XS, Tang H. Estimating the robust P-Q capability of a technical virtual power plant under uncertainties. IEEE Trans Power Syst. 2020;35(6):4285–96.

    Article  Google Scholar 

  53. Caramanis M, Ntakou E, Hogan WW, Chakrabortty A, Schoene J. Co-optimization of power and reserves in dynamic T&D power markets with nondispatchable renewable generation and distributed energy resources. Proc IEEE. 2016;104(4):807–36.

    Article  Google Scholar 

  54. Bragin M, Dvorkin Y, Darvishi A. Toward coordinated transmission and distribution operations. 2018 IEEE Power and Energy Society General Meeting (PESGM) 2018 Aug 5 (pp. 1–5). IEEE.

  55. Mohammadi A, Mehrtash M. Diagonal quadratic approximation for decentralized collaborative TSO+DSO optimal power flow. IEEE Trans Smart Grid. 2019;10(3):2358–70.

    Article  Google Scholar 

  56. Li Z, Guo Q, Sun H, Wang J. Coordinated transmission and distribution AC optimal power flow. IEEE Trans Smart Grid. 2018;9(2):1228–40.

    Article  Google Scholar 

  57. Li Z, Guo Q, Sun H, Wang J. A new LMP-sensitivity-based heterogeneous decomposition for transmission and distribution coordinated economic dispatch. IEEE Trans Smart Grid. 2018;9(2):931–41.

    Article  Google Scholar 

  58. Tang Z, Liu Y, Wu L, Liu J, Gao H. Reserve model of energy storage in day-ahead joint energy and reserve markets: a stochastic UC solution. IEEE Trans Smart Grid. 2021;12(1):372–82.

    Article  Google Scholar 

  59. Saint-Pierre A, Mancarella P. Active distribution system management: a dual-horizon scheduling framework for DSO/TSO interface under uncertainty. IEEE Trans Smart Grid. 2017;8(5):2186–97.

    Article  Google Scholar 

  60. • Koraki D, Strunz K. Wind and solar power integration in electricity markets and distribution networks through service-centric virtual power plants. IEEE Trans Power Syst. 2018;33(1):473–85. An interesting and enlightening market clearing mechanism.

    Article  Google Scholar 

  61. Vicente-Pastor A, Nieto-Martin J, Bunn DK, Laur A. Evaluation of flexibility markets for retailer–DSO–TSO coordination. IEEE Trans Power Syst. 2019;34(3):2003–12.

    Article  Google Scholar 

  62. Capitanescu F. AC OPF-based methodology for exploiting flexibility provision at TSO/DSO interface via OLTC-controlled demand reduction. 2018 Power Systems Computation Conference (PSCC) 2018 Jun 11 (pp. 1–6). IEEE.

  63. Zotti GD, Pourmousavi SA, Morales JM, Madsen H, Poulsen NK. A control-based method to meet TSO and DSO ancillary services needs by flexible end-users. IEEE Trans Power Syst. 2020;35(3):1868–79.

    Article  Google Scholar 

  64. Southern California Edison. Wholesale distribution access tariff. Online available: https://www.sce.com/business/generating-your-own-power/grid-interconnections/wholesale-distribution-access-tariff.

Download references

Author information

Authors and Affiliations

  1. Department of Electrical and Computer Engineering, Stevens Institute of Technology, 1 Castle Point Terrace, Hoboken, NJ, 07030, USA

    Yikui Liu & Lei Wu

Authors
  1. Yikui Liu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Lei Wu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Lei Wu.

Ethics declarations

Human and Animal Rights and Informed Consent

This article does not contain any studies with human or animal subjects performed by any of the authors.

Conflict of Interest

The authors declare no competing interests.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

This article is part of the Topical Collection on Zero-Marginal-Cost Market Design

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Liu, Y., Wu, L. Integrating Distributed Energy Resources into the Independent System Operators’ Energy Market: a Review. Curr Sustainable Renewable Energy Rep 8, 233–241 (2021). https://doi.org/10.1007/s40518-021-00190-8

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s40518-021-00190-8

Keywords

Search

Navigation