Design of Local Services Markets for Pricing DSO-TSO Procurement Coordination

The growing presence of Distributed Energy Resources (DERs) has opened the debate around their possibilities for participation in the system operations. On one hand, Transmission System Operators (TSOs) could leverage DERs capabilities to provide ancillary services such as voltage support, frequency response, or reserves deployment. On the other hand, Distribution System Operators (DSOs) could use DER services to avoid congestion in distribution networks and defer reinforcement costs. This study discusses the paradigm of DSOs having priority in the provision of services over the TSO in a local services market. When a DSO procures services in a local market close to real time, coordination issues with TSO can be expected. This paper assesses the conflict cost of two possible market schemes: in the first one only TSO can access DER flexibility, whereas in the second case DSOs lead the TSOs in the procurement of DER flexibility. A novel set of metrics based of conflict pricing has been defined and evaluated in area in the UK, where a significant increase of distributed generation is planned.