The pilot project will contribute to increased knowledge about a new concept for the design of a flexibility market, based on hierarchical balancing and interaction DSO/TSO.

Hierarchical balancing emerges as an enabler for implicitly representing DSO grid constraints in "grid-secure" bids, which is referred to as a residual supply function (RSF). These bids are submitted to the TSO balancing market, and account for the DSO's grid constraints while preserving its independence. The approach in this pilot project aims to achieve a more integrated and efficient market while also accounting for the specific network constraints of the DSO. By representing the DSO grid constraints in the form of residual supply functions, we aim to promote a more effective and comprehensive market that can address the challenges faced by both TSO and DSO.

The pilot project will contribute with the following benefits for both TSO and DSO:

1. Anticipate needs from the system operators to mobilize flexible resources at distribution level for active participation in system operations.
2. Increase the toolkit of flexible resources that TSO can access from DSO for the purpose of balancing and congestion management.
3. Evaluate efficient and market-based alternatives to postpone network upgrades or investing in new capacity (e.g. transformers) in the local grid by reducing peaks using demand flexibility. Deferring investment to enhance SOs planning activities is of high value.
4. Prepare for dealing with the increasing trend of electrification in transportation as well as the large-scale deployment of renewable resources.
5. Clarify the precise mode of interaction between DSO and TSO, as well as the desired mode of management of medium voltage resources.

The following three tracks for the project's successful execution are identified:

1. Network Models: ability to handle real power system models and use the information to precisely model the best-suited solution.
2. Mathematical Programming: know-how on the modeling of market clearing solutions while incorporating the maximum level of detail from the networks, in a tractable, efficient and precise manner.
3. Market Design: knowledge to ensure the proposed solution that fits within existing institutions, and enriching the ongoing discussion, rather than disrupting the future of TSO-DSO interactions.

The pilot project is based on previous work described in market-approaches-for-tso-dso-coordination-in-norway.pdf (statnett.no)

Contact person: 

• , Statnett SF