Aggregating Distributed Energy Resources: Efficiency and Market Power

The U.S. Federal Energy Regulatory Commission (FERC) Order No. 2222 is heralded as a landmark rule on distributed energy resources (DER). Issued in September 2020, it is specifically designed for organized wholesale power markets. The rule is nonbinding for utilities that have not chosen to join an organized wholesale power market. This primer, which analyzes the order, focuses on potential insights for similar changes in the international power systems.

The Intermittent Renewable Management Pilot - Phase 2 (IRM2) was designed to study the feasibility of demand-side resources to participate into the California Independent System Operator (CAISO) wholesale market as proxy demand resources (PDR). The pilot study focused on understanding the issues related with direct participation of third-parties and customers including customer acceptance; market transformation challenges (wholesale market, technology); technical and operational feasibility; and value to the rate payers, DR resource owners and the utility on providing an enabling mechanism for DR resources into the wholesale markets. The customer had the option of committing to either three contiguous hour blocks for 24 days or six contiguous hours for 12 days a month with day-ahead notification that aligned with the CAISO integrated forward market. As a result of their being available, the customer was paid $10/ kilowatt (kW)-month for capacity in addition to CAISO energy settlements. The participants were limited to no more than a 2 megawatt (MW) capacity with a six-month commitment. Four participants successfully engaged in the pilot. In this report, we provide the description of the pilot, participant performance results, costs and value to participants as well as outline some of the issues encountered through the pilot. Results show that participants chose to participate with storage and the value of CAISO settlements were significantly lower than the capacity payments provided by the utility as incentive payments. In addition, this pilot revealed issues both on the participant side and system operations side. These issues are summarized in the report.The Intermittent Renewable Management Pilot - Phase 2 (IRM2) was designed to study the feasibility of demand-side resources to participate into the California Independent System Operator (CAISO) wholesale market as proxy demand resources (PDR). The pilot study focused on understanding the issues related with direct participation of third-parties and customers including customer acceptance; market transformation challenges (wholesale market, technology); technical and operational feasibility; and value to the rate payers, DR resource owners and the utility on providing an enabling mechanism for DR resources into the wholesale markets.

Designing pricing strategies for coordination of networked distributed energy resources

Distributed Energy Resources (DER), due to their high ramp rates, can bring about high flexibility and reliability to the power grid. A proper option to harness DER capabilities is their aggregation to offer ancillary service products (ASP) in the wholesale market. This option is backed by FERC Order 2222 requiring planning of the ISOs across the United States for participation of DER aggregators in the ASP markets. However, the DERs are spread across distribution grids which impedes tracking their ASP delivery. In this paper, we propose a blockchain-based framework to bring about the visibility of DERs to ISOs by secure recording and verification of the monetary, energy and ASP transactions made among the ISO, aggregator and DERs. Our major focus is on a type of DER named distributed prosumer (DP) which is comprised of rooftop solar generation, battery storage, electric vehicle charger and controllable electric loads. We conducted a case study where the simulation results demonstrate the accuracy and efficiency of the framework in making DERs visible and tractable to the ISO.

Market-Based Coordination of Transmission and Distribution Network Planning with Distributed Energy Resources Planning

Developing a multi-objective framework for expansion planning studies of distributed energy storage systems (DESSs)

In a re-structured environment, demand response (DR) programs are presented in a new style. The demand response program consists of demand-side management methods which answers to electricity price variations. With advent of electricity markets, the demand-side management programs was introduced into two categories: (1) energy efficiency program, (2) demand response program. This paper studies engagement of participants load in an electricity market having a grid with large and small loads interested to participate in the market, energy storage systems, micro-grids, and distributed generations. In the proposed scheme, it is supposed to have an aggregator which sends demand-side preferences including load curtailment, load shifting, onsite generation, and energy storage systems along with proposed value and prices and all respective system constraints to the independent system operator (ISO). In fact, load aggregators submit aggregated DR offers to the ISO in order to optimize final decisions on aggregators’ DR contributions in wholesale market. The main goal of this paper is to solve the operation problem considering demand-side, system, and pollution and reliability constraints. Compared to other methods, the results indicate that the explicit modeling of customer DR would provide ISOs with more flexible options for scheduling the available energy resources in day-ahead energy markets.

Many distribution networks are operating based on uniform energy price rate for all the system nodes. However, with high penetration of distributed energy resources (DER), energy storage (ES) and flexible demands (FD), there is a big opportunity to optimally operate the distribution networks. In this context, distribution locational marginal pricing (DLMP) can be employed, similar to that of whole-sale electricity market, as the distribution pricing mechanism. The main advantage of DLPM that it can count for the network losses and congestion, so it can ensure a competitive and fair participation for all the entities, such as DERs and FDs, on the distribution side. With introduction of transactive energy system (TES) on wider scale in modern power systems, there will be a big necessity to adopt a robust pricing mechanism such as DLMP to consider both technical and economic concerns of distribution networks. In this paper, a brief review has been conducted on DLMP and its application. Further, an illustrative example is provided to demonstrate several attributes for the operation of distribution networks and its impacts on the DLMP values.

In this paper, a planning model for active distribution network (ADN) is proposed considering distributed energy resources (DERs) and distribution network expansion planning (DNEP) to cope with load growth and to maximize profits to the distribution system operator (DSO). The DERs considered in this paper include distributed renewable energy resources (RESs), distributed thermal generators (TGs), and battery energy storage system (BESS). DNEP options, such as adding new lines to the distribution network (DN) and upgrading existing lines are taken into account. The main motivation of this research is to find the optimal sizing and siting of DERs with considering DNEP to meet the load growth requirements and to maximize the total payoff to the DSO. The DSO trades energy externally with an independent system operator (ISO) at the market-clearing price (MCP) and internally with consumers at a predetermined cost. The overall performance of the proposed model is investigated on a 38-bus radial distribution test system. Simulation results indicate that considering DERs contributes to maximizing the total payoff to DSO and meeting the load growth requirements. In addition to that DERs can relieve the congestion in the DN's lines; therefore, it can mitigate or postpone DNEP's investment.

In order to solve the problems of increased voltage fluctuation and increased peak load caused by the high proportion of distributed photovoltaic (PV) and electric vehicles (EVs) connected to the distribution network, it is helpful to increase the storage efficiency and reduce the incremental cost of energy storage system (ESS) to carry out the energy storage supplement planning based on the aggregation of the EVs. Firstly, the “distributed energy storage +” resource partition hierarchical control topology and the economic incentive model of on-board energy storage aggregation are established, including on-board energy storage and distributed energy storage system (DESS). The mathematical models of on-board energy storage, DESS and the calculation model of the potential of on-board energy storage are established. Then, a DESS supplement planning model is built, which is including on-board energy storage participating in system peak shaving and valley filling. And the solution flow is given. Finally, an example is given based on IEEE-33 bus distribution network. It is verified that the supplementary planning based on the aggregation of existing resource is effective for cost reduction and efficiency increase of energy storage resource.

A distribution energy resource aggregator (DERA) constitutes a group of distribution energy resources with small generation capacities that, when combined, meet the threshold to participate in the electricity wholesale market.This document investigates the DERA offer model formulation with three components of solar, battery energy storage system (BESS), and the demand response resources (DRRs).Different economical assessment methodologies have been developed to incorporate bids for individual distributed resources, including a solar offer model, BESS opportunity cost offer algorithm, and nested utility function model for DRRs.In addition, an optimization-based method and a cost-based method are proposed to aggregate individual cost offers to a DERA cost curve to bid in the wholesale electricity market while the schedule-following method and profit-following method are also introduced to simulate the DER actual dispatch.Based on the DERA models in this document, the SCUC-DER project will be able to assess the impacts of DERA on the distribution system's operation and reliability.

Modern active distribution grids are characterized by the increasing penetration of distributed energy resources (DERs). Proper coordination and scheduling of these DERs requires a local retail market which can operate at the distribution grid level. In this paper, we propose a retail market for optimally managing and scheduling DERs, and coordinating ancillary services in a distribution grid. Our proposed retail market leverages a recently proposed distributed proximal atomic coordination (PAC) algorithm which has several advantages over other distributed algorithms, with reduced local computational effort and enhanced privacy. We describe how the market can be implemented using a Distribution System Operator (DSO), whose representatives are located at the primary feeder level and workers are located at the substation level, and how the DSO will interact with the Wholesale Electricity Market. Finally, we extensively validate the performance of the proposed retail market via simulations of three networks: a real distribution grid in Tokyo, a balanced IEEE 123-bus distribution grid, and a modified IEEE 13-bus network. Our results show that the proposed market is practical and can be easily implemented in distribution grids, resulting in optimal real-time scheduling of DERs and compensation in the form of distributed locational marginal prices.

A two-stage stochastic programming scheme is proposed in order to evaluate the offering strategy of a distributed energy resource aggregator in both wholesale and local electricity markets and appropriately cope with uncertainties associated with its decision-making problem. In this regard, the aggregator combines a broad range of virtual and real distributed energy resources to simultaneously participate in the local electricity market as a price-maker or strategic player and the wholesale electricity market as a price-taker or non-strategic player. To model the studied aggregator as a strategic entity in the local market, a bilevel programming approach is exploited in this work. Accordingly, at the upper level of the raised problem, the aggregator tends to promote its expected profit through taking part in the wholesale and local electricity markets, while at the lower level, the considered local market is cleared in a way to maximise the social welfare. In the end, the effectiveness of the proposed framework for the simultaneous participation of the distributed energy resource aggregator in these two markets has been explored utilising a case study.

Reducing the cost of distributed energy resources (DERs) such as renewables, storage, electric vehicles and smart loads is driving their increased connection to distribution systems. Extracting maximum benefits from DERs require liberalising distribution systems by allowing: (1) a distribution transactive energy market (DTEM) operated by a local distribution operator (LDO) and (2) peer‐to‐peer (P2P), peer‐to‐LDO (P2LDO) and Transmission‐to‐LDO (T2LDO) type transactions. A DTEM will bring several benefits such as: (1) enhanced economic opportunity for DERs, making them more profitable and (2) increased social welfare benefiting both buyers and sellers. To achieve this objective, we develop a comprehensive three‐phase DTEM platform that provides maximum economic opportunities for DERs and maximises social welfare that benefits all market participants, while considering P2P, P2LDO and T2LDO transactions, for both energy and ancillary services. Interaction between bulk electricity market independent system operator (ISO) and LDO controlled DTEM is presented. The DTEM model is implemented as a practical mixed‐integer linear programming formulation that includes a network reconfiguration feature. The DTEM model is studied on three‐phase 5‐bus and 34‐bus systems, demonstrating its effectiveness to settle energy and ancillary service transactions, while obtaining distribution locational marginal prices. Results show that P2P transactions, when allowed, increase social welfare and increases profitability of DERs.

A transactive strategy to purposeful pricing distributed energy resources (DERs) in distribution networks is proposed in this paper. This strategy is presented as a novel heuristic optimization approach. The total network loss and released greenhouse gases (GHGs) emissions are considered as objective functions. In addition, the locational marginal prices (LMPs) and power factors of DERs are considered as decision variables. Each DER, which is more participated in the mitigation of afore-mentioned objectives, will contribute a larger excitement form benefits consequently. Therefore, more contribution consequent to more generation leads to a higher price for DERs bus in comparison to substation market price. Also, the earned benefits from loss/emission mitigations are allocated to DERs directly. The fairness of this pricing process is supervised by the Independent Distribution System Operator (IDSO). Because the problem has two contradictory objective functions, a reliable Multi-Objective method called Chaotic search and Covariance matrix (MGSOACC) is proposed to solve the problem. To evaluate the proposed method, the pricing procedure is applied on modified IEEE-33 and IEEE-69 bus test networks. Furthermore, in order to the validation of the proposed optimization method, the result-oriented comparisons between four conventional Multi-Objective optimization methods and proposed optimization method are presented.