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Wholesale Market Participation of DERA: DSO-DERA-ISO Coordination

Cong Chen, Subhonmesh Bose, Timothy D. Mount, Lang Tong

TL;DR

The paper tackles enabling multi-DERA participation in wholesale markets via a forward auction that allocates distribution-network operating envelopes, decoupling DSO-DERA-ISO decision-making from real-time ISO dispatch. It develops two auction designs—a robust (worst-case) and a risk-aware stochastic (CVaR-based) model—employing a LinDistFlow distribution model and endowing DERAs with bid-in utilities to recover network access limits. The authors derive locational marginal access prices (LMAP-R and LMAP-S), prove surplus nonnegativity under mild conditions, and demonstrate price monotonicity along feeders under specified assumptions. Through a 4-bus illustrative example and a 141-bus case study, they show that the stochastic design can yield higher social welfare and lower prices than the robust one, while preserving distribution network security with limited real-time coordination. The framework offers a practical path to open access for DERAs while maintaining reliability, though it leaves topology changes, bid formation, and detailed DSO cost modeling for future work.

Abstract

Distributed energy resource aggregators (DERAs) must share the distribution network together with the distribution utility in order to participate in the wholesale electricity markets that are operated by independent system operators (ISOs). We propose a forward auction that a distribution system operator (DSO) can utilize to allocate distribution network access limits to DERAs. As long as the DERAs operate within their acquired limits, these limits define operating envelopes that guarantee distribution network security, thus defining a mechanism that requires no real-time intervention from the DSOs for DERAs to participate in the wholesale markets. Our auctions take the form of robust and risk-sensitive markets with bids/offers from DERAs and utility's operational costs. Properties of the proposed auction, e.g., resulting surpluses of DSO and the DERAs, and the auction prices, along with empirical performance studies, are presented.

Wholesale Market Participation of DERA: DSO-DERA-ISO Coordination

TL;DR

The paper tackles enabling multi-DERA participation in wholesale markets via a forward auction that allocates distribution-network operating envelopes, decoupling DSO-DERA-ISO decision-making from real-time ISO dispatch. It develops two auction designs—a robust (worst-case) and a risk-aware stochastic (CVaR-based) model—employing a LinDistFlow distribution model and endowing DERAs with bid-in utilities to recover network access limits. The authors derive locational marginal access prices (LMAP-R and LMAP-S), prove surplus nonnegativity under mild conditions, and demonstrate price monotonicity along feeders under specified assumptions. Through a 4-bus illustrative example and a 141-bus case study, they show that the stochastic design can yield higher social welfare and lower prices than the robust one, while preserving distribution network security with limited real-time coordination. The framework offers a practical path to open access for DERAs while maintaining reliability, though it leaves topology changes, bid formation, and detailed DSO cost modeling for future work.

Abstract

Distributed energy resource aggregators (DERAs) must share the distribution network together with the distribution utility in order to participate in the wholesale electricity markets that are operated by independent system operators (ISOs). We propose a forward auction that a distribution system operator (DSO) can utilize to allocate distribution network access limits to DERAs. As long as the DERAs operate within their acquired limits, these limits define operating envelopes that guarantee distribution network security, thus defining a mechanism that requires no real-time intervention from the DSOs for DERAs to participate in the wholesale markets. Our auctions take the form of robust and risk-sensitive markets with bids/offers from DERAs and utility's operational costs. Properties of the proposed auction, e.g., resulting surpluses of DSO and the DERAs, and the auction prices, along with empirical performance studies, are presented.
Paper Structure (18 sections, 5 theorems, 42 equations, 8 figures, 5 tables)

This paper contains 18 sections, 5 theorems, 42 equations, 8 figures, 5 tables.

Table of Contents

  1. Introduction
  2. Network and Coordination Models
  3. The Robust Auction Model
  4. The Stochastic Auction Design
  5. An Illustrative Example
  6. Case Study on a 141-Bus Network
  7. Running the Robust Access Allocation
  8. Comparing the Robust and Stochastic Auctions
  9. Conclusions
  10. Appendix
  11. The Linearized Power Flow Model
  12. Proof of Lemma \ref{['lemma:EqRO']}
  13. Proof of Proposition \ref{['Prop:LAP']}
  14. Proof of Proposition \ref{['Prop:RA']}
  15. Proof of Proposition \ref{['Prop:PM2']}
  16. ...and 3 more sections

Key Result

Lemma 1

Problem eq:auction is equivalent to

Figures (8)

  • Figure 1: Power flow, financial flow, and control interactions in the DSO-DERA-ISO coordination model.
  • Figure 2: The distribution system and DER resources.
  • Figure 3: CVaR of a random variable $X$.
  • Figure 4: A 4-bus distribution network example. Left: Bid-in functions of DERAs and DSO; right: network topology.
  • Figure 5: Auction results over the 141-bus distribution network. Left y-axis: cleared access limits, right y-axis: access clearing prices
  • ...and 3 more figures

Theorems & Definitions (7)

  • Lemma 1
  • Definition 1: LMAP-R
  • Proposition 1
  • Proposition 2
  • Proposition 3
  • Definition 2: LMAP-S
  • Proposition 4