DSO-DERA Coordination for the Wholesale Market Participation of Distributed Energy Resources

Abstract: We design a coordination mechanism between a distribution system operator (DSO) and distributed energy resource aggregators (DERAs) participating directly in the wholesale electricity market. Aimed at ensuring system reliability while providing open access to DERAs, the coordination mechanism includes a forward auction that allocates access limits to aggregators based on aggregators' bids that represent their benefits of aggregation. The proposed coordination mechanism results in decoupled DSO and DERAs operations that satisfy the network constraints, independent of the stochasticity of the renewables, wholesale real-time locational marginal prices, and individual DERA's aggregation policy. Optimal bidding strategies by competitive aggregators are also derived. The efficiency of the coordination mechanism and the locational price distribution at buses of a radial distribution grid are demonstrated for a 141-bus radial network.