Basic schemes for TSO-DSO coordination and ancillary ...smartnet-project.eu/wp-content/uploads/2016/12/D1... · Basic schemes for TSO-DSO coordination and ancillary services provision

SmartTSO-DSOinteractionschemes,marketarchitecturesandICTSolutionsfortheintegrationof

ancillaryservicesfromdemandsidemanagementanddistributedgeneration

BasicschemesforTSO-DSOcoordinationandancillaryservicesprovision

D1.3

Authors:HelenaGerard(VITO/EnergyVille)

EnriqueRivero(VITO/EnergyVille)

DaanSix(VITO/EnergyVille)

DistributionLevel PU

ResponsiblePartner VITO

CheckedbyWPleader[DaanSix]

Date:17/10/2016

VerifiedbytheappointedReviewers[JuliaMerino(Tecnalia),GuillaumeLeclercq(N-Side)]

Date:11/11/2016

ApprovedbyProjectCoordinator[GianluigiMigliavacca(RSE)]

Date:02/12/2016

ThisprojecthasreceivedfundingfromtheEuropeanUnion’sHorizon 2020 research and innovation programme undergrantagreementNo691405

IssueRecord

Planneddeliverydate 30/09/2016

Actualdateofdelivery 02/12/2016

Statusandversion FINAL

Version Date Author(s) Notes

0.1 14/10/2016 Gerard,H.,Rivero,E.,Six,D.

Finaldraftsubmittedforrevision

0.2 28/10/2016 Leclercq,G. Review

0.3 10/11/2016 Merino,J. Review

1.0 02/12/2016 Gerard,H.,Rivero,E.,Six,D.

Finalversion

1.1 19/01/2017 Gerard,H. Finalversion–correctionoftypos/missingreferences

Copyright2016SmartNetD1.3 Page1

AboutSmartNetTheprojectSmartNet(http://smartnet-project.eu)aimsatprovidingarchitecturesforoptimizedinteractionbetweenTSOsand

DSOs in managing the exchange of information for monitoring, acquiring and operating ancillary services (frequency

control,frequencyrestoration,congestionmanagementandvoltageregulation)bothatlocalandnationallevel,takingintoaccount

theEuropeancontext.Localneeds forancillary services indistributionsystemsshouldbeable to co-existwith systemneeds for

balancingandcongestionmanagement.Resources located indistributionsystems, likedemandsidemanagementanddistributed

generation,are supposed toparticipate to theprovisionofancillary servicesboth locallyand for theentirepowersystem in the

contextofcompetitiveancillaryservicesmarkets.

WithinSmartNet,answersaresoughtfortothefollowingquestions:

• Whichancillaryservicescouldbeprovidedfromdistributiongridleveltothewholepowersystem?

• HowshouldthecoordinationbetweenTSOsandDSOsbeorganizedtooptimizetheprocessesofprocurementand

activationofflexibilitybysystemoperators?

• How should the architectures of the real time markets (in particular the markets for frequency restoration and

congestionmanagement)beconsequentlyrevised?

• What information has to be exchanged between system operators and how should the communication (ICT) be

organizedtoguaranteeobservabilityandcontrolofdistributedgeneration,flexibledemandandstoragesystems?

Theobjectiveistodevelopanadhocsimulationplatformabletomodelphysicalnetwork,marketandICTinordertoanalyze

threenational cases (Italy,Denmark, andSpain).DifferentTSO-DSOcoordination schemesare comparedwith reference to three

selectednationalcases(Italian,Danish,andSpanish).

Thesimulationplatformisthenscaleduptoafullreplicalab,wheretheperformanceofrealcontrollerdevicesistested.

Inaddition,threephysicalpilotsaredevelopedforthesamenationalcasestestingspecifictechnologicalsolutionsregarding:

• monitoring of generators in distribution networks while enabling them to participate to frequency and voltage

regulation,

• capabilityofflexibledemandtoprovideancillaryservicesforthesystem(thermalinertiaofindoorswimmingpools,

distributedstorageofbasestationsfortelecommunication).

Partners

http://smartnet-project.eu


TableofContentsAboutSmartNet.......................................................................................................................................................................................1Partners......................................................................................................................................................................................................1ListofAbbreviationsandAcronyms..............................................................................................................................................4ExecutiveSummary...............................................................................................................................................................................61Introduction..........................................................................................................................................................................................9

1.1 Objectivesandreportstructure..........................................................................................................................92Methodologicalapproach.............................................................................................................................................................11

2.1 Selectionofcoordinationschemes.................................................................................................................112.2 Assessmentofcoordinationschemes...........................................................................................................13

3Frameworkfortheprovisionofflexibility-basedservicesbyDER...........................................................................143.1 Europeanregulatorycontext:aliteraturereview...................................................................................153.1.1 NetworkcodesrelatedtoConnection.....................................................................................................163.1.2 NetworkcodesrelatedtoOperation........................................................................................................173.1.3 NetworkcodesrelatedtoMarket..............................................................................................................193.1.4 Conclusion...........................................................................................................................................................20

3.2 Evolutionsonrolesandresponsibilities,systemoperationandflexibilitymarketdesign...213.2.1 Rolesandresponsibilities.............................................................................................................................213.2.2 Systemoperation..............................................................................................................................................223.2.3 Flexibilitymarketdesign..............................................................................................................................23

3.3 Flexibility-basedservices:acountrysurvey..............................................................................................243.3.1 ContractingASfromDERdirectlyconnectedtotheDSO-grid.....................................................243.3.2 TSOcontractingASfromDERdirectlyconnectedtotheDSO-grid............................................253.3.3 DSOcontractinglocalservicesfromDERdirectlyconnectedtoDSO-grid.............................263.3.4 DSOcontractingASonbehalfoftheTSO...............................................................................................273.3.5 InformationexchangerelevanttoASprocurementandactivationfromDER......................273.3.6 Coordinationschemes:approachestowardsanenhancedcooperation.................................29

4Coordinationschemes...................................................................................................................................................................304.1 Overviewofcoordinationschemes................................................................................................................304.1.1 CentralizedASmarketmodel.....................................................................................................................304.1.2 LocalASmarketmodel..................................................................................................................................324.1.3 Sharedbalancingresponsibilitymodel..................................................................................................344.1.4 CommonTSO-DSOASmarketmodel.......................................................................................................364.1.5 Integratedflexibilitymarketmodel.........................................................................................................38

4.2 Coordinationschemesandtheevolutionofsystemoperatorsroles..............................................404.2.1 Overviewofroles..............................................................................................................................................404.2.2 Mappingofrolesandcoordinationschemes........................................................................................414.2.3 Thefuturerolesofsystemoperators:feedbackconsultation......................................................47


4.3 CoordinationschemesandtheconstraintsoftheDistributiongrid................................................484.4 Coordinationschemesandmarketdesign..................................................................................................514.4.1 Scopeofthemarket.........................................................................................................................................514.4.2 Organizationofthemarket..........................................................................................................................514.4.3 Operationofthemarket................................................................................................................................524.4.4 Futuremarketdesign:feedbackfromtheconsultation..................................................................53

4.5 Theorganizationofancillaryservicesunderdifferentcoordinationschemes...........................544.5.1 MappingofcoordinationschemesandAncillaryServices.............................................................554.5.2 Frequencyrestorationandcongestionmanagement.......................................................................564.5.3 Frequencycontrol............................................................................................................................................664.5.4 Voltagecontrol..................................................................................................................................................67

5Assessmentofcoordinationschemes.....................................................................................................................................695.1 Benefitsandattentionpointsofcoordinationschemes........................................................................695.1.1 CentralizedASmarketmodel.....................................................................................................................695.1.2 LocalASmarketmodel..................................................................................................................................715.1.3 Sharedbalancingresponsibilitymodel..................................................................................................735.1.4 CommonTSO-DSOASmarketmodel.......................................................................................................755.1.5 Integratedflexibilitymarketmodel.........................................................................................................775.1.6 Summaryofbenefitsandattentionpointsofdifferentcoordinationschemes.....................80

5.2 Feasibilityofcoordinationschemes.............................................................................................................815.2.1 Regulatoryframework...................................................................................................................................815.2.2 Organizationofdistributionsystemoperators...................................................................................835.2.3 Europeanevolutiontowardsharmonizationandintegration......................................................845.2.4 Feasibilityofcoordinationschemes:feedbackfromtheconsultation.....................................86

6Conclusionsandkeymessages..................................................................................................................................................887References..........................................................................................................................................................................................908Appendices.........................................................................................................................................................................................92

8.1 Appendix1:OverviewDERparticipationtoASmarkets......................................................................928.2 Appendix2:Questionsconsultation..............................................................................................................948.3 Appendix3:Overviewrespondentsconsultation....................................................................................96


ListofAbbreviationsandAcronymsAcronym Meaning

ACER AgencyfortheCooperationofEnergyRegulators

aFRR AutomaticFrequencyRestorationReserves

AS AncillaryServices

BRP BalanceResponsibleParty

CACM CapacityAllocationandCongestionManagement

CEER CouncilofEuropeanEnergyRegulators

CMP CommercialMarketParty

DCC DemandConnectionCode

DER DistributedEnergyResources

DG DistributedGeneration

DM DataManager

DRES DistributedRenewableEnergySources

DSM DemandSideManagement

DSO DistributionSystemOperator

Dx Distributiongrid

EB ElectricityBalancing

EEGI EuropeanElectricityGridInitiative

ENTSO-E EuropeanNetworkofTransmissionSystemOperatorsforElectricity

ER EmergencyandRestoration

EU EuropeanUnion

FCA ForwardCapacityAllocation

FCR FrequencyContainmentReserves

FD FlexibilityDispatcher

FFC FlexibilityFeasibilityChecker

FRR FrequencyRestorationReserves

GBR GridBalanceResponsible

HV HighVoltage

HVDC HighVoltageDirectCurrent

ISGAN InternationalSmartGridActionNetwork

IEM InternalElectricityMarket

IMO IndependentMarketOperator

mFRR ManualFrequencyRestorationReserves

NC NetworkCode

NRA NationalRegulatoryAuthority

MDR MeteredDataResponsible

MO MarketOperator

MS MemberState


MV MediumVoltage

RA ReserveAllocator

R&D ResearchandDevelopment

RfG Requirementsforgenerators

RR ReplacementReserves

SBR SystemBalanceResponsible

SGU SignificantGridUser

SO SystemOperator/SystemOperation

SoS SecurityofSupply

TSO TransmissionSystemOperator

Tx Transmissiongrid

UC UseCase


ExecutiveSummaryThe energy market is undergoing important changes, driven by the realization of the European

internalenergymarketontheonehandandthe increaseofdistributedenergyresources(DER)onthe

otherhand.ThesignificantamountofDER,mainlyconnectedatthedistributiongrid,resultsinahigher

needforflexibilityservicesforsystemoperators(TSOsandDSOs)andothercommercialmarketparties

(i.e.balanceresponsibleparties(BRPs)).Flexibilityisneededincaseoflargedeviationsine.g.windand

solarproduction,ordemand.Inthesesituations,flexibilitycouldbeused,inordertocontrolandrestore

thefrequencyandthevoltageofthegrid,tobalancetheindividualportfoliosortomanagecongestion.

TheincreaseofDERconnectedatthedistributiongridprovidesanadditionalopportunityforsystem

operators touse theseresources forservicessuchas frequencycontrol,voltagecontrolandcongestion

management,bothatthedistributionandtransmissiongrid.

Today, resources from thedistribution grid are starting to participate to theTSOancillary services

(AS)markets.However,theparticipationisstilllimitedandthereisawidevarietyinproductsandrules

across countries. DSOsuse rarely flexible resources to solve localnetworkproblems. In case theTSO

usesresourcesfromthedistributiongrid,thisserviceismainlyorganizedwithoutanyinvolvementofthe

DSO, which could potentially lead to problems in case of increasing volumes. The need for increased

cooperation between system operators is recognized by several stakeholders and the EU regulation

(NetworkCodes(NCs))providesafirstbasicframeworktodevelopfurthercollaborationstructures.

Five coordination schemesareproposed thatpresentdifferentwaysof organizing the coordination

betweensystemoperators.Eachcoordinationschemeischaracterizedbyaspecificsetofroles,takenup

by systemoperators, andadetailedmarketdesign.Thedifferencesbetween the coordination schemes

havemainly an impact on theprocurementphase of theAS or local system services. Theprocesses of

prequalification, activation and settlement of flexible resources are rather similar across coordination

schemes due to the fact that the roles responsible for these activities are undoubtedly assigned to a

specificmarketparty.

In the Centralized AS market model, the TSO operates a market for both resources connected at

transmission and distribution level,without extensive involvement of theDSO. In theLocalASmarket

model,theDSOorganizesa localmarket forresourcesconnectedattheDSO-gridand,aftersolvedlocal

grid constraints, aggregates and offers the remaining bids to the TSO. In the Shared balancing

responsibility model, balancing responsibilities are divided between TSO and DSO according to a

predefinedschedule.TheDSOorganizesalocalmarkettorespectthescheduleagreedwiththeTSOwhile

theTSOhasnoaccesstoresourcesconnectedatthedistributiongrid.IntheCommonTSO-DSOASmarket

model, the TSO and the DSO have a common objective to decrease costs to satisfy both the need for

resourcesbytheTSOandtheDSO.Thiscommonobjectivecouldberealizedbythe jointoperationofa

commonmarket(centralizedvariant)orthedynamicintegrationofalocalmarket,operatedbytheDSO,


and a centralmarket, operated by the TSO (decentralized variant). In the Integrated flexibilitymarket

model, the market is open for both regulated (TSOs, DSOs) and non-regulated market parties (BRPs,

CMPs),whichrequirestheintroductionofanindependentmarketoperatortoguaranteeneutrality.

ThedifferentcoordinationschemesallhavespecificbenefitsandattentionpointsrelatedtotheTSO

gridoperation,theDSOgridoperation,othermarketparticipants involvedandthemarketoperationin

general. The table below summarizes the main benefits and attention points for each scheme for the

differentstakeholders.

CoordinationScheme Benefits Attentionpoints

CentralizedASmarket

model

§ EfficientschemeincaseonlytheTSOisabuyerfortheservice

§ Asinglemarketislowinoperationalcostsandsupportsstandardizedprocesses

§ Mostinlinewithcurrentregulatoryframework

§ NorealinvolvementofDSO§ DSOgridconstraintsnot

alwaysrespected

LocalASmarketmodel

§ DSOhasprioritytouselocalflexibility

§ DSOsupportsactivelyASprocurement

§ LocalmarketsmightcreatelowerentrybarriersforsmallscaledDER

§ TSOandDSOmarketclearedsequentially

§ Localmarketsmightberatherilliquid

§ NeedforextensivecommunicationbetweentheTSOmarketandthelocalDSOmarkets

Sharedbalancing

responsibilitymodel

§ TheTSOwillneedtoprocurealoweramountofAS

§ LocalmarketsmightcreatelowerentrybarriersforsmallscaledDER

§ ClearboundariesbetweensystemoperationTSOandDSO

§ TotalamountofAStobeprocuredbyTSOandDSOwillbehigherinthisscheme

§ BRPsmightfacehighercostsforbalancing

§ SmalllocalmarketsmightbenotliquidenoughtoprovidesufficientresourcesfortheDSO

§ Definingapre-definedschedulemethodologyagreedbybothTSO/DSOmightbechallenging

CommonTSO-DSOAS

marketmodel

§ TotalsystemcostsofASfortheTSOandlocalservicesfortheDSOareminimized

§ TSOandDSOcollaborateclosely,makingoptimaluseoftheavailableflexibleresources

§ IndividualcostofTSOandDSOmightbehighercomparedtootherschemes

§ AllocationofcostsbetweenTSOandDSOcouldbedifficult

Integratedflexibility§ Increasedpossibilitiesfor

BRPstosolveimbalancesintheirportfolio

§ Independentmarketoperatorneededtooperatethemarketplatform


marketmodel § Highliquidityandcompetitivepricesduetolargenumberofbuyersandsellers

§ Negativeimpactonthedevelopmentandliquidityofintradaymarkets

§ TSOandDSOneedtosharedatawithIMO

Inaddition, the feasibilityof the implementationofeachcoordinationscheme isverydependenton

the regulatory framework. Today, the Centralized AS market model is most in line with current

regulations. The other coordination schemes require each extensive changeswith respect to roles and

responsibilitiesofTSOandDSO.Theimplementationofacoordinationschemeisalsoinfluencedbythe

nationalorganizationofTSOsandDSOs,i.e.theamountofsystemoperatorsandthewaytheycurrently

interact. In addition, the installation of certain coordination schemes will have an impact on other

marketssuchastheintradaymarkets.DependentontheservicesofferedintheASmarket,comparedto

the intradaymarkets, thesemarkets might be able to co-exist or alternatively, need to be integrated.


1 IntroductionThe growing share of distributed energy resources (DER) in the distribution grid provides

opportunitiestousetheseresourcesfortheprovisionofservicesnotlimitedtothedistributiongrid,but

fortheoverallbenefitoftheentirepowersystem.Procurementofflexibility-basedservices(e.g.ancillary

services for theTSOor localsystemservices for theDSO),deliveredbyresourcesdirectlyconnectedat

distributiongrid level, requiresoptimal coordinationbetween the transmission systemoperator (TSO)

andthedistributionsystemoperator(DSO).Withinthisreport,differentmodalitiesforthecoordination

betweenTSOsandDSOsareexamined.

1.1 Objectivesandreportstructure

Thepresentdeliverablehasthefollowingobjectives:

- Propose a representative set of basic TSO-DSO coordination schemes for the provision of

flexibility-basedservicesforsystemoperators(e.g.ancillaryservices(AS)fortheTSOandlocal

system services for the DSO) by resources (i.e. distributed generation (DG), demand side

management(DSM)andstorage)directlyconnectedtothedistributiongrid;

- Illustratetheframeworkforeachcoordinationschemefocusingon(1)theenvisionedsetofroles

andresponsibilities, (2)potentialmarketarchitecturesand(3)relevant informationexchanges

byapplyingthecoordinationschemesonaselectionofusecases(UCs).

- Compare the different coordination schemes and assess the benefits, attention points and

feasibilityofeachcoordinationscheme.

Detailsonthecoordinationschemes,discussedwithinthisdeliverable,serveasinputforthedesignof

adaptedmarketsandthedefinitionofICTrequirements.

Outcomesfromthepresentdeliverablearealsousedfordevelopingnationalcases,setting-uppilots

anddescribingpotentialimplicationsrelatedtotheimplementationofTSO-DSOcoordinationschemes.

Thedocumentisstructuredaccordingtothefollowingchapters:

- Chapter1presentsanintroductiontothescope,objectivesandstructureofthisreport.

- Chapter 2 describes the methodology used for the selection and assessment of the TSO-DSO

coordinationschemes.

- Chapter3providestheresultsofbothaliteraturereviewandacountrysurvey,relatedtocurrent

practicesandexpectedevolutionsonTSO-DSOcoordination.


- Chapter 4 introduces a selection of coordination schemes: general principle, roles,

responsibilitiesandmarketarchitecture.Asetofusecasesisexaminedinthecontextofdifferent


- Chapter5analysesandcomparesdifferentcoordinationschemes.Themainbenefitsandrisksof

eachofthecoordinationschemesarehighlightedandthefeasibilityofeachofthecoordination

schemesisdiscussed.

- Chapter6givesanoverviewofthemainconclusionsandkeymessages.

ReferencesandappendicesarepresentedinChapter7andChapter8.


2 MethodologicalapproachThefollowingchapterdescribesthemethodologyusedtodefinethedifferentcoordinationschemes.

In addition, a selection of use cases is presented that will be analyzed for the different coordination

schemes.

2.1 Selectionofcoordinationschemes

The selection of relevant coordination schemes is based on a literature review, a country survey, a

theoretical analysis andapublic consultation.Theprocess and the relationshipbetween these sources

areshowninFigure1.

Figure1Methodology

Theliteraturereviewexaminesexistingneedsandrecommendationsonthefutureneedsofcooperation

betweenTSOsandDSOs.Severaldistinctsourcesareusedasinput:

- Regulatoryreferencedocuments,i.e.Europeanandnationalnetworkcodes1,Europeandirectives

relatedtoenergypolicy2,…;

- Positionpapersfromvariouspowersystemstakeholders,e.g.ACER,CEER,EDSOforSmartGrids,

ENTSO-e,Eurelectric,SmartGridTaskForce;

1EUnetworkcodescanbefoundinENTSO-Enetworkcodes.NationalnetworkcodesmaybefoundinthewebsiteoftherespectiveTSO.

2e.g.theEnergyEfficiencyDirective[1]


- Outcomes (results and recommendations) of projects at European and national level. Only

projectsthatshowedadirectlinkwiththesubjectofstudy,i.e.TSO-DSOcoordinationschemes,

wereanalyzed.SourcestotheseprojectswereprovidedbySmartNetpartners.3

The country survey has collected information via a questionnaire from a selection of countries,

represented in theSmartNet consortium:Austria,Belgium,Denmark,Finland, Italy,NorwayandSpain.

Thequestionnaireisstructuredintwodifferentiatedsections:

a. The first section isdedicated to themappingof existingTSO-DSO interaction schemes

with respect to procurement and activation of distributed energy resources (DER),

including storage, distributed generation (DG) and demand response (DR), directly

connectedtothedistributiongrid.

- Thesecondsectionassessespossiblealternativecoordinationschemesandinnovativeconcepts

forfutureTSO-DSOcooperation.

Inaddition to the literaturereviewand thecountrysurvey,a criticalassessmenthasbeenmadeabout

potentialadditionalalternativeTSO-DSOcoordinationschemes,baseduponexistingrolemodelsforTSOs

andDSOs on the one hand and existing concepts ofmarket design on the other hand (e.g. centralized

versusdecentralized).TherolemodelsconsideredaretheTSOrolemodelasproposedby[10]andthe

DSOrolemodelasdevelopedintheFP7projectEvolvDSO[11].

A consultationwasorganized related topossible coordination schemesbetweenTSOsandDSOs in the

context of ancillary services provision. The consultation asked specific questions related to the role of

system operators, the appropriate market design, the relevant use cases and the feasibility of the

coordination schemes. Respondents could provide answers via the project website or by email for a

period of 2 months. Nineteen answers were received in total. Eighteen answers were considered

completeandthefeedbackisintegratedinthereport.Inappendix8.2,thequestionsoftheconsultation

arepresented.Inappendix8.3,anoverviewisgivenofthedifferentrespondentstotheconsultation.

3CITIES[2],FlexPower[3],IEA-ISGAN[4],evolvDSO[5],CHPCOM[6],SGEM[7],FENIX[8],ADDRESS[9].


2.2 Assessmentofcoordinationschemes

The different coordination schemes are examined in terms of benefits and risks. The analysis

comprisestwosteps:

1. Selection anddescriptionof relevant services (use cases4) that highlight themaindifferences

betweencoordinationschemes.

The selection and description of use cases is done in cooperation with consortium members

involvedinthedefinitionofflexibility-basedservicesforsystemoperatorsforfutureEuropeanpower

systems [12]. Current and future flexibility-based services were listed. Only the services that are

expected to be mature by 2030 and procured via a market-based environment were selected for

further analysis. For each service selected, use cases are defined that describe the information

exchangebetweenmarketpartiesfortheprequalification,procurement,activationandsettlementofa

specificservice,accordingtotheSGAMframework[13].Usecasesarefurtherusedinthedefinitionof

theICTrequirements.

2. Analysis of internal and external aspects of coordination schemes, taking into account the

differentphasesofprocurementandactivationofflexibility-basedservices.

TheanalysisfocusesfirstontheimpactofaspecificcoordinationschemeonTSOgridoperation,DSO

gridoperation,theroleofothermarketparticipantsandtherelatedmarketdesign(internalaspect). In

addition,therelationsbetweenthecoordinationschemesandthenationalregulatoryframeworkandthe

Europeanevolutionareassessed(externalaspect).

4Within SmartNet, a use case is defined as the provision of a service, within the framework of acertaincoordinationscheme,fromoneactortoanotheractor.


3 Frameworkfortheprovisionofflexibility-basedservicesby

DERIn order to describe the context for the provision of flexibility-based services by DER directly

connectedtothedistributiongrid,twomainsourceswereused:aliteraturereviewandacountrysurvey.

TheliteraturereviewprovidesanoverviewofthecurrentstatusofregulatorymeasuresatEuropean

level. The overview is complemented with a description of stakeholders’ positions concerning

cooperationbetweensystemoperatorsand theneed tomake flexibility-basedservicesavailableacross

theentirepowersystem.

The objective of the literature review is to create an overview of the current status of TSO-DSO

interactions and outline their future needs, taking into account current regulatory boundaries. The

literature review, as mentioned in chapter 2, is intended to function as a basis and reference for the

creationofcoordinationschemes.Theseschemesarethenfurtherdiscussedinchapter4.

Thestudyconcentratesonspecificactions,documentsandpublicstatements fromkeystakeholders

involved in the discussion around TSO-DSO cooperation. Relevant conclusions from Research and

Development(R&D)projectsandnationalprocessesfollowthesummaryofstakeholders’positions.This

is done in order to provide an overall view of the current perspectives around flexibility use and

coordinationamongsystemoperators.

Thestakeholdersconsideredwithinthisanalysisarelistedbelow:

- Regulators

- NationalRegulatoryAgencies(NRAs);

- AgencyfortheCooperationofEnergyRegulators(ACER);

- CouncilofEuropeanEnergyRegulators (CEER)

- Systemoperatorsassociations

- EuropeanNetworkofTransmissionSystemOperators(ENTSO-E);

- EuropeanassociationsrepresentingDSOs:EDSOforSmartGrids,Eurelectric,GEODEand

CEDEC;

- Other

- EuropeanGridElectricityGridInitiative(EEGI);

- InternationalSmartGridActionNetwork(ISGAN);

- ConsortiaofEuropeanprojects.

Sections 3.1 and 3.2 discuss more in detail the European regulatory context and the positions of

differentstakeholders,inrelationtothecoordinationbetweenTSOsandDSOs.


The country survey illustrates current practices concerning the services provided by DER services

within seven European countries. The country survey is further complemented with insights on

innovative concepts with potential application to coordination schemes for system operators. The

countrysurveyispresentedinsection3.3.

3.1 Europeanregulatorycontext:aliteraturereview

TheneedforincreasedcooperationbetweenTSOsandDSOsiswidelyrecognizedbyregulators.DSOs

andTSOs should significantly increase engagementwith one another todeliver thebestwhole system

outcome for customers [14]. In previous years, progress has been made to create an appropriate

framework for further cooperation between TSOs and DSOs. Proof of this are the adaptions made to

currentnetworkcodes.

Network codes are developed at European level. NCs provide rules for awide variety of areas, e.g.

networksecurity,reliabilityandconnection,third-partyaccess,dataexchangeandsettlement,emergency

procedures,balancingincludingnetwork-relatedreserves,etc.Theserulesaddressissuesrelatedtothe

proper functioning of the internal electricity market (IEM). To this end, system security should be

guaranteed, transparency should be enforced and optimal grid operation should be kept taking into

accounthighestoverallefficiencyandlowesttotalcostforallinvolvedparties[15].

TSO-DSO cooperation is not explicitly addressed in the NCs. However, several topics discussed in

thesecodesimpactdirectlyorindirectlyhowsystemoperatorscooperate.Table1providesanoverview

of the network codes highlighting their relevancywith respect to TSO-DSO cooperation. NCs that still

havetopassthevalidationprocessmaysuffersomeadaptations.Anup-to-datestatusoftheNCscanbe

found in [16].Theprovisionsdetermined in theNCsarenotexhaustiveandshouldbeconsideredasa

basisonwhichfuturecooperationbetweenTSOsandDSOsshouldbebuilt[14].

Category NetworkCode/Guideline StatusRelevanttoTSO-DSOcoordination

discussion

Connection

Requirementsfor

Generators(RfG)Intoforce(5/2016) Yes

DemandConnection(DCC) Intoforce(8/2016) Yes

HighVoltageDirectCurrent

(HVDC)Intoforce(8/2016) Limited


Operation

SystemOperation(SO)5

ValidatedbyEUMS.

Awaitingvalidationby

EuropeanCommission

Yes

EmergencyandRestoration

(ER)

AwaitingvalidationbyEU

MSYes

Market

CapacityAllocationand

CongestionManagement

(CACM)

Intoforce(8/2015) No

ElectricityBalancing(EB)AwaitingvalidationbyEU

MSYes

ForwardCapacity

Allocation(FCA)

ValidatedbyEUMS.

Awaitingvalidationby

EuropeanCommission

No

Table1NetworkCodesstatusandrelevancytowardsTSO-DSOcoordination

TheabovelistedNCsaregroupedin3categories:Connection,OperationalandMarketcodes.

3.1.1 NetworkcodesrelatedtoConnection

The codes included in the Connection category are Requirements for Generators (RfG), Demand

Connection (DCC) and High Voltage Direct Current (HVDC). In general, these NCs count on system

operators todefinerequirementsandtoassessthepotential impactaconnectionofaspecificresource

mayhaveontheirsystem.Theseactionsareexpectedtobecarriedoutincoordinationbetweensystem

operators.

- RfGsetsouttherulesthatnewgeneratorsmustadheretoconnectatthedesiredvoltagelevel.6

Oneofitsaimsistoincreasetheintegrationofrenewableelectricityproductionunits[17];

- DCC focuses on how demand facilities, connected directly or indirectly through a distribution

system,interactwiththetransmissionsystem.Italsoclarifiestheroleofdemandresponseinan

5 The System Operation guideline integrates the network codes for Operational Planning andScheduling(OPS),OperationalSecurity(OS)andLoadFrequencyControlandReserve(LFCR).

6Transmissionordistribution.


energy system with an increased proportion of energy from renewable energy sources. DCC

applies to transmission-connected demand facilities, transmission-connected distribution

facilities,distributionsystemsanddemandunitsusedtoprovidedemandresponseservices,both

existingandnew[18];

- HVDCdoesnotdirectly tackleTSO-DSOcooperation.Asdescribed in [19], thecode“laysdown

the requirements for grid connections of high-voltage direct current (HVDC) systems andDC-

connected power park modules.” However, it does state that DSOs impacted by the grid

connectionshouldbeconsultedandtakeintoaccountanypotentialimpactontheirsystem.

In summary, coordination between system operators (TSOs and DSOs) is needed to make sure

requirements,forgeneratorsandload,connectedatdifferentvoltagelevels,arerespectedandaligned.

3.1.2 NetworkcodesrelatedtoOperation

The category of Operational codes includes a guideline on System Operation (SO) and a code for

Emergency and Restoration (ER). These NCs are highly relevant to the current discussion since theydefineguidelinesconcerningrulesandresponsibilitiesforcoordinationanddataexchangeamongsystemoperators.

- SOdefinesprinciplesrelatedtooperationalsecurity(e.g.gridmonitoring,outagecoordination),

sketchestheprequalificationprocess7andprovidesinsightsconcerningminimuminformationto

bedeliveredbyreserveprovidingunits(e.g.voltagelevel,connectionpoint,typeofactivepower

reserve, maximum reserve capacity,… ). This guideline aggregates guidelines on Operational

Security (OS), Operational Planning and Scheduling (OPS) and Load Frequency Control and

Reserve(LFCR)[20]:

- The guideline on Operational Security sets requirements and principles for the

transmission system applicable to all TSOs, DSOs and significant grid users (SGU)8in

7Prequalification is defined in the NC LFCR as the process to verify the compliance of a ReserveProvidingUnitoraReserveProvidingGroupofkindFCR,FRRorRRwith the requirements setby theTSOaccordingtoprinciplesstipulatedinthiscode.

8Significant Grid Usermeans the existing and new Power Generating Facility and Demand Facilitydeemed by the Transmission System Operator (TSO) as significant because of their impact on theTransmissionSystemintermsofthesecurityofsupplyincludingprovisionofAncillaryServices(sourceofthedefinition:thedraftNetworkCodeonOperationalSecurity).ENTSO-ESupportingDocumentfortheNetwork Code on Operational Security of24 September 2013 2nd Edition Final (p. 154) explains,


normalandalertsystemstate.Notethattherequirementsforfrequencycontrol,voltage

control and reactive powermanagement take into account the scenario where a TSO

mightprovideinstructionstoarelevantDSO.Anothersubjectrelevanttohighlightisthe

emphasistowardsdataexchange.TSOsandDSOsshallcooperateinordertodefineand

agree on effective processes for providing and managing relevant data exchanges

between them. Hence, a structural and real-time data exchange between system

operators(andSGU)isencouraged.

- The guideline on Operational Planning and Scheduling determines minimum

requirementstoensurecoherentandcoordinatedoperationalplanningprocessesonthe

synchronousareasapplicable toall relevantstakeholders(SGUs,TSOsandDSOs).This

NC details the process of operational security analysis of the TSO in D-1 and close to

real-time(togetherwithsolutionsfortheaffectedTSOandDSOareas),outageplanning

andmonitoringofreactivepowercapacitiesbytheDSOs.

- The guideline on Load Frequency Control and Reserve promotes a closer cooperation

acrossTSOsinEurope,supportingfurtherpenetrationofRES.Itdefinestheconceptofa

Reserve Providing Unit as “a single or an aggregation of Power Generation Modules

and/or Demand Unit connected to a common Connection Point fulfilling the

requirementsofFCR,FRRorRR.”9Theguidelineprovides indications thataggregation

should also be allowed acrossDSO areas. Therefore, it indicates the need for DSOs to

collaboratewitheachother incase theyactasaggregatororhaveaggregatorspresent

that can aggregate units across all DSO areas within a TSO control area. It is also

stipulatedthateachDSOshallhavetherighttosettemporarylimitsatanypointintime

before reserve activation happens. The imposition of limits should be done in a non-

discriminatoryandtransparentwaytoallreserveprovidingunits.Alltheseprocedures

requireagreementbetweensystemoperators.

moreoverthatSignificantGridUsersare thoseGridUserswhose influenceontheTransmissionSystemneedstobetakenintoaccountforOperationalSecurity.

9Frequency Containment Reserves (FCR), Frequency Restoration Reserves (FRR) and RestorationReserves(RR).


- ERsetstherequirementsfortechnicalandorganizationalmeasurestobeundertakenincaseof

anincident,topreventitspropagationandtorestorethesituationinordertoavoidanextended

disturbance and blackout state. These procedures contain amongst others the design and

activationofasystemdefenseplan,aswellasdisconnectionandrestorationmeasures.Different

plansandproceduresareactivatedinclosecooperationwiththeDSOs.Inaddition,highpriority

is given to information exchange between system operators in emergency, blackout or

restoration states. For instance, TSOs shall collect information on measures (restoration and

emergencyactions10)implementedbyDSOssotheycanbeincludedinthedesignofthesystem

defenseandrestorationplans.Inaddition,islandingoperationcapabilitiesandstatusshouldbe

communicatedbyrelevantDSOstotheTSO[21].

The NCs related to operation emphasize the need of cooperation among system operators. An

enhancedcooperationisbasedonsharingrelevantinformationfrequentlyenoughtoprovideanaccurate

illustrationofsystemdynamics.Knowledgeonavailableresourcessuchaslocation,maximumoutputand

rampingrateallowforabetteroperationalscenarioplanning.Theexchangeofdatamayhelptoenhance

gridobservabilityandinturnsupportthecreationofanaccurateanddynamicpictureofthestateofthe

system.However,systemoperators(TSOandDSOswithinacontrolarea)mustagreeontheformat,type,

aggregationlevel,frequencyandrelevancyofthedatatobeexchanged.

3.1.3 NetworkcodesrelatedtoMarket

The Market category includes Capacity Allocation and Congestion Management (CACM), Forward

CapacityAllocation(FCA)andElectricityBalancing(EB).CACMandFCAarenotrelevanttothisanalysis

and will not be further discussed. The NC on EB aims to move Europe towards a competitive and

integratedEuropeanbalancingmarket [22].Thecode laysdowncommonrules forbalancing including

reservesprocurement, activationandsettlement.11Inparticular, itdetermines thatTSOsareobliged to

participateinacoordinatedbalancingareabyi.e.cross-bordernettingorexchangeofbalancingservices

(FRR and RR). Principles for market design are also mentioned (e.g. marginal pricing). Note that the

designofsuchabalancingmarketmayimpactDSOs,especiallywhenbalancingservicesaresourcedby

DERdirectlyconnectedtotheDSOgrid.Inconclusion,thecodeencouragescooperationamongrelevant

stakeholders(i.e.TSO,DSO,balancingserviceprovidersandBRPs).Cooperationisspurredbytherequest

10ThedefinitionofemergencysituationsandproceduresdealingwithsucheventsareoutofthescopeoftheSmartnetproject[21].

11ProcurementandsettlementforFCR,FRRandRR.ActivationforFRRandRR.


forthecreationofamethodologyfora fairallocationofcostsresultingfromtheprovisionofbalancing

servicesfromtheDSOgrid.Inaddition,thecodesupports informationexchangebetweenDSOandTSO

withrespecttotheimbalancesettlement.

3.1.4 Conclusion

In conclusion, the implementation and future updates of all NCs are important for TSO-DSO

collaboration. It isexpectedthatoperationalagreementsbetweensystemoperatorswillbebasedupon

theframeworkdeterminedintheNCs.Asseen,NCsaddressseveralimportanttopicssuchas:

- Assessmentofconnectionrequirementsforgenerationandload;

- Exchange of data for grid operation and network planning (observability and control

arrangements);

- Emergencyprocedures;

- MarketdesignforthetradeofbalancingservicesalsosourcedbyDERunitsdirectlyconnectedto

theDSOgrid;

- Possibility for DSOs to impose limits to the activation of balancing services coming from the

distributiongrid;

However,thesetopicswillneedtobefurtherdetailed,takingalsointoaccountthefollowingaspects:

- Countrycharacteristicssuchasnationalregulation(currentandexpectedevolution),stateofthe

grid,structureofTSOsandDSOs,...

- Details of data exchange. This needs to be determined jointly by TSOs and DSOs. Relevant

elementsarethecontentoftheinformation,theownershipoftheinformation,thefrequencyof

exchange,theconfidentiality,theICTrequirements,.…

- Ongoingmarketdevelopmentswillhaveanimpactonfutureupdatesofregulation.Forexample,

it should bemonitored towhat extent the development of localmarkets for ancillary services

products iscompatiblewiththerequirementsdeterminedforancillaryservicesandmarkets in

theNCs.

- In future revisions of the NCs, the aspect of collaboration and joint responsibilities between

systemoperatorswillneedtobefurtherclarified.

Inadditiontothetopicslistedabove,ENTSO-EalsoasksforajointmandatewithDSOstodevelopan

arenaformoreformalizedcooperationbetweenTSOsandDSOs.Thisincludesrelevantareassuchasnew

legislation for distributed flexibility (i.e. demand side response, dynamic pricing, distribution grid

management,dataexchange,…)[23].


AsseenfromthesummaryoftheNCs,thediscussionisnotfocusedontheneedforcoordinationbut

ratheronhow toorganize such cooperation.Thepresentdeliverable attempts toprovide insights that

could be used for this purpose. Chapter 3.3 illustrates the current environment concerning flexibility-

basedservicesacrossseven(7)EUcountries.Chapter4introducesfiveTSO-DSOcoordinationschemes.

3.2 Evolutionsonrolesandresponsibilities,systemoperationandflexibilitymarketdesign

Several stakeholders have issued position papers addressing changes to bemade to the regulatory

framework with respect to roles and responsibilities, system operation and flexibility market design in

order to enhance the cooperation between TSOs and DSOs [11], [14], [23]–[27]. The key elements are

furtherdiscussedinsection3.2.1,3.2.2and3.2.3.

3.2.1 Rolesandresponsibilities

As gridmanagers, bothTSOs andDSOs are responsible for the secureoperationof their respective

networks,which involvesmanagingcongestionandvoltageon theirgrids [26].However, ina situation

withincreasingamountofDER,connectedatthedistributiongrid,currentrolesofsystemoperatorsare

subject to evolution. In particular for the DSO, current roles might be extended and new roles could

emerge. Concerning grid operation, DSOs could play an important role as active system managers,

technological enablers, datamanagers and innovators [28]. In addition, DSOs could be involved in the

developmentoflocalmarketsasbothneutralmarketfacilitator,marketofficerandcontributortosystem

security[11],[26].Asneutralmarketfacilitator,DSOssupporttheparticipationofresourcesconnectedto

thedistributiongridtotheflexibilitymarket.TheDSOascontributortosystemsecuritywillsupportthe

TSObyprovidinglocalsolutionsforsystem-wideproblems.Intheroleofmarketofficer,theDSOisable

to contract flexibility resources both in long and short term for local purposes (e.g. congestion

management). Currently, DSOs are not allowed to contract and/or use flexibility-based services as an

alternativetodelayoravoidnetworkreinforcementstocopewiththeincreasingintermittentgeneration

[11],[26],[29].

Similar to the rules defined for TSOs, DSOs cannot be on both sides of themarket as bothmarket

facilitatorandserviceprovider.Iftheyaredemandingorbuyingasystemservice,DSOsandTSOsshould

notbeactiveascommercialserviceproviders[25],[26].

Notonlytherolesofsystemoperatorsaresubjecttoevolution,alsotherolesandresponsibilitiesof

othermarketpartiesareimpactedbyrecentmarketdevelopments.Inparticular,theroleofthirdparties,

responsibleforaggregationofsmallflexibilities,isunderdiscussion.Inanumberofcountries,thirdparty

aggregators offer customers the opportunity to engage in demand response. An example of ongoing


debate is the discussion related to standardized contractual frameworks that could define the key

operational arrangements between third party aggregators and the customer’s BRP/supplier, e.g.

defining balance responsibility, adequate data exchange, financial compensation measures and robust

methodologiestoestimatedemandresponsevolumes[28].Inaddition,thetransparencyoftherulesfor

participationtotheflexibilitymarketisimportant[23].

Policymakerswillneedtoacknowledgethestrongelementofsubsidiarity12intheevolutionofroles

andresponsibilitiesforTSOsandDSOs[25].Duetothelargeheterogeneityinrolesandresponsibilitiesof

system operators, there is no one-fits-all solution which could be applicable for every country or

balancingarea.

3.2.2 Systemoperation

Cooperation between system operators supports optimal system planning and operation. In

particular, this calls for intensification of relevant data and information exchanges between system

operators.Aclearandconsistentregulatory frameworkshouldbedesignedbyMemberStates(MS) for

data management and fulfillment of the following standard criteria: (i) transparency and a clear

definitionoftheaccessrights,(ii)cost-efficiency,(iii)highstandardsofdataprivacy,(iv)andahighlevel

ofreliability[25].

Inthedifferentstagesofsystemoperation(planning,short-termoperationandemergency),theneed

for more and better data sharing is mainly related to the information exchange on the respective

‘observability’ area of the DSO and the TSO. The idea is that all system operators should share an

overviewofthesituationoftheirsysteminanaggregatedway[24].Buildingacommonunderstandingof

thestatusofeachother’snetworkwillbeakey facilitator tobettermanaging thegrowing interactions

betweennetworksunderdifferentsystemoperatorsandacrossalltimeframes(includingrealtime)[14].

TSOsshouldworkwithDSOsandregulatorsindeterminingrequirementsaroundobservability[25].

Inaddition,thegranularityandtransparencyofdata,expectedbypolicymakers,isincreasing,explaining

whydatagatheringanddatasharingrequiresimprovement[26].Demandresponsewillbefacilitatedand

supportedifnetworkavailabilityisknownatanymomentintime[28].

TheuseofflexibilityresourcesbyTSOandDSOrequiresahighlevelofcoordination.Whendecisions

aremadeontheTSOside,theimpactofthesedecisionsontheDSOside(andviceversa)needtobetaken

intoconsideration[26].Inaddition, it is importantthatTSOs,DSOsandaggregatorsselectmutuallythe

12Moreinformationontheprincipleofsubsidiaritycanbefoundin[30].


bestsolutionsforsolvinglocalconstraints,i.e.voltageorcongestionproblems[26].Inaddition,agreater

informationsharingbetweenTSOsandDSOscouldsupportsystemoperatorstoidentifywhereoneparty

canandshouldtakeactiontosupporttheneedsoftheotherandthesystemasawhole[14].

3.2.3 Flexibilitymarketdesign

TSOs and DSOs need to provide consumers with access to all markets. All resources (generation,

storage and demand) connected to transmission or distribution grids should be able to participate in

energymarketsandofferservicestothesystem.Thiswillrequireappropriatemarketframeworks(e.g.

rules forconflict resolution)supportedandenforcedbyTSOsandDSOs [25].Regulatoryarrangements

need to create the right signals and the framework toallow the competitivemarket toaddress system

needsandminimizetheeffortsneededbytheDSOandTSOoverall[14].

Flexibility resources canmatch different needs and could potentially create conflicts dependent on

whousestheflexibilityandforwhichpurpose[26].Resourcesshouldbeallocatedbasedontechnicaland

economicoptimization,i.e.flexibilityshouldbeusedwhereitspotentialisthehighest[25],[26].Creating

exclusive,fragmentedmarketsperDSOandperTSOwilljeopardizethisabilityforresourcestomaximize

their economic potential [25]. An adequate regulatory framework providesways to allocate flexibility

resourcesinasmartwaysothatasocialoptimumcouldbereached[11].

Inthefuture,currentbalancingmarketsareexpectedtoevolvefurther.Suchevolutionshouldenable

(i) trading of services that allowmarket players to balance their positions at all times; (ii)markets to

includeoperationalgridconstraints(bothattransmissionanddistribution)undershorterleadtimes;(iii)

flexibilityprocurementwithoutjeopardizinggridoperationorcreatingextracosts[25].Inaddition,more

sophisticated products and services should be integrated, implementing timeframes that better fit the

flexibilityrequirementsfromsystemoperators[28].


3.3 Flexibility-basedservices:acountrysurvey

AquestionnaireonTSO-DSOcooperationwascompletedforthefollowingcountries:Austria,Belgium,

Denmark,Finland,Italy,NorwayandSpain.Themainresultsarepresentedinthischapter.

3.3.1 ContractingASfromDERdirectlyconnectedtotheDSO-grid

Ancillary services are used at transmission system level to balance the system andmanage energy

fluctuations. At distribution system level, services with similar characteristics may be used for the

management of local system challenges. At TSO level, these services may be classified into frequency

control,voltagecontrolandotherancillaryservices.Insomecases,regulationandtechnologyallowgrid

units(loadorgenerationresources),connecteddirectlytothedistributiongrid,toprovidee.g.balancing

servicestotheTSO.ThesameunitsmayalsoprovidelocalsystemservicestotheDSO.

Figure2andFigure3illustratethecurrentsituationofTSOsandDSOscontractingASinthesurveyed

countries.InFigure3thecountriescoloredingreywerenotincludedinthesurvey.

Figure2Currentstatusofancillaryservicescontractingatdistributionsystemlevel


Figure3DERs’participationinASprocurementmechanisms

3.3.2 TSOcontractingASfromDERdirectlyconnectedtotheDSO-grid

According to the survey, Italy is the only countrywhere DER are not allowed to provide ancillary

services. In thisway, current rules are constraining the use of flexibility-based services for the Italian

system. Inallother surveyedcountries,DER(Storage,DGand/orDR)areallowed toparticipate in the

procurementmechanismsmanagedbytheTSO.However,

- The minimum rated power and the type of ancillary services where DER are allowed to

participatevariesamongthecountries.

- TherulesforDERparticipationvaryacrossEuropeancountries.

Dependent on the country, DER are allowed to participate to different types of AS products. There

existquite somedifferencesbetweencountries related to the typeofASproduct and theprocurement

mechanism.


ConcerningthetypeofASproduct,DERareparticipatingtoFCRmarketsinAustria,BelgiumandFinland

andtoFRRmarketsinAustria,Belgium,Denmark,FinlandandNorway.OthertypesofAS-participation

canbefoundinSpainwhere, forexample,DERareparticipatingtoRRmarketsorareprovidingpower

factorcontrol.

Figure4 gives anoverviewof theprocurementmechanismsused for each typeof ancillary service

relevant to DER participation per country. As highlighted in the figure, contracting flexibility-based

services from DER directly connected to the distribution grid is commonly done via a market-based

procurementmechanism.MandatoryprovisionisseenonlyinSpain(e.g.withpowerfactorcontrol).

Figure4ProcurementmechanismsforASprovidedbyDER

Ingeneral,fewlimitationsexisttothetypeofDERtoparticipate.IfacertainASproductisaccessible

forDER(i.e.DERisallowedtoprovidetheservice),itisalmostinallcasesrelevantforallDER-types.

Today,inmostcountries,thevarietyinDER-participationtoASmarketsislargewhilethecontracted

volume is stillmarginal.However, it is clear that theparticipationofDER toASmarkets is increasing.

Table26inappendixgivesanoverviewoftheASproductswhereDERareallowedtoparticipateforthe

countriesexaminedinthesurvey.ForeachAS-product, thename,theprocurementmechanismandthe

typeofDERallowedtoparticipatearementioned.

3.3.3 DSOcontractinglocalservicesfromDERdirectlyconnectedtoDSO-grid

As seen in Figure 2, today, all DSOs do not contract flexibility from resources connected at the

distributiongridtosolvelocalgridconstraints.Similarresultsfordifferentcountriesarealsoconfirmed


bytheresultspresentedbytheEvolvDSOproject[2].Themainbarrierisrelatedtothepermissionforthe

DSOs to contract system services for its own operational purposes (and with this the uncertainty of

recoveringthecostrelatedtotheseservices).Thereareonlyfewexceptionalcases inwhichtheDSOis

allowedtocontractsystemservicesforhisownoperationalpurposes.InNorwayandAustria,DSOsmay

use, in some cases, small-scale hydropower for voltage regulation. This service is acquired not via a

market-basedmechanismbutviaconnectionrequirements.

3.3.4 DSOcontractingASonbehalfoftheTSO

Inallofthesurveyedcountries,DSOsarenotallowedtoprocureASonbehalfoftheTSO.Thismeans

they cannot act as an aggregator for suchpurpose.Acting as suchwouldmean to aggregate resources

fromalocalmarketandtransferringtheaggregatedbidstothecentralASmarket,organizedbytheTSO.

TheonlyexceptionisaFinnishsystempilotcasewheretheTSOrequestsheatingloadreductionforlost

reservewithintheframeworkofabilateralcontractbetweentheDSOandtheTSO.

3.3.5 InformationexchangerelevanttoASprocurementandactivationfromDER

The exchange of relevant information related to the procurement and activation of AS among

concernedmarketparties, i.e.TSOs,DSOs,aggregatorsandBRPs, isessential to limit the impacton the

operation of the grid (especially at DSO level) and the positions of market players (i.e. creating

undesirableimbalancesinBRPs’portfolio).Today,thepositionofaggregatorsisstillunclear.Aggregators

are known as a new service provider, responsible for the aggregation of smaller sized flexibility

resources. In several countries, aggregators are balance responsible (or manage the responsibility on

behalfofsomeoneelse),i.e.inSpain,DenmarkandFinland.InBelgium,NorwayandAustria,aggregators

are currently not necessarilyBRPs. In Italy, the role of the aggregator is evennot recognized and as a

result,theactivityofaggregationdoesnotyetexistinItaly.

InformationexchangeduringASprocurementandactivationservesvariouspurposesforBRPs,TSOs

andDSOs.

BRPsmaybeaffectedbytheactivationofAS.Toavoidunforeseensystemimbalances,BRPshaveto

exchange informationwithsystemoperatorsand ifneeded,withotherBRPs,duringbothprocurement

and activation processes. As a result, stakeholders become knowledgeable of potential actions. Hence,

responsiblepartiescouldbeidentifiedandaccountedfortheimpact.

Note that information exchange practices differ from one country to another mainly due to the

variationoftheroleofBRPsandaggregators.Forinstance,


- In Austria, BRPs get ex-post information about procurement and/or activation of AS in their

perimeter:i.e.theyareawareoftheeventafterithappens(afterflexibilityisactivated).

- InFinland,themarketrulesdonotrequireanyrealtimeinformationexchangebetweenamarket

actor and itsBRP.Every actor in thebalancingmarket andASmarkets self informshisBRPas

agreedwiththeBRP.Thisisoneofthereasonswhyelectricitymarketaggregatorsareinpractice

eithercloselyconnectedtotheirBRPorarethemselvesBRPs.

- In Norway, the BRP is not informed when the TSO is activating the AS until the balancing

settlementisperformed.

- In Belgium, BRPs are notified 15 minutes after activation starts. The information exchanged

consistsofthemaximumamountofpotentiallyactivatedpowerwithinitsperimeter.

- IntheDanishsystem,allASareprocuredandactivatedthroughtheBRP.

There are settlement mechanisms in place in different countries to deal with the impact of the

balancingperimeterofBRPscausedbytheactivationofancillaryservices.Forinstance,

- In Finland, the system operator, when calculating the settlement, removes the calculated

activatedresponsefromthebalanceoftheBRP.

- In Belgium, the imbalance settlement mechanism does not consider the impact AS activation

mighthaveontheimbalancesofBRPs.

- InDenmark and Spain, the imbalance settlement is set in such away that if a BRP imbalance

helpsthesystemi.e.oppositetothedirectionofthesystemimbalance,thecostof imbalanceis

equal to the day-ahead price. Conversely, if a BRP imbalance contributes to the system

imbalance,thecostisthemarginalbalancingprice,whichistypically10%higher/lowerthanthe

day-aheadprice.

While the purpose of TSO-DSO data exchange is broad, it also aims at smoothening operational

processestominimizecostsandtomaximizeefficiency.Amongthesurveyedcountries,however,onlyin

Belgium, TSOs exchange information with the DSOs concerning prequalification and procurement of

ancillaryservicessourcedfromDERdirectlyconnectedtothedistributionsystem.Moreover,dependent

ontheASproduct,theDSOorTSOisresponsiblefortheprequalificationprocedure.Forinstance,forthe

Tertiary reserveproductDynamicProfile (R3DP), theDSOperforms a checkon the amount of flexible

power,technicalconformityandtheeffectofattachedgeneratorsandloadsonthenetwork.Incasethe

DERunitdoesnotpasstheprequalificationprocedure,theDSOisallowedtorefusetheconnectionofthe

resource,andasaresult,theresourceisnotabletoparticipatetotheASmarket.Intheothersurveyed

countries,DSOsarenotinvolvedinaprequalificationprocesswithrespecttoAS.


Inaddition, innoneofthesurveyedcountriesTSOsexchangeinformationwiththeDSOsconcerning

theactivationofASfromdistributionsystemlevel.Themainreasongivenisthattoday,theactivationof

resourcesconnectedatthedistributiongridisstilllimited,sotheimpactontheDSOgridisalsolimited,

andthuspotentialproblemsarenotseenassignificant.Asaresult,alsoconfirmedbythesurvey,thereis

noclearpracticeofblockingormodifyingactivationofASbytheDSOatthedistributionsystemlevel.The

TSOdirectlyactivatesresourcesconnectedatthedistributiongrid,withoutnotificationtotheDSO.

DSOsprovidemeasurementdatausually through theSCADAsystem.Thesemeasurementsareused

for the final imbalance settlement. For instance, in the Belgian system, DSOsmay also exchange data

collected from the meter, network and/or contracts via the Message Implementation Guides (MIG)

process under explicit request from eligible parties and explicit consent from relevant grid users.

However,BelgianDSOsdonotcontractsystemservicesyet.

3.3.6 Coordinationschemes:approachestowardsanenhancedcooperation

Today, thecooperationbetweenTSOsandDSOs in thecontextof theprequalification,procurement,

activationandsettlementofDERsourcedflexibility-basedservicesislimited.

From the survey, it becomes clear that today, the coordination between TSOs and DSOs is mainly

focusedondiscussionsaround,

- Networkplanning(i.e.inAustriaandNorway);

- Theinstallationofacommondataplatform(e.g.AtriasinitiativeinBelgium[31]),or

- Collaborationontheimplementationofmetersandonlinemeasurements(e.g.Denmark).

Although in most countries, DER units are allowed to provide a variety of services for system

management,thereiscurrentlylimitedcoordinationbetweenTSOsandDSOsintheprocessesinvolving

theuse of flexibility coming from thedistribution grid. In addition, localmarkets that trade flexibility-

based services sourced by DER units are not a reality (yet). The TSO contracts directly resources

connected at the distribution grid, without involvement of the DSO. Moreover, the activation of

contractedresourcesdoesnotseemtobecommunicatedtotheDSO.Thismakestheimplementationof

anactivedistributionsystemmanagementapproachahardtaskforDSOs.Itisobviousthatinascenario

with increasing RES and increasing participation of DER to AS markets, the need for closer TSO-DSO

coordinationwillincreaseandnewprocessesandwaysofcoordinationneedtobeenvisioned.Inchapter

4,aselectionofthesecoordinationschemeswillbefurtherexplored.


4 CoordinationschemesAshighlightedinchapter3,thecoordinationbetweensystemoperatorsisgainingimportance.Inthis

chapter, five models for TSO-DSO coordination will be presented. Each coordination scheme will

determine the operational processes and information exchanges between system operators related to

prequalification, procurement, activation and settlement of flexibility-based services that impact both

transmissionanddistributionsystemlevel.

In section 4.1, the five coordination schemes are introduced. In section 4.2, the link between the

evolutionoftherolesofsystemoperatorsandthecoordinationschemesis furtherclarified.Section4.3

dealswiththeconstraintsofthedistributiongridandtheimpactofthecoordinationschemes.Insection

4.4,themarketdesigninrelationtothecoordinationschemesisdiscussed.Thechapterconcludeswith

anassessmentofdifferentancillaryservices inthecontextofdifferentcoordinationschemes insection

4.5.

4.1 Overviewofcoordinationschemes

Eachcoordinationschemeischaracterizedbyasetofroles,takenupbyTSOs,DSOsandothermarket

players,andageneralmarketdesign,inlinewiththeseroles.Thedistinctionbetweenrolesisessentialas

the increased need for coordination between system operators should not create any confusion in

allocatingrespectiverolesandresponsibilities[14].

A role isdefinedas an intendedbehaviorof a specificmarketpartywhich isuniqueand cannotbe

shared.Eachrolehascertainresponsibilities inherent to therole.Aroledefineshowonemarketparty

interactswithanothermarketpartyduringacertaintransaction[32].

Inthissection,fivecoordinationschemes,basedontheanalysisofchapter3,arepresentedindetail.

4.1.1 CentralizedASmarketmodel

In this scheme,TheTSOcontractsDERdirectly fromDERownersconnected to theDSOgrid forAS

purposes.TheDSOcanprocureanduseresourcestosolve localgrid issues,but theprocurementtakes

place inother timeframes than the centralizedASmarket.Table2 summarizes themarketdesign and

mainresponsibilitiesforeachsystemoperator(i.e.TSOandDSO).


Characteristics

MarketdesignThere isone commonmarket for ancillary services, operatedby theTSO, forbothresources connected at transmission and distribution level. There is no separatelocalmarket.

TSOrole

TheTSOisresponsiblefortheoperationofitsownmarketforancillaryservices.TheTSOdoesnottakeDSOconstraintsactivelyintoaccount.Aseparateprocess(systemprequalification) could be installed to guarantee that the activation of resourcesfrom thedistributiongridby theTSOdoesnot cause additional constraints at theDSO-grid(e.g.congestion).

DSOrole

TheDSOisnotinvolvedintheprocurementandactivationprocessofASbytheTSO,exceptinthecasethataprocessofsystemprequalification13isinstalledtoguaranteethattheactivationofresourcesfromthedistributiongridbytheTSOdoesnotcauseadditional constraints at the DSO-grid (e.g. congestion). TheDSO is not procuringlocalflexibilitiesinreal-timeorneartoreal-time.

Table2CentralizedASmarketmodel

Figure 5 illustrates the role played by relevant stakeholders. Additionally, the figure shows a high-

levelviewofthemarketarchitectureandinteractionsamongplayers.

13The general process of prequalification could be divided in two separate processes: technicalprequalification and system prequalification). A technical prequalification validates the technicalrequirementsofaunitthatwantstoparticipatetotheASmarket.Systemprequalificationisdefinedasanup-front processwhere theDSO validates the participation ofDER to the flexibilitymarket, under thecondition that it does not violate local grid constraints. More detailed information related to systemprequalificationcanbefoundinsection4.3.


Figure5CentralizedASmarketmodel:high-levelviewofroles,marketarchitectureandstakeholder

interactions14

In summary, this scheme limits the involvement of the DSO to a possible role in the system

prequalificationprocess(Figure5).Tonotethatinexceptionalcases,theDSOmightwanttoincludeDSO

grid constraints in the TSO market clearing process. Consequently, the DSO will need to provide the

necessarydatatotheTSOortheTSOshouldhavefullobservabilityoftheDSO-grid.

4.1.2 LocalASmarketmodel

ThemainprincipleofthisschemeistheoperationofalocalmarketbytheDSO.TheTSOcancontract

DERindirectlyviaalocalmarket,aftertheDSOhasaggregatedtheseresourcesandhastransferredthem

totheTSOASmarket.Table3summarizesthemarketdesignandmainresponsibilitiesforeachsystem

operator(i.e.TSOandDSO).

14Thedifferentactorsandrolesarediscussedindetailinsection4.2.1.


Characteristics

Marketdesign

ThereisaseparatelocalmarketmanagedbytheDSO.ResourcesfromtheDSOgridcan only be offered to the TSO via the DSO/local market and after the DSO hasselected resources needed to solve local congestion. The DSO aggregates andtransfersbidstotheASmarket,operatedbytheTSO.TheDSOassuresthatonlybidsrespectingtheDSOgridconstraintscantakepartintheASmarket.

RoleofTSOTheTSO is responsible for the operation of its ownmarket for ancillary services,where both resources from the transmission grid and resources from thedistributiongrid(afteraggregationbytheDSO)cantakepart.

RoleoftheDSO

TheDSOistheoperatorofalocalmarketforflexibility.TheDSOclearsthemarket,selectsthenecessarybidsforlocaluseandaggregatesandtransferstheremainingbidstotheTSO-market.TheDSOhasprioritytousetheflexibleresourcesfromthelocalgrid.

Table3LocalASmarketmodel

Figure6 illustrates the role played by relevant stakeholders. Additionally, the figure shows a high-


Figure6LocalASmarketmodel:high-levelviewofroles,marketarchitectureandstakeholder

interactions


Insum,theLocalASmarketmodeldeviatesfromtheCentralizedASmarketmodelbypromotingalocal

market. The implementation of such a market shifts priorities towards the DSO. All flexibility not

needed/procuredatthelocalmarket(wheretheDSOisthemarketoperator)issenttothecentralmarket

(where the TSO acts as the market operator) in an aggregated form, taking into account that the

distribution network constraints are respected (e.g. some local market bids could possibly not be

transferredtotheTSOifthatwouldjeopardizethedistributiongridoperation).Inthisscheme,theDSO

contractsandaggregates(already)aggregatedbids.

4.1.3 Sharedbalancingresponsibilitymodel

Forthisscheme,theTSOtransfersthe“balancing”responsibilityforthe(local)distributiongridtothe

DSO.TheDSOhastorespectapre-definedschedule15anduseslocalDER(obtainedviaalocalmarket)to

fulfillitsbalancingresponsibilities.Thepre-definedscheduleisbasedonthenominationsoftheBRPs(for

theentireDSO-area),possiblyincombinationwithhistoricalforecastsateachTSO-DSOinterconnection

point. In case thepre-defined schedule is basedon theoutcomeof the energy-onlymarkets, TSOs and

DSOs do not make any modifications to this schedule. This means that the pre-defined schedule is

determinedattheleveloftheentireDSO-areaandnotattheleveloftheTSO-DSOinterconnectionpoint,

duetothefactthattoday,nominationsarenotexclusivelymadeforeachTSO-DSOinterconnectionpoint.

Alternatively, TSOs and DSOs could determine the pre-defined schedule, using historical forecasts for

eachTSO-DSOinterconnectionpoint,togetherwithcongestionconstraintsforboththetransmissionand

distributiongrid.Inthissecondoption,thepre-definedscheduleisdeterminedforeachindividualTSO-

DSO interconnection point.Table 4 summarizes themarket design andmain responsibilities for each

systemoperator(i.e.TSOandDSO).

Characteristics

Marketdesign

There is an ASmarket for resources connected at the TSO-grid, managed by theTSO. There is a separate local market for resources connected at the DSO-grid,managedby theDSO.Resources from theDSO-grid cannotbeoffered to theTSO-grid. DSO constraints are integrated in the market clearing process of the localmarket.

15Theschedulecouldbeanetinjectionoranetoff-take,dependentonthelocalsituationoftheDSO-grid.


RoleofTSOThe TSO is the operator of the ASmarket, limited to resources connected at thetransmission level. The TSO is responsible for the balancing of the transmissiongrid.

RoleoftheDSO

The DSO is the operator of a localmarket. The DSO contracts local flexibility forboth local congestion management and balancing of the DSO-grid. The DSO isresponsible for the balancing of the DSO-grid, i.e. respecting the pre-definedschedule.

Table4Sharedbalancingresponsibilitymodel

Figure7illustratestheroleplayedbyrelevantstakeholders.Additionally,thefigureshowsahigh-


Figure7Sharedbalancingresponsibilitymodel:high-levelviewofroles,marketarchitectureand

stakeholderinteractions


The Shared balancing responsibility model is the only coordination scheme where the TSO has no

access to resourcesconnectedat thedistributiongrid.Flexibility from thedistributiongrid is reserved

exclusively for theDSO, in order to fulfill its responsibilitieswith respect to local grid constraints and

localgridbalancing.

4.1.4 CommonTSO-DSOASmarketmodel

TheCommonTSO-DSOASmarketmodelpromotesacommonflexibilitymarket forsystemoperators

(SO).Theprocurementofresourcesmadeunderthiscoordinationschemehasasmaingoaltominimize

totalprocurementcostsofflexibilities.Thisideaisalsosupportedbytherecentpositionpaperissuedby

CEER which states that it is essential that controls on revenue recovery for DSOs and TSOs create

incentivestooptimizeoutcomesforthesystemasawhole,ratherthanfocusingonminimizingtheDSO’s

andTSO’scosts in isolation [14]. Table5 summarizes themarketdesignandmainresponsibilities for

eachsystemoperator(i.e.TSOandDSO).

Characteristics

Marketdesign

There is a common market for flexibilities for both TSO and DSO with both

resourcesconnectedattransmissionlevelandconnectedatdistributionlevel.TSO

andDSOarebothresponsiblefortheorganizationandoperationofthemarket.DSO

constraints are integrated in the market clearing process. Two alternatives are

considered:(1)allconstraintsareintegratedinoneonlyoptimizationprocessthat

encompasses both TSO and DSO grid constraints (centralized variant), (2) a

separatelocalDSOmarketforlocalgridconstraintsrunsfirst(withoutcommitment

tothemarketparticipants)andcommunicateswithanASmarketoperatedbyaTSO

with transmission grid connected resources. The outcome of the second market

communicates back to the first market to find the optimal solution to be

communicatedtothemarketparticipants(decentralizedvariant).

RoleofTSO

TheTSOandDSOsarejointlyresponsibleforthemarketoperationofthecommon

TSO-DSOmarket(centralizedvariant)whiletheyarejointlyresponsibleforthefinal

outcome of the two separate market runs (decentralized variant). The TSO is

contractingASservicesfrombothtransmissionanddistribution.Inpractice,inthe

centralized variant, the joint responsibility could be organized by allocating the

responsibilitytoathirdparty,underguidanceofbothTSOsandDSOs.

RoleoftheDSOTheTSOandDSOsarejointlyresponsibleforthemarketoperationofthecommon

TSO-DSOmarket(centralizedvariant)whiletheyarejointlyresponsibleforthefinal

outcome of the two separate market runs (decentralized variant). The DSO uses


flexibleresourcesfromthedistributiongridincooperationandinteractionwiththe

TSO.

Table5CommonTSO-DSOmarketmodel

Figure 8 illustrates the role played by relevant stakeholders. Additionally, the figure shows a high-


Figure8CommonTSO-DSOASmarketmodel:high-levelviewofroles,marketarchitectureandstakeholder

interactions

Insummary,theCommonTSO-DSOASmarketmodelcouldbeseenasanextensionoftheCentralized

AS market model (for the centralized variant) and the Local AS market model (for the decentralized

variant). In the centralized variant, the optimization is still organized by aggregating both resources

connectedattransmissiongridanddistributiongrid,butinthisscheme,notonlyTSOgridconstraintsare

integratedbutalsoDSOgridconstraintsandpossible localneeds for flexibilityarepartof thecommon

market.ThedecentralizedvariantdiffersfromtheLocalASmarketmodelinsuchawaythattheDSOhas

noprioritytouseflexibleresourcesfromthedistributiongrid.Thechoiceofwhichresourcestobeused


by the DSO to solve local constraints will depend on the combined optimization of both needs for

flexibilityatdistributionlevelandneedsforflexibilityattransmissionlevel.

4.1.5 Integratedflexibilitymarketmodel

TheIntegratedflexibilitymarketmodelpromotesthe introductionofamarketwhereregulated(TSO

and DSO) and commercial market parties (CMPs) procure flexibilities in a common market. Table 6

summarizesthemarketdesignandmainresponsibilitiesforeachsystemoperator(i.e.TSOandDSO).

Characteristics

Marketdesign

Thecommonmarketforflexibilitiesisorganizedaccordingtoanumberofdiscrete

auctionsand isoperatedbyan independent/neutralmarketoperator.There isno

priorityforTSO,DSOorCMP.Resourcesareallocatedtothepartywiththehighest

willingness to pay. There is no separate local market. DSO constraints are

integratedinthemarketclearingprocess.

RoleofTSOTSOs are contracting AS services in a common market. TSOs can sell previously

contractedDERtotheothermarketparticipants.

RoleoftheDSODSOsarecontractingflexibilitiesforlocalpurposesinacommonmarket.DSOscan

sellpreviouslycontractedDERtotheothermarketparticipants.

Table6Integratedflexibilitymarketmodel

Figure9illustratestheroleplayedbyrelevantstakeholders.Additionally,thefigureshowsahigh-



Figure9Integratedflexibilitymarketmodel:high-levelviewofroles,marketarchitectureandstakeholder

interactions

In sum, the Integrated flexibility market model proposes a market mechanism where available

flexibility can be procured by system operators and commercial market parties under the same

conditions.There isnodistinctionbetweenregulatedand liberalizedactors.Market forcesdictatehow

flexibilitywill be allocated. This allocation, however, will respect grid constraints at all voltage levels.

Furtherdetailsonthewaygridconstraintsareintegratedinthecoordinationschemesarepresentedin

section4.3.


4.2 Coordinationschemesandtheevolutionofsystemoperatorsroles

System operators fulfill a large set of roles during their daily activities. Each coordination scheme,

introducedinsection4.1,requiresadifferentsetofrolestobetakenupbysystemoperators.

TheselectionofrelevantrolesisbasedontheENTSO-Erolemodel[10]fortheTSO,theEvolvDSOrole

model[11]fortheDSOandsomeadditionalroles16,specificfortheinteractionbetweenTSOandDSO.

4.2.1 Overviewofroles

Table7providesanoverviewofthemostrelevantrolesthathavetobeconsideredinthecontextof

the prequalification, procurement, activation and settlement of ancillary services. For each role, it is

indicatedwhichmarketpartycouldtakeupthisrole.

Role Explanation Adoptedby

Dom

ain

Gridoperation SystemOperator

(SO) Operatesandmanagesthephysicalsysteminquestion TSO;DSO

SystemBalanceResponsible(SBR)

Ensuresthebalanceofthegridandreducesdeviationsforasystemorcertainareabytheactivationofreserves

TSO;DSO

DataManager(DM)

Handlesgriddata(incl.formatting,storageandprovision),separatelyforeachnetworklevel. TSO;DSO;IMO

Prequalification

FlexibilityFeasibilityChecker(FFC)

Responsibleforassessingpotentialimpactatdistributiongridlevel(systemprequalification)causedbytheprovisionofflexibility-basedservicesfromaDERunitrequestingparticipationtotheASflexibilitymarket(centralorlocal)

DSO

Procurem

ent

ReserveAllocator(RA)

Determinestheamountofflexibility-basedservices(e.g.reserves)tobeprocured TSO;DSO

Buyer Acquirerofflexibility-basedservicesinamarketsetting TSO;DSO;CMP

Seller Providerofflexibility-basedservicesinamarketsetting TSO;DSO;CMP;

MarketOperator(MO)

Responsibleforsettingupthemarketplatformandoperatingthemarket TSO;DSO;IMO

16Additionalrolesweretheresultoftheindepthanalysisofthecoordinationschemesandtheimpactonprequalification,procurement,activationandsettlement.


Aggregator17 CollectorofDERflexibilityforitsofferinginamarketsetting DSO;CMP

Activation

FlexibilityDispatcher(FD)

ActivatesDERunitsprovidingflexibilitybysendingoperationalsignals TSO;DSO;IMO;CMP

Settlement

MeteredDataResponsible(MDR)

Responsibleformeasuringactivatedenergyandforprovidingrelevantrelateddatatothepartycalculatingthesettlement

TSO;DSO;CMP

Table7Overviewofroles

4.2.2 Mappingofrolesandcoordinationschemes

Asseeninsection4.1,therolestakenupbysystemoperatorsdifferbetweencoordinationschemes.In

theCentralizedASmarketmodel, theroleof theDSO is limitedand theTSO is thecentralmarketparty

beingresponsibleforalmosttheentireASprocurementprocess.Intheothercoordinationschemes,there

isagradualincreaseoftheroleoftheDSO.IntheIntegratedflexibilitymarketmodel,anadditionalmarket

party,theindependentmarketoperator, is introduced,takingoversomeoftherolespreviouslycarried

outbysystemoperators.

SomerolescouldbeseenassupportingrolesandarealwaystakenupbyTSOsandDSOs,independent

ofthecoordinationscheme.ExamplesaretheroleofSystemOperator,SystemBalanceResponsibleand

DataManager.Themain taskofbothTSOandDSO is toguarantee thereliabilityandsafeoperationof

theirgrid.Inaddition,theTSOisthebalanceresponsiblefortheentiresystem,whichincludesboththe

transmissionand thedistributiongrid.Only in theSharedbalancingresponsibilitymodel, theDSOtakes

overthebalanceresponsibilityforhisrespectivedistributiongrid.Theroleofdatamanagerisessential

for each step in the process of procurement of AS (and, if allowed by regulation, the procurement of

systemservicesby theDSO).BothTSOandDSOareresponsible for theirowndata,which implies that

theyshouldorganizehowtheycansharedataincasetheyhaveacommoninterest.Forexample,inthe

Common TSO-DSO ASmarketmodel, system operators are jointly responsible for the operation of the

market,andshouldsharetherelevantdatatobeabletotakeupthisjointresponsibility(e.g.locationof

17TheroleofaggregatorcouldbebothperformedbyaCMPandaDSO.InthecaseaCMPorFlexibilityServiceProvidertakesuptheroleofaggregator,thisimpliesacommercialactivityofcollectingDERfromDERownersatacertainprice,whicharethenfurthercommercializedindifferentenergymarkets.Incasethe DSO takes up the role of aggregator, there is no commercial activity involved. The DSO transfersaggregatedoffers,submittedinhisownlocalmarketbycommercialpartiestotheTSO.


theresource,volumescontracted,timingoftheactivation).IntheIntegratedflexibilitymarketmodel,the

IMOisresponsiblefortheoperationofthemarketplatform,usingdataprovidedbyTSOandDSO.Inthis

case,clearrulesfordatasecurityandprivacyhavetobeagreedbetweentheIMOandsystemoperators.

AnoverviewoftheadoptedrolesconcerninggridoperationisillustratedinTable8.

CoordinationSchemes

RoleCentralizedASmarketmodel

LocalASmarketmodel

Sharedbalancing

responsibilitymodel

CommonTSO-DSOASmarketmodel

Integratedflexibilitymarketmodel

Dom

ain

Gridoperation

SystemOperator(SO)

TSO(Tx)18DSO(Dx)19

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

SystemBalance

Responsible(GBR)

TSO(Tx;Dx) TSO(Tx;Dx) TSO(Tx)DSO(Dx) TSO(Tx;Dx) TSO(Tx;Dx)

DataManager(DM)

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

IMOTSO(Tx)DSO(Dx)

Table8Gridoperationrolesadoptionacrosscoordinationschemes

Ineachcoordinationscheme,theDSOwillberesponsibleforsystemprequalification,i.e.theprocess

wheretheimpactofacertainflexibilitysourceisassessedontheDSO-grid.Thetechnicalprequalification,

where the technical capabilities of the flexibility source are verified, could be done by a verified

independentactor,whichshouldnotnecessarilybeasystemoperator.Acertificationfromthisverified

bodyisthansufficienttomakearequestforsystemprequalification.

TheDSOistheonlyentitythatcanberesponsibleforsystemprequalification.Asdatamanager(DM)

andsystemoperator(SO)ofthedistributiongrid,theDSOiscapable,withoutthird-partyintervention,to

analyzescenariosandassesspotentialimpacts.Alternatively,iftheDSOisnotinvolvedintheprocessof

systemprequalification,theTSOcouldperformtheassessmentonbehalfoftheDSO,underconditionthat

all relevant data are available and communicated to the TSO. Thismight be optimal in case of a large

number of small DSOs. However, the implications of the latter option would have to be further

18Tx=Transmissiongrid19Dx=Distributiongrid


investigated.Thisinordertoavoidpotentialsituationsthatmayimpactdistributiongridoperationcosts

anddynamics(e.g.non-coordinatedactionsfromTSOandDSO,duplicationofdata,…).

AnoverviewoftheadoptedrolesconcerningprequalificationisillustratedinTable9.

Coordinationschemes


LocalASmarketmodel

Sharedbalancingresponsibility

model


Integratedflexibility

marketmodel

Dom

ain

Prequalification

FlexibilityFeasibilityChecker(FFC)

DSO DSO DSO DSO DSO

Table9Prequalificationrolesadoptionacrosscoordinationschemes

The role of buyer and seller of flexibility-based services, provided by DER, changes across


In the Centralized ASmarketmodel, only the TSO is actively buying resources in short-term (day-

ahead,intradayandreal-time).TheDSOisnotbuyingflexibility-basedservicesinthesametimeframeas

theTSO.However,theDSOmightbuysomeflexibilityresourcesinthelongertermtosolvee.g.structural

gridcongestionortopostponecertaingridreinforcements.

In the Local AS market model, the Shared balancing responsibility model, the Common TSO-DSO AS

marketmodel,andtheIntegratedflexibilitymarketmodel,bothTSOandDSOarebuyingflexibility-based

servicesprovidedbyresourcesdirectlyconnectedtothedistributiongridinthesametimeframe.Inthe

LocalASmarketmodel,resourcesfromthedistributiongridareallocatedwithprioritytotheDSOwhile

intheCommonTSO-DSOASmarketmodel,theallocationofresourcesisbasedonaglobalminimizationof

the costs for concerned systemoperators. In theSharedbalancingresponsibilitymodel, theTSOhasno

access to resources connected at the distribution grid, only the DSO can use these resources. In the

Integratedflexibilitymarketmodel, commercialmarketpartiesarealsoallowedtocompeteonanequal

basewiththeregulatedparties.

Inmost coordination schemes, commercialmarket parties (CMPs) are the sole sellers of flexibility

resources. Only in the Integrated flexibilitymarketmodel, system operators could, via the independent

market platform, resell back to the market previously contracted flexibility. This could be done to

increaseliquidityandreducegridcosts.


Innoneofthecoordinationschemes,CMPscanmakeatrade-offbetweendifferentflexibilitymarkets,

i.e. the location of a certain flexibility resource, in combinationwith the chosen coordination scheme,

determineswheretheCMPcouldoffertheflexibility.ThismeansthatforexampleintheLocalASmarket

model,CMPscanonlyoffer flexibility to theTSO,via the localmarketoperatedby theDSO.Also in the

Sharedbalancingresponsibilitymodel,CMPscannotofferflexibility,connectedatthedistributiongrid,to

theTSO.

The role of market operator is directly linked with the market design and is different for each

coordination scheme. In the Centralized AS market model, the TSO operates both the AS market for

resourcesconnectedatthedistributiongridandforresourcesconnectedatthetransmissiongrid.Inthe

LocalASmarketmodelandtheSharedbalancingresponsibilitymodel,TSOandDSOareeachresponsible

for the respective operation of the flexibilitymarket of their grid. In theCommonTSO-DSOASmarket

model, dependent on the market design, TSO and DSO operate together one common platform, or

alternatively,operateeachtheirrespectivemarkets,optimizingtheoutcomeofbothmarkets inmutual

agreement. In the Integratedflexibilitymarketmodel, the IMOtakesovertheroleofmarketoperator to

guaranteeneutralityascommercialmarketplayersarenowcompetingwithregulatedentities.

Theaggregationof flexibilityresources isdoneby flexibilityserviceprovidersoraggregators.Small

individual DER are combined and offered in an aggregated way to the market. In addition, it is also

possiblefortheDSOtoaggregateindividualbids,offeredtothelocalmarket,andtosendthemtotheTSO

inanaggregatedform,takingintoaccountspecificconstraintsfromtheDSO-grid.Bydoingthis,theDSO

guaranteesthatthebidscomingfromtheDSO-gridandusedbytheTSO,respectallDSOgridconstraints.

TheDSOcarriesoutthisactivityofDSO-aggregationintheLocalASmarketmodelandtheCommonTSO-

DSO AS market model (decentralized variant). In the former, the DSO aggregates after the resources

neededtosolvelocalconstraintsaretakenout.Inthelatter,theDSOperformstheaggregation,usingall

resources offered to the local market, combined in such a way that local constraints are not only

respectedbutalsosolved,independentoftheselectionofbidsmadebytheTSO.

AnoverviewoftheadoptedrolesconcerningprocurementisillustratedinTable10.


Coordinationschemes


LocalASmarketmodel

Sharedbalancing

responsibilitymodel



Dom

ain

Procurem

ent

ReserveAllocator(RA) TSO(Tx;Dx) TSO(Tx)

DSO(Dx)TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

Buyer TSO(Tx;Dx) TSO(Tx;Dx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx;Dx)DSO(Dx)

TSO(Tx;Dx)DSO(Dx)

CMP(Tx;Dx)

Seller CMP(Tx;Dx) CMP(Tx;Dx) CMP(Tx;Dx) CMP(Tx;Dx)CMP(Tx;Dx)TSO(Tx;Dx)DSO(Dx)

MarketOperator(MO)

TSO(Tx;Dx) TSO(Tx)DSO(Dx)

TSO(Tx)DSO(Dx)

TSO(Tx;Dx)DSO(Tx;Dx) IMO(Tx;Dx)

Aggregator CMP(Tx;Dx) CMP(Tx;Dx)DSO(Dx) CMP(Tx;Dx) CMP(Tx;Dx)

DSO(Dx) CMP(Tx;Dx)

Table10Procurementrolesadoptionacrosscoordinationschemes

Aftertheclearingofthemarket,themostadequateresourcesareselectedandcanbeactivated.Inthe

case of a capacity market, the buyer has received a capacity and should explicitly send an additional

activationsignaltothemarketoperator,incasethebuyerneedstoactivatetheresource.Inthesituation

ofanenergyonlymarket, theactivation is implicit in theconfirmationof thebid (i.e.marketclearing),

givenbythemarketoperator.Theactivationinvolvesacascadingprocess,startingwithasignalsentfrom

the market operator to the relevant CMP (seller of contracted flexibility). Next, the CMP sends an

activationsignaltotheDERunit(s)requiredforserviceprovision.

AnoverviewoftheadoptedrolesconcerningactivationisillustratedinTable11.


Coordinationschemes


LocalASmarketmodel

Sharedbalancing

responsibilitymodel



Dom

ain

Activation

FlexibilityDispatcher

(FD)

TSO,CMP(Tx;Dx)

DSO(Dx);TSO(Tx;Dx),CMP(Tx;Dx)

TSO(Tx);DSO(Dx);CMP(Tx;

Dx)

TSO(Tx;Dx),DSO(Dx);

CMP(Tx;Dx)

IMOandTSO(Tx;Dx),DSO(Dx);CMP(Tx;Dx)

Table11Activationrolesadoptionacrosscoordinationschemes

The responsibility for themeter readings toverify theactivationcouldgodoneby theDSO,via the

officialDSO-meteroralternatively,incaseapprovedbyregulation,viaanindependentcommercialplayer

withanindependentmeter,onlymeantformeasuringtheactivationofaflexibilityresource.

AnoverviewoftheadoptedrolesconcerningsettlementisillustratedinTable12.

Coordinationschemes


LocalASmarketmodel

Sharedbalancingresponsibility

model



Dom

ain

Settlement

MeteredDataResponsible(MDR)

TSO(Tx)DSO(Dx)

CMP(Tx;Dx)

TSO(Tx)DSO(Dx)CMP(Tx;Dx)

TSO(Tx)DSO(Dx)

CMP(Tx;Dx)

TSO(Tx)DSO(Dx)

CMP(Tx;Dx)

TSO(Tx)DSO(Dx)

CMP(Tx;Dx)

Table12Settlementrolesadoptionacrosscoordinationschemes


4.2.3 Thefuturerolesofsystemoperators:feedbackconsultation

Theconsultationorganizedinthecontextofthisreport(appendix8.2)askedspecificquestionsrelatedto

theevolutionofrolesandresponsibilitiesofsystemoperators.Themainresultsaresummarizedbelow

(seedetailedresultsinappendix8.3).

Allrespondentsconfirmthat,althoughincreasedcoordinationbetweensystemoperatorsisneeded,it

shouldbeclearthatTSOsshouldberesponsibleforthetransmissiongridandDSOsremainresponsible

forthedistributiongrid.ThisimpliesthatDSOswillberesponsibleforlocalconstraintsmanagement.

Severaladditionalroles for theDSOwerediscussed in theconsultation: theroleof theDSOas local

marketoperator,theroleoftheDSOasbalanceresponsibleforthedistributiongridandtheroleofthe

DSOasbuyerofflexibility.TheroleoflocalmarketoperatorbytheDSOisconsideredasapossibilityby

several respondents, similar to the current responsibility of theTSO asmarket operator of currentAS

markets. However, other respondents raise important attention points with respect to neutrality and

transparency.Inordertoguaranteeaneutralandtransparentfunctioningofthemarket,theoptionofan

independentmarketoperatorcouldbeconsidered.

WithrespecttothequestiononthepossibleroleoftheDSOasbalanceresponsible,mostrespondents

agreethatthisisprobablynotacostefficientsolutionandthatbalanceresponsibilityshouldbeorganized

at a system level by the TSO. In particular, it should be avoided that by splitting up the balance

responsibility, inefficiencies are created that might increase grid costs that will be charged to end

consumers,i.e.duplicationofdispatchingcenters,costlyprocurementofresources,….Duetothefactthat

theDSOhasaccesstoamorelimitedsetofresources,comparedtotheTSO,thecostofbalancingmight

increase,leadingtoasub-optimalsolutionfromasystemwideperspective.Inaddition,splittingupthe

responsibility for balancing is going against the European trend of increased integration of balancing

markets.However,somerespondentsseealsobenefitsincasetheDSObecomesbalanceresponsible,e.g.

fasterreactiononlargeimbalances,inducedbyverylocalsituations.

The procurement of flexibility by DSOs in the short term as an alternative for grid investments is

considered as very realistic by all respondents, under the condition that regulation provides the

appropriate framework, including proper cost remuneration for the use of flexibility. Also, DSOswill

needtoadoptanewwayofworkingwithdynamicreal-timeoperationalsecurityassessments.

Onerespondentalsohighlightedtheneedforsystemoperatorstoresellpreviouscontractedflexibility

backtothemarket.


4.3 CoordinationschemesandtheconstraintsoftheDistributiongrid

TheuseofflexibilityfromDER,connectedattheDSO-grid,mayhaveanimpactonthegridimposing

constraints to its operation. For instance, the activation of DER might violate voltage limits and/or

overloaddistributionlines(leadingtoanincreaseinlosses).ItisthereforeimportanttoassesshowDSO

gridconstraintsshouldbeintegratedintheprocessesofprocurementandactivationofancillaryservices

inordertosafeguardsecurityofsupplyandqualityofservice.DSOconstraintsmaybetakenintoaccount

accordingtofour(4)scenarios:

- Scenario 1: DSO constraints are not considered. This is currently the case inmost Europeancountriesanditisalsoconfirmedbytheresultsofthecountrysurvey,discussedinsection3.3.Itis clear that this is a scenario that could only be acceptable in case the share of resourcesconnectedfromthedistributiongridisbelowacertainthreshold.ThisthresholdmayvaryacrossMSandshouldtakeintoaccountthestateofthegrid.Alsoindistributiongridsthatareheavilyover-dimensioned, it couldbeagreed that it isnotnecessary to involve theDSO inanyof theprocesseswheretheTSOcontractsresourcesfromthedistributiongrid.

- Scenario2:TheDSOisinvolvedinaprocessofsystemprequalification.Duringthisprocess,DERassets are analyzed and approval is given by the DSO to the DER owner to participate to theflexibility market. The process of system prequalification differs from a more technicalprequalification.Duringtheprocessoftechnicalprequalification,thetechnicalrequirementsofacertainresourceareassessedtomakeiteligibletodeliveraspecificservice.Duringtheprocessofsystemprequalification,theDSOassessestheimpactofthedeliveryofaspecificservicebyacertainresourceonthegrid.Incasethedeliveryoftheserviceinthatspecificareawouldviolategridconstraints,theDSOcouldforbidthedeliveryoftheservicebythatspecificresource.

- Scenario3:TheDSOisnotonlyinvolvedduringsystemprequalification(beforeprocurement),butalsoaftertheclearingofthemarket.TheDSOhasthepossibilitytoblocktheactivationofaflexible resource (if selected by the clearing of themarket), in case DSO constraintsmight beviolated.Blockingaspecificresourceisamanualanditerativeprocess.Themarketoperator(incase it is not the DSO) will inform the DSO about the market results, the DSO will make aninternalassessmentandapprovesorblockstheselectedresources.Incaseofblockingofcertainresources, themarket is cleared again and theupdated results are again sent to theDSO. It isclearthatthismanualcheckofDSOconstraintsmightbeoperationallyheavyasitcouldrequiremultipleiterationswithinaveryshorttimeframeincaseconstraintsofthedistributiongridinaspecificmarketareeasilyviolated.

- Scenario4:TheDSOisnotonlyinvolvedduringprequalification(beforeprocurement),butDSOconstraintsarealsointegratedinthemarketclearingalgorithm.Thisassuresthattheoutcomeofthe market clearing will not violate DSO grid constraints. The advantage of this scenario


comparedtoscenario3isthatitisoperationallymucheasierasnomanualactionsfromtheDSOare required after market clearing and no iterations are needed. Nevertheless, integratingphysicalgridconstraints inthemarketalgorithmmightbeheavyfromamathematicalpointofview.Also,thisrequiresthattheDSOprovidesthenecessarydatatothepartyresponsiblefortheoperationofthemarket.IncasetheDSOisthemarketoperator,thisistrivial,however,incaseanexternalpartyoperatesthemarket,concernsrelatedtoprivacyandconfidentialityofdatamightneedtobeaddressed.

ThefirstscenariowhereDSOconstraintsarenottakenintoaccount,illustratesthecurrentsituationinmost countries. As it can be seen, this scenario does not encourage the implementation of an activedistributionsystemmanagement.Moreover,itisonlyrelevantforveryspecificconditions.ThisscenariowillnotbediscussedindetailforthecoordinationschemesbecausesuchscenariodoesnotrequireanyinteractionbetweenTSOandDSO.

IncasetheDSOistheoperatorofalocalmarket,whichisthecaseintheLocalASmarketmodel,theShared balancing responsibilitymodel and the Common TSO-DSO ASmarketmodel, it is logic that DSOconstraints are always taken into account in an automated way. This is operationally less heavy andprivacyandconfidentialityofdataareguaranteed.

In a market set-up where the DSO is not the operator of the market, which is the case in theCentralized ASmarketmodel and the Integrated flexibilitymarketmodel, the choice between differentscenariosdependsonseveralaspectssuchasthestateofthedistributiongrid,therequirementsfordataprotection and confidentiality, the national organization of DSOs,… in order to determinewhich is themost optimal set-up. In the case of theCentralizedASmarketmodel, DSOs are only to a limited levelinvolvedintheprocessesforflexibilityprocurementandactivation,carriedoutbytheTSO.Asaresult,DSOinvolvementwillbemostlylimitedtosystemprequalification.However,insomecases,DSOsmightwanttoincludeDSOgridconstraintsautomaticallyintheTSOmarketclearing.Therefore,DSOswillneedtoprovidethenecessarydatatotheTSOoralternatively,shouldallowtheTSOtoaccessdirectlycertainDSOdata.

IntheIntegratedflexibilitymarketmodel,themarketisoperatedbyanindependentmarketoperator.

ThisIMOcouldberesponsibleforthe‘blocking’ofcertainbids,inordertoguaranteeneutrality.Thisisin

particular relevant for the Integrated flexibilitymarketmodel as DSOs are allowed to resell previously

contractedDER.IfDSOsaresimultaneouslyasellerthemselvesandresponsiblefortheacceptanceofnew

sellers in themarket (prequalification) and the acceptance of selected bids, this could create potential

conflicts of interest. It is important that processes are in place to ensure appropriate justification and

transparencyaroundrestrictiveactionstakenbytheDSOorTSO[14].

The process of system prequalification is not always necessary in case DSO grid constraints are

integrated intheclearingprocess inamanualorautomatedway.Thiscouldpossiblyresult inahigher

participationofDERtothemarket,butalsoahigherprobabilityofbidsnotselectedduringorafterthe

marketclearing.


The advantage of the process of system prequalification is that it gives an indication to flexibility

providersincasetheymightbelocatedinaconstrainedarea.Itisimportanttohighlightthattheprocess

ofsystemprequalificationshouldalsobeadynamicprocess.ItshouldgivetherightincentivestoDSOsto

invest in certain areas to unlock the potential of flexibility. As a result, a request for system

prequalification, incaseofanegativeresult, couldberepeatedafteracertainperiodof time.Table13

summarizesthemainbenefitsandrisksofaspecificchoiceforhandlingDSOgridconstraints.

Benefits Risks

Scenario1

(distribution

constraints

not

considered)

• Noadditionalcost • Constraintsmightnotberespected

Scenario2

(DSOinvolvedin

system

prequalification)

• Implementationcostsmightbelow

• DSOgridconstraintsaretakenintoaccount

• ProvidesmoreinformationtotheDSO(enhancinggridobservability)

• Constraintsmightnotberespected• Needforaccurateforecastsoffuture

gridload• Inordertosecurethegrid,safety

marginstakenbytheDSOmightbeveryconservative

Scenario3

(DSOalsoinvolved

aftermarketclearing)

• DSOgridconstraintsarealwaysrespected

• ProvidesmoreinformationtotheDSO(enhancinggridobservability)

• Mathematicallynotdifficulttoimplement

• Heavyoperationalprocess(manualanditerative)

• Deadlineoffinishingthemarketclearingprocessmightbeendangeredbythisprocess

• CouldcreateuncertaintyinthemarketasitisunclearonwhichbaseDSOsmightblockactivations

• Issueswithtransparency

Scenario4

(Constraintsintegrated

inmarketclearing) • DSOgridconstraintsarealways

respected• Providesmoreinformationtothe

DSO(enhancinggridobservability)

• Operationalprocessisrelativelylight

• Noissuesrelatedto‘neutrality’oftheDSO

• Heavymathematicalprocesstointegrateallconstraintsintheclearing

• NeedforsharingdatabetweenDSOandmarketoperator(discussionsonsecurityandprivacyofdata)

Table13Benefitsandrisksacrossscenarios

In case no DSO constraints are taken into account, flexible resources could be aggregated across

several DSO areas without any problems. In case DSO grid constraints should be taken into account,

aggregation of bids across several areas might need to reflect the locality aspect of the bid. Market

productswillneedtodecideifthismeansthataggregationwillonlyhappenattheleveloftheindividual

nodeorifaggregationcouldstillhappenoveralargerarea.Inthesecondcase,therecouldbee.g.market

productsthatwillonlybepartiallycleared(dependentonthelocality)incaseofviolationofconstraints.


4.4 Coordinationschemesandmarketdesign

Each of the coordination schemes is characterized by a specificmarket design. In this section, the

scopeofthemarket, theorganizationofthemarket, and theoperationofthemarket arehighlightedand

discussed.

4.4.1 Scopeofthemarket

Thescopeofthemarketanalyzeswhichtypesofresourcesareparticipatingtoit,takingintoaccount

thelocationoftheseresources.

IntheCentralizedASmarketmodel,theCommonTSO-DSOmarketmodel(centralizedvariant)andthe

Integratedflexibilitymarketmodel, both resources connectedat transmissionanddistribution level are

participating in the same market session. In the Local AS market model, the Shared balancing

responsibilitymodelandtheCommonTSO-DSOmarketmodel(decentralizedvariant),resourcesconnected

at the distribution level are offered and optimized in a separate market session. In case there is one

marketplatform, there is theneed foronlyonemarketoperator. In caseofdifferentmarkets,multiple

marketoperatorsmightco-exist.

4.4.2 Organizationofthemarket

Themarket for ancillary services couldbeorganized according to a set of discrete auctionsor as a

continuousmarket. In caseamarket isorganizedas a continuousmarket, theadvantage is that at any

momentintime,theremightbethepossibilitytotrade,tillgateclosure.Theargumentofmorefrequent

tradingoptionsbecomeslessrelevantincasethefrequencyofthediscreteauctionsisincreased.Onthe

contrary,adisadvantageofacontinuousmarketisthattheremightbeariskoflowliquidity.Thesame

disadvantageappearsfordiscreteauctionmarketswithahighauctionfrequency.

In addition, in the case of the Integrated flexibilitymarketmodel, not only regulated but also non-

regulatedplayersareparticipating to themarket. Inacontinuousmarketstructure, thepricesetting is

accordingtothepay-as-bidconceptandtheremightbetheriskthattheTSOandDSOarepayingamuch

higher price, compared to a market organized with discrete auctions (and marginal pricing). Other

market players could wait till the last moment to place their bids, while the TSO is obliged to buy

reasonablyinadvancetoguaranteesystemstability.Marketplayerswillknowthis,askingahigherprice,

abovetheirmarginalcost,fordealsdonefurtherawayfromgateclosure.

Anotherdisadvantageofacontinuousmarketset-upwouldbethefactthatitisalmostimpossibleto

integrateDSOgridconstraintsas thisshould implyacontinuouscheckofgridconstraintsevery timea

bid is submitted. Of course, in case local grid constraints should not be checked continuously, a


continuous market is possible as well. In addition, it is clear that in case the market is a continuous

market,thisorganizationisfairlysimilartotheset-upofcurrentintradaymarkets.Formoreinformation

onthepossiblelinkwiththeintradaymarket,seesection5.2.3.

Hence,foramarketofASservices,fromaconceptualpointofview,itseemsbesttoorganizeitbyaset

ofdiscreteauctions,makinga trade-offbetweenahigher liquidityon theonehandanda frequencyof

auctions which is high enough to give flexibility to the participants of the market. In all of the

coordinationschemes,themarketdesignassumesdiscreteauctions.

4.4.3 Operationofthemarket

Themarketcouldbeoperatedbythesystemoperatorsorbyanindependentmarketoperator(IMO).

Inthecoordinationschemeswherethereisasinglebuyer,i.e.onesystemoperatorthathasexclusivityto

buyresourcesfromonespecificmarket,thissinglebuyerisalsoresponsiblefortheoperationofhisown

market(similartocurrentpracticesforprocurementofASbyTSOsinmanycountries).Thisisthecase

fortheCentralizedASmarketmodel,theLocalASmarketmodel,theSharedbalancingresponsibilitymodel

andtheCommonTSO-DSOASmarketmodel(decentralizedvariant).

Incoordinationschemeswheremultiplesystemoperators(CommonTSO-DSOASmarket–centralized

variant)orbothregulatedandnon-regulatedpartiesparticipate(Integratedflexibilitymarketmodel),the

operation of the market should guarantee neutrality, transparency and a high level of operational

efficiency. In this case, an independentmarket operator could be responsible for the operation of the

market.

In the Common TSO-DSO AS market model, TSOs and DSOs could still be the main and only

shareholdersofthisindependententity.Itseemslogictoassumethat,incaseTSOsandDSOsarejointly

responsible for theoperationof themarket, for efficiency reasons, an independent entity is necessary,

especiallyinthecasethatmultipleTSOsorDSOsareparticipating.

For the Integratedflexibilitymarketmodel, thepresenceofan IMO isaprecondition toassurea fair

levelplayingfieldwherenodistinctionismadebetweenregulatedandnon-regulatedentities.


4.4.4 Futuremarketdesign:feedbackfromtheconsultation

General elements arementionedby several respondents about themain characteristicsof aproper

marketdesign(appendix8.2).Themarketdesignshould:

• Allocateflexibilityinthemostefficientway

• Minimizegamingandunfortunatepriceeffects

• Ensuresufficientliquidity

• Betransparent

• Supportcompetition

• Respectgridconstraints

• Stimulateparticipationtothemarketforbothbuyersandsellersofflexibility

• Assurethatsystemoperatorsdonotactivateflexibilityresourcesthatareinconflictwithactions

donebytheothersystemoperator

The consultation highlights a clear preference for a more centralized market organization to

guaranteeliquidity,efficiencyinmarketoperationandstandardizedproductsandprocesses.Asaresult,

thiscouldevenbeafacilitatorfortheparticipationofsmallDERtothemarketforancillaryservices.One

remarkwasgiventhat,whencombiningbothconstraintsoftransmissionanddistributioninonesingle

market place, the optimization problemmight become highly complex and potentially not feasible to

solveinanadequatetimeframe.

Mostrespondentshighlightseveralissuesthatmightariseincaseseverallocalmarketsareorganized.

LiquidityinsmalllocalmarketsmightbesmallandDSOswillnothavethepossibilitytoaccessflexibility

locatedinadifferentDSO-areaincasethisisneededforbalancingpurposes.Anotherelementofattention

is that the smaller the market size, the higher the risk for market power and high prices. Several

respondentsexplicitlymentionthatfragmentationofmarketsshouldbeavoidedasmuchaspossible.

Althoughconsensusexistsonhowthemarketshouldbeorganized,divergingopinionsareexpressed

on who should have access to this central market place as a buyer of flexibility. A small number of

respondentspreferthismarkettobeonlyaccessiblefortheTSO,otherrespondentsseethismarketasa

common market for all system operators. A majority of respondents would prefer that both system

operatorsandcommercialcompaniescompeteinthesamemarketenvironmenttobuyflexibility,under

theconditionthatlocalgridconstraintsarerespected.

Alsointermsofpriority,noconsensusexists.SomerespondentspreferaclearpriorityfortheTSOto

guaranteesystemsecurityatalltimes.OthersemphasizetheneedforpriorityfortheDSO,duetothefact

thatatalocallevel,fewoptionsmightexistfortheDSO.Inthiscase,clearrulesshouldbedeterminedin

which situations the DSO should have priority. Other respondents do not want to assign any upfront

prioritytoanysystemoperator.Onthecontrary,theywantmarketforcestodeterminewheretheuseofa


specificflexibility,incase,multiplepartiesareinterestedintheresource,hasthehighesteconomicvalue.

Several respondents highlight the importance that in the end, the decision taken should lead to lower

costsforendconsumers.

4.5 Theorganizationofancillaryservicesunderdifferentcoordinationschemes

Thedifferentcoordinationschemesareanalyzedforaselectionofancillaryservices.Theprocessesof

prequalification, procurement, activation and settlement are analyzed and described in each use

case20,inordertoassesstheimpactofaspecificcoordinationscheme.

Thefollowingthreeancillaryservicesareconsidered:

1. UseofflexibilityfromthedistributiongridbytheTSOforfrequencyrestoration/balancing(aFRR,mFRRandRR)andcongestionmanagement21atthelevelofthetransmissiongrid.Inaddition,thelinkwiththeuseofflexibility(i.e.systemflexibilityservices)fromthedistributiongridbytheDSOforlocalpurposes(e.g.localcongestionmanagement)wasanalyzed;

2. UseofflexibilityfromthedistributiongridbytheTSOforfrequencycontrol(FCR);3. UseofflexibilityfromthedistributiongridbytheTSOtosupportvoltagecontrolofthetransmission

grid.

Otherancillaryservicesarenotfurtherconsidered.Furtherdescriptionoftheseservicescanbefoundin[12],[20].

It is expected that, by2030, these serviceswill not bematureorwill not beprocured in amarketbasedenvironment[12].However,theconclusionsmadefortheancillaryserviceslistedaboveintermsof interaction between system operators and the related information exchange, could be extended toother ancillary services. The consultation organized for this report also asked respondents to givefeedbackwithrespecttotheselectedusecases.Allrespondentsemphasizetheimportanceoftheusecaserelatedtobalancingandcongestionmanagement,duetotherelevancyforallsystemoperatorsandasaconsequence, theneed forcoordination.Thisusecase isalsoconsideredas themostcomplexusecase,due to the interactions between several market parties. In addition, the use case on the provision of

20WithinSmartNetausecaseisdefinedas“theprovisionofaservice,withintheframeworkofacertaincoordinationscheme,fromoneactortoanotheractor”.

21 Assumption: characteristics of resources used for frequency restoration and congestionmanagementbytheTSOare intrinsicallythesame,so intheusecases,procurementof theseresourcescanbecombined.Note that forsomespecificcountries, structuralweaknesses in the transmission-gridmight require a temporary and specific procedure for procurement of resources for congestionmanagementseparately.Assumptionismadethatthisprocurementprocedurewillbebasedonbilateralcontractsandisoutsidethegeneralmarketsetting.


frequencycontrolisalsoseenasveryrelevant,especiallyfromtheperspectiveoftheTSO.Theusecaseontheprovisionofvoltagecontroltothetransmissiongridisseenaslesscrucial.

Inaddition,severalrespondentshighlight the importanceof futureresearchontheuseof flexibility

fromthedistributiongridforlocalvoltagecontrol.

Insection4.5.1,theancillaryservicespresentedabovearemappedagainstthedifferentcoordination

schemes.Next,theimpactofaspecificcoordinationschemeisdiscussedforeachancillaryservice.

4.5.1 MappingofcoordinationschemesandAncillaryServices

Due to thenatureof theuse cases, not every coordination scheme is feasibleor relevant.Table14showsamappingbetweenancillaryservicesandrelevantcoordinationschemes.

Table14Mappingofancillaryservicesandcoordinationschemes


The decision if a coordination scheme is applicable to a certain ancillary service is based on thequestionifthecharacteristicsoftheancillaryserviceareservingtheneedsofcertainmarketparties.

For balancing and congestion management, all coordination schemes are possible. However, forfrequencycontrolandvoltagecontrol,somecoordinationschemesareexcluded.TheIntegratedflexibilitymarket model allows both regulated and non-regulated market parties to buy in the same marketenvironment. It is clear that this coordination scheme is only relevant for those ancillary services thathave characteristics that satisfyboth theneedsof a sufficient large rangeof regulatedandcommercialmarket parties. As a result, frequency control and voltage control are very specific and only used bysystemoperators.Therefore,theIntegratedflexibilitymarketmodelisnotapplicablefortheseusecases.

In addition, frequency control is the unique responsibility of the TSO. Therefore, nor DSOs, norcommercialmarket parties have an interest to buy this product. It is thereforenot likely that theDSOwouldorganizeaseparatelocalmarketforthisservice.Therefore,onlythecoordinationschemeswherethe TSO is directly involved in the operation of themarket are relevant, i.e. theCentralizedASmarketmodelandtheCommonTSO-DSOASmarketmodel.

Voltageissuesandassociatedcontrolneedsareverylocationspecificanditseemsnotfeasiblethatamarketwouldexistwithout involvementoftheDSO. IncasetheDSOwouldnotbe inthe loop,theTSOwould not be able to really control the voltage at the TSO-DSO connection point by steering himselfdirectlyassetsinthedistributiongrid.Hence,theCentralASmarketmodelisnotapplicableinthecontextofvoltagecontrol.

An important remark is the fact that different ancillary services could be procured via differentcoordinationschemes.Thisalso impliesthattheprocurementofoneancillaryservicehasanimpactontheavailablecapacityofotherancillaryservices.

Inthenextsections,coordinationschemesareappliedtothedifferentAS,highlightingdifferencesinrolesandmarketdesign.

4.5.2 Frequencyrestorationandcongestionmanagement

As discussed in section 4.5.1, resources that could be used both by TSO (for frequency restoration

(balancing) and congestion management) and by DSO (for local congestion management) could be

organizedaccordingtofive(5)coordinationschemes.

Ashighlightedinsection4.2.2,theDSOisalwaysresponsibleforsystemprequalification.Thisprocess

issimilaracrossallcoordinationschemes.Sinceallprequalificationrequestspassthroughthemarket,the

process varies if a local market exists in parallel to the central market. Before a request for system

prequalification can be made, a technical prequalification of the resource happens to check the

conformityofthetechnicalcharacteristicsoftheresource.Thistechnicalprequalificationcanbedoneby

acertifiedbodyandisaprerequisiteforarequestforsystemprequalification.Figure10andFigure11

showtheprocessofprequalification,bothtechnicalandsystemprequalification.Systemprequalification


is defined as an up-front process where the DSO validates the participation of DER to the flexibility

market, under the condition that it does not violate local grid constraints. More detailed information

related to system prequalification can be found in section 4.3. Figure 10 shows the process for a

centralized market organization (Centralized AS market model, Common TSO-DSO AS market model –

centralized and the Integrated flexibility market model) and Figure 11 shows the process for a

decentralizedmarketorganization(LocalASmarketmodel,Sharedbalancingresponsibilitymodelandthe

CommonTSO-DSOASmarketmodel–decentralized). Table15 listsactorsandactionstakenwithinthis

process.Stepsareapplicabletobothsituations(i.e.centralmarketandlocalmarket).Notethattheroleof

certified body (CB) could be performed by a third party. This certification relates to the technical

prequalification (see chapter4.2.2).Alsonote that the role ofMOdiffers across coordination schemes.

Thisisindicatedwithan(*).

Flexibilityresou

rce

Marketplatform

Central

Commercialflexibility

Transmissiongrid

Distributiongrid

Aggregator(CMP)

Aggregator(CMP)

DER(Owner A)

DER(Owner A)

CB(Independent actor)


FFC(DSO)FFC

(DSO) DER(Owner B)

DER(Owner B)

DER(Owner C)

DER(Owner C)

(3)

(1)

(2)

(4)

(6)

(8)

(5)

(7)

MO(*)

MO(*)

DM(DSO)DM

(DSO)

Seller(CMP)Seller

(CMP)

Figure10Prequalificationprocessapplicabletocoordinationschemeswithacentralizedmarketdesign22

22(*) the actor adopting the role of market operator (MO) varies according to the coordinationscheme.


Flexibilityre

source

Marketplatform

Central


AS

Transmissiongrid

Distributiongrid

Aggregator(CMP)

Aggregator(CMP)

DER(Owner A)

DER(Owner A)



FFC(DSO)FFC

(DSO) DER(Owner B)

DER(Owner B)

DER(Owner C)

DER(Owner C)

(3)

(1)

(2)

(4)

(6)

(8)

(5)

(7)

MO(DSO)MO

(DSO)

DM(DSO)DM

(DSO)

Seller(CMP)Seller

(CMP)

MO(TSO)MO

(TSO)

Figure11Prequalificationprocessapplicabletocoordinationschemeswithadecentralizedmarketdesign

Steps(#) Origin Action Recipient

1 DERowner RequeststechnicalprequalificationCertifiedBody(CB)

2CertifiedBody(CB)

VerifiestechnicalcharacteristicsDERandvalidatestechnicalprequalification DERowner

3 Aggregator(CMP)

AggregatesDER DERowner

4 Seller(CMP) Requestsystemprequalificationtomarketoperator MO

(*)

5 MO(*) Communicatesrequestforsystemprequalification FFC

(DSO)

6 FFC(DSO)

AssessesimpactofDERonlocalsystemconstraints(limits/capabilities)

7 FFC(DSO)

Sendsresponse(systemprequalificationassessment)to

MO(*)

8 MO(*) Sendsresponse(systemprequalificationassessment)to Seller

(CMP)Table15Stepswithintheprequalificationprocess


Fortheprocessesofprocurement,activationandsettlement,maindifferencesbetweencoordination

schemescanbefoundintheprocurementprocessandarelinkedwiththeorganizationandoptimization

of themarket for resources connected at the distribution grid. Figure 12 illustrates the processes for

procurement,activationandsettlementforcoordinationschemesCentralizedASmarketmodel,Common

TSO-DSOASmarketmodel(centralized)andIntegratedflexibilitymarketmodel.Table16listsactorsand

actionstakenwithintheseprocesses.Stepsareapplicable to thethreecoordinationschemes.Notethat

theroleofmarketoperator(MO)couldbeperformedbytheTSO(CentralizedASmarketmodel),byboth

system operators (Common TSO-DSO AS market model – centralized variant), or by an independent

market operator (Integrated flexibility market model). Differences across coordination schemes are

mainlyreflectedbytheactionslinkedwiththeprocurementofAS.Thisisduetothefactthatthisprocess

ismostimpactedbychangesinthemarketdesign,rolesadoptedandtypeofinformationexchanged.The

processesofactivationandsettlementareverysimilarduetothefactthatthemainroles,responsiblefor

theseactivities,areindisputableassignedtospecificmarketparties.

Flexibilityresou

rce

Marketplatform

(cen

tral)ASflexibility


Transmissiongrid

Distributiongrid

SO(TSO)

SO(TSO)

MO(TSO)MO

(TSO)

DER(Owner A)

DER(Owner A)

MDR(DSO)MDR(DSO)

SO(DSO)

SO(DSO)

DER(Owner B)

DER(Owner B)

DER(Owner C)

DER(Owner C)

(8)

(1)

(2)

(3)

(5)

(7)

(5)

(7)

(9)

(13)

(12)

(10)

DM(DSO)DM

(DSO)

DM(TSO)DM

(TSO)

RA(TSO)

RA(TSO)

Buyer(TSO)Buyer(TSO)

Aggregator(CMP)

Aggregator(CMP)

Seller(CMP)Seller

(CMP)(4)

(6)

MDR(TSO)MDR(TSO)

(11)

Figure12Procurement,activationandsettlementforCentralizedASmarketmodel,23

23(*)theactoradoptingtherolevariesaccordingtothecoordinationscheme.



Procurem

ent

1 RA(TSO) Determinesvolumestobeprocured

2 Buyer(TSO) Communicatesvolumesto MO

(TSO)

3 Seller(CMP)

Sendsaggregatedbids(fromtransmissionanddistribution)to

MO(TSO)

4 SO(DSO)(*) Communicatesdistributiongridconstraintsto MO

(TSO)

5 MO(TSO) Clearsmarketandcommunicatesresultsto SO

(DSO)

6 SO(DSO)(**)

ChecksiflocalconstraintsallowforactivationrequestedbyTSOandblocksifneeded–

communicationtoMOandstep5willberepeated

MO(TSO)

Activation

7 MO/FD(TSO)

Communicatesresultsto(activationissimultaneousifnocapacityis

procured)

Buyer(TSO)

Seller(CMP)

8 Aggregator/FD(CMP) Activatesunitsbasedontheselectedbids DER

Settlement

9 MDR(DSO) Communicatesmeasurementsto

MO(TSO)

10 MDR(TSO) Communicatesmeasurementsto MO

(TSO)

11 MO(TSO) Communicatesmeasurementsto SO

(TSO)

12 SO(TSO) CorrectsperimeterofBRPsaffectedbyactivation

13 MO(TSO)

Performsfinancialsettlementofflexibilityactivationforresourcesconnectedatdistributionand

transmissiongrid

Aggregator(CMP)

Table16Stepswithintheprocurement,activationandsettlementprocessesfortheCentralizedAS

marketmodel

ForacorrectinterpretationofTable16thefollowingshouldbeconsidered:


• (*)Step4 shouldonlybe considered in caseof scenario4of the integrationofdistribution

gridconstraints(seesection4.3).

• (**)Step5andstep6 shouldonlybe considered in caseof scenario3of the integrationof

distributiongridconstraints(seesection4.3).

ThestepsasexplainedinTable16fortheCentralizedASmarketmodel,couldbeeasilyadaptedforthe

CommonTSO-DSOASmarketmodel (centralized)andthe Integratedflexibilitymarketmodel.Differences

arerelatedtotheoperatorofthemarketandthebuyersandsellersonthemarket.

IntheCentralizedASmarketmodel,theroleofMOisgiventotheTSO,whileintheCommonTSO-DSO

ASmarketmodel(centralized),theroleofMOisperformedjointlybyTSOandDSOandintheIntegrated

flexibilitymarketmodel,theMOistheIndependentMarketOperator.Thishasanimpactonallthesteps

thatinvolvetheMO(i.e.steps2,3,4,5,6,7,9,10,11,13).

In the Centralized ASmarket model, the TSO is the only buyer, while in the Common TSO-DSO AS

marketmodel(centralized)andtheIntegratedflexibilitymarketmodel,bothTSOandDSOarebuyer.This

hasanimpactonallstepsrelatedtothepurchaseofflexibilityservices(i.e.steps1,2and7).

IntheCentralizedASmarketmodel,onlyCMPsaresellerofflexibility,similartotheCommonTSO-DSO

ASmarketmodel(centralized).However, intheIntegratedflexibilitymarketmodel, theTSOandDSOare

alsoasellerofflexibility.Thishasanimpactonallstepsrelatedtothesaleofflexibilityservices(step3).

Figure 13 illustrates the processes for procurement, activation and settlement for coordination

schemes Local AS market model and Common TSO-DSO AS market model (decentralized). As before,

differences across coordination schemes are not reflected in the actions (which do not change across

coordinationschemes)but,ratherinthemarketdesign,rolesadoptedandtypeofinformationexchanged.

Table 17 lists actors and actions taken within these processes. Steps are applicable to both

coordinationschemes.Notethattheroleoflocalmarketoperator(MO)couldonlybeperformedbythe

DSO.IntheCommonTSO-DSOASmarketmodel(decentralized)bothMOscontractflexibilitythatproves

beneficialtothesystemasawhole.Fromthelistofstepsitcanbeseenthatactionsconcerningactivation

suffernochange(comparedwiththeactionsinTable16).


Flexibilityresou

rce

Marketplatform

(local)

(AS)

ASflexibility


Localflexibility


Transmissiongrid

Distributiongrid

MO(DSO)MO

(DSO)

DER(Owner A)

DER(Owner A)

MDR(DSO)MDR(DSO)

SO(DSO)

SO(DSO)

DER(Owner B)

DER(Owner B)

DER(Owner C)

DER(Owner C)

(12)

(16)

(4)

(5b)(7)

(17)

(11)

(8)

(13)

(19b)

(15)

DM(DSO)DM

(DSO)

DM(TSO)DM

(TSO)MO

(TSO)MO

(TSO)

(9)

(2)

(8)(10b)

(11)

SO(TSO)

SO(TSO)

(3)

(18)

RA(TSO)

RA(TSO)

Buyer(TSO)Buyer(TSO)

RA(DSO)

RA(DSO)

(1)

Buyer(DSO)Buyer(DSO)

(6)

Aggregator(CMP)

Aggregator(CMP)

Seller(CMP)Seller

(CMP)

Aggregator(CMP)

Aggregator(CMP)

Seller(CMP)Seller

(CMP)

(5a)

(10a)

(14)

(19a)

MDR(TSO)MDR(TSO)

(16)

Figure13Procurement,activationandsettlementfortheLocalASmarketmodel

Steps(#) Origin Action Recepient

Procurem

ent

1 RA(DSO)

Calculatesvolumesoflocalflextobeprocuredviathelocalmarketforlocaluse

2 Buyer(DSO) Communicatesvolumesto MO

(DSO)

3 RA(TSO) Calculatesvolumestobeprocuredatsystemlevel

4 Buyer(TSO) Communicatesvolumesto MO

(TSO)

5a Seller(CMP)

SendsaggregatedbidsofflexibilityconnectedatthetransmissiongridtoASmarket

MO(TSO)


5b Seller(CMP)

Sendsaggregatedbidsofflexibilityconnectedatthedistributiongridtolocalmarket

MO(DSO)

6 SO(DSO) Communicatesdistributiongridconstraintsto MO

(DSO)

7 MO(DSO) Clearslocalmarket,respectingthelocalconstraints

8 MO/Aggregator(DSO)

Aggregatesnon-selectedbidsandsendsthemtothecentralmarket

MO(TSO)

9 MO(TSO) Clearscentralmarket

10a MO(TSO) Communicatesclearedcentralbidsto Seller

(CMP)

10b MO(TSO) Communicatesclearedlocalbidsto MO/Aggregator

(DSO)

Activation

11 MO/Aggregator/FD(DSO)

Communicatesmarketresultsto

(activationissimultaneousifnocapacityisprocured)

Seller(CMP)

SO

(DSO)

12 Aggregator/FD(CMP) Activatesselectedbids DER

Settlement

13 MDR(DSO) Communicatesmeasurementsto MO

(DSO)

14 MO(DSO) Communicatesmeasurementsto SO

(DSO)

15 MO(DSO) Communicatesmeasurementsto MO

(TSO)

16 MDR(TSO) Communicatesmeasurementsto MO

(TSO)

17 MO(TSO) Communicatesmeasurementsto SO

(TSO)

18 SO(TSO) CorrectsperimeterofBRPsaffectedbyactivation

19a MO(TSO)

Performsfinancialsettlementofflexibilityactivationfromresourcesconnectedattransmissiongrid

Aggregator(CMP)

19b MO(DSO)

Performsfinancialsettlementofflexibilityactivationfromresourcesconnectedatdistributiongrid

Aggregator(CMP)

Table17Stepswithintheprocurement,activationandsettlementfortheLocalASmarketmodel

ThestepsfortheCommonTSO-DSOASmarketmodel(decentralized)arealmostequaltothestepsof

theLocalASmarketmodel.Themaindifferencecouldbefoundinstep7and8.IntheCommonTSO-DSO

ASmarketmodel, step 7 is not performed (i.e. the DSO does not clear themarket). Instead, step 8 is

enlarged:theDSOaggregatesallbidsintoone(perhapsafew)bid(s)(pricesandvolumes)bytakinginto


accountthedistributiongridconstraintsand,whatdifferswiththeLocalASmarketmodel,bysolvingthe

localproblemsinthebidconstructionitself.TheTSOwillclearthecentralmarketanddecidewhichbids

tochoose fromtheDSO.Dependentonthechoiceof theTSO, theDSOwillactivate localresources that

solvebothconstraintsoftheTSOandtheDSO.

Figure 14 illustrates the processes for procurement, activation and settlement for coordination

scheme Shared balancing responsibility model. Table 18 lists actors and actions taken within these

processes. From the list of steps it can be seen that actions concerning activation suffer no change

(comparedwiththeactionsinTable16).

Figure 14 Procurement, activation and settlement for coordination scheme Shared balancing

responsibilitymodel


Procurem

ent

1

SO(DSO)SO

(TSO)

Agreesonexchangeprofile(mutualagreement)

SO(TSO)SO

(DSO)2a RA Calculatesreserveneedstobeprocuredviathe


(TSO) centralmarket

2b RA(DSO)

Calculatesvolumesoflocalflextobeprocuredviathelocalmarketforlocaluse

3a Buyer(TSO) Communicatesvolumesto MO

(TSO)

3b Buyer(DSO) Communicatesvolumesto MO

(DSO)

4a Seller(CMP)

Sendsaggregatedbidsfromresourcesconnectedatthetransmissiongridtothecentralmarket

MO(TSO)

4b Seller(CMP)

Sendsaggregatedbidsfromresourcesconnectedatthedistributiongridtothelocalmarket

MO(DSO)

5a SO(TSO)

Communicatestransmissiongridconstraintstothecentralmarket

MO(TSO)

5b SO(DSO)

Communicatesdistributiongridconstraintstothelocalmarket

MO(DSO)

6a MO(TSO) ClearsmarkettofulfillSO(TSO)requirements

6b MO(DSO) ClearsmarkettofulfillSO(DSO)requirements

Activation

7a MO/FD(TSO)

communicatescentralmarketresultsto(includeslocalandsystemflexibility)(activationissimultaneousifnocapacityisprocured)

Seller(CMP)

SO

(TSO)

7b MO/FD(DSO) Communicateslocalmarketresultsto

Seller(CMP)

SO

(DSO)

8 Aggregator/FD(CMP) Activatesselectedbids DER

Settlement

9a MDR(TSO) Communicatesmeasurementsto MO

(TSO)


9b MDR(DSO) Communicatesmeasurementsto MO

(DSO)

10a MO(TSO) Communicatesmeasurementsto SO

(TSO)

10b MO(DSO) Communicatesmeasurementsto SO

(DSO)

11a SO(TSO)

CorrectsperimeterofBRPsaffectedbyactivationofresourcesconnectedatthetransmissiongrid

11b SO(DSO)

CorrectsperimeterofBRPsaffectedbyactivationofresourcesconnectedatthedistributiongrid

12a MO(TSO)

Performsfinancialsettlementofflexibilityactivationofresourcesconnectedatthetransmissiongrid

Aggregator(CMP)

12b MO(DSO)

Performsfinancialsettlementofflexibilityactivationofresourcesconnectedatthedistributiongrid

Aggregator(CMP)

Table18Stepswithintheprocurement,activationandsettlementforcoordinationschemeShared

balancingresponsibilitymodel

The choice of the coordination scheme does not only determine the responsibilities of system

operatorstowardseachother,butdeterminestheresponsibilitiestowardsthirdpartiesaswell.Several

oftheseresponsibilities,suchassystemprequalification,areindependentfromthecoordinationscheme.

However,someoftheresponsibilities,i.e.thecorrectionoftheBRPperimeterafteractivation,arelinked

withthechosencoordinationscheme.IntheSharedbalancingresponsibilitymodeltheDSOisresponsible

forbalancingthelocalgridandhence,willberesponsibleforthecorrectionoftheBRPperimeter,while

intheothercoordinationschemes,thisresponsibilityisassignedtotheTSO.

4.5.3 Frequencycontrol

FrequencyContainmentReserves(FCR)arereserves thatareused tomaintain the frequencyof the

grid. They are activated autonomously by local measurements. Thus FCRs do not need any data

communicationforactivation(besidethesystemfrequencyasareference).Theyarealsocalledprimary

reserves,becausetheyarethefastestreactingreservesandarefirstactivatedduringdisturbances.FCRs

constantlyregulatethefundamentalfrequencyoftheAC-powersystem.

Asdiscussedinsection4.5.1,frequencycontrolisaservicewheretheTSOistheonlyinterestedbuyer.

ThismeansthattherewillbenouniquelocalmarketorganizedandoperatedbytheDSOforthesekinds

ofservices.TherelevantcoordinationschemesaretheCentralizedASmarketmodelandtheCommonTSO-

DSOASmarketmodel(centralizedvariant).


Note that for services, outside the scope of normal operation, i.e. emergency situations, other

coordinationschemescouldbealsoappropriate.Forexample, theSharedbalancingresponsibilitymodel

couldbetheappropriatemodelincasetheDSOwouldprovideblackstartorislandoperationcapabilities.

IntheCentralizedASmarketmodel,theroleoftheDSOislimitedtoallowingtheTSOtouseresources

fromthedistributiongridwhileguaranteeingthatDSOgridconstraintsarenotviolated.Themarketfor

frequencycontrolisacapacitymarket.ThismeansthatDSOgridconstraintswillbefirstverifiedduringa

processofsystemprequalification.Duringtheprocessofsystemprequalification,theDSOcouldallowor

prohibit the participation of a resource to the market. In a next phase, the process of system

prequalification could be refined. The DSO could, for example, determine the range of droop control

settings, i.e. the reactionof the flexible resource,dependentonanexternal signal.Thesedroopcontrol

settings could be optimized based on the local grid situation and the total system needs. Note that,

dependentonthemarketsituation,itmightbecostefficient,nottoincludetheDSOinthisprocessatall,

also not explicitly taking into account DSO grid constraints, in case there are never (or almost never)

violatedgridconstraints.Thereisnoreal-timecontrolofDSOgridconstraintsastheactivationofFCRis

based on local autonomous control in all coordination schemes. Obviously, general grid monitoring

controlsthestateofthegridandmightindicatepotentialreal-timeconstraints.

In the Common TSO-DSO AS market model (centralized variant), the organization of the

prequalification, procurement, activation and settlement of FCR is very similar to the Centralized AS

market model. However, the difference lies in how droop control parameters are adapted. In the

CentralizedASmarketmodel,theseparametersaredeterminedonce(withorwithoutinvolvementofthe

DSO). In the Common TSO-DSO AS market model (centralized variant), due to the close cooperation

betweensystemoperators,theseparametersaredeterminedonaregularbase(couldbeonadailybasis,

but even a lower granularity, i.e. hours or minutes before activation could be envisioned) and hence,

could integrate in amoredynamicway theday-to-day constraints of thedistribution grid.As a result,

DSOscouldbelessstrictinthephaseofsystemprequalification,allowingmoreresourcestoparticipate

to the FCR market. The setting of droop control parameters is the most critical part in terms of

communicationrequirementsbetweenTSOandDSOinthecontextofFCR.

4.5.4 Voltagecontrol

Thevoltagecontrolancillaryservice(AS)isusedtoprovidethereactivepower(Q)availablebyDSOs

andDER,connectedatthetransmissionnetwork,beyondtheirminimummandatoryband(incasethere

isaminimummandatoryband).Thesupportofresourcesconnectedatthedistributiongridtosupport

the voltage at the transmission grid is a very particular service. The service is delivered at the

interconnection point between TSO and DSO. As explained in section 4.5.1, the relevant coordination

schemesaretheLocalASmarketmodel, theSharedbalancingresponsibilitymodelandtheCommonTSO-

DSOASmarketmodel.


In the Local ASmarketmodel, the DSO offers reactive power to the TSO, but the TSO has its own

marketwherehewillchoosebetweentheofferoftheDSOandalternativeoffers,comingfromresources

connectedattransmissionlevel.IftheofferoftheDSOisselected,theTSOwillinformtheDSO.

IntheSharedbalancingresponsibilitymodel,theTSOsetsapredefinedschedule(set-point)totheDSO

tobemetatthecommonbordernode.TheDSOusestheflexibilityoflocalDER,obtainedvialocalmarket,

tofulfil itsresponsibilitiesonbehalfoftheTSO.Thedefinitionofthesetpointcouldbedoneinmutual

agreementbetweenTSOandDSOorcouldbedeterminedbytheTSOonly.

In theCommonTSO-DSOASmarketmodel, theTSOand theDSOhavea commonobjective,meaning

thattheDSOiswillingtoprovidealevelofreactivepower,evenatthepossiblecostofadditionallosses.

This is themain differencewith the LocalASmarketmodel where the DSO offers only the amount of

reactivepowerthatdoesnotincrease/violatetheboundariesoflossestheywanttohave.

Similartopreviousancillaryservices,theprocessesofprequalification,activationandsettlementare

relatively similar across coordination schemes. The main differences can be found at the level of

procurementasexplainedbefore.


5 AssessmentofcoordinationschemesIn this chapter, the benefits and attention points of the different coordination schemes are further

analyzed. The impact of the choice of a certain coordination scheme on TSO grid operation, DSO grid

operation,othermarketparticipantsandthefunctioningofthemarketarefurtheranalyzed.

Inaddition, it isalsoassessedhow feasible the implementationofacertaincoordinationscheme is,

takingintoaccounttheexistingregulatoryframework,theexistingstructureofsystemoperatorsandthe

ongoingEuropeaninitiativesintermsofregulation,harmonizationandintegration.

5.1 Benefitsandattentionpointsofcoordinationschemes

Inthenextsection,thedifferentbenefitsandattentionpointsofeachcoordinationschemearefurther

discussed.Theanalysis focusesonthe impactonTSOgridoperation,DSOgridoperation,othermarket

participantsandthemarketdesign.

5.1.1 CentralizedASmarketmodel

IntheCentralizedASmarketmodel,theDSOisnotinvolvedintheprocurementofresourcesfromthe

distributiongridandtheTSOhastheuniqueaccesstoalltheresourcestobeusedforsystemservicesfor

theentirepowersystem.Thiscoordinationschemeistheclosesttocurrentpractices(seealsochapter3).

DuetothelowinvolvementoftheDSO,thiscoordinationschemerequireslittlecommunicationbetween

TSO and DSO in all stages of the processes related to the use of flexibilities (prequalification,

procurement, activation and settlement). There is also no need to share data, unless the TSO would

include DSO grid constraints automatically in the market clearing. This has the risk of being rather

complex, in particular as the TSO has not necessarily the experience or knowledge to understand and

interpret thedistribution griddata (see section4.3 formore information related to scenarios).On the

otherhand,DSOsdonotmakeuseofthepotentialthatshort-termflexibilitiescouldbringtosolvelocal

gridconstraints.

There is only onemarket placewhich is operated by the TSO. The advantage of one singlemarket

operator(whoisalsotheonlybuyer),isthefactthatprocessesarerelativelysimpleandmarketproducts

areclearandknowntoallmarketparticipants.

Table19givesanoverviewofthemainbenefitsandattentionpointsrelatedtoTSOgridoperation,

DSOgridoperation,othermarketparticipantsandthefunctioningoftheASmarketfortheCentralizedAS

marketmodel.


Benefits Attentionpoints

TSOgridoperation

§ TSO has access to all

resources from distribution

grid–noneedtosharethem

withtheDSO

§ Few communication

between system operators

needed

§ Actions of the TSO might

negatively impact the DSO

grid and thus grid users

connected to the

distributiongrid

DSOgridoperation

§ Few communication

between system operators

needed

§ DSO grid constraints not

included

§ DSOs do not benefit from

possible advantages of the

useofflexibilities

Othermarketparticipants

§ Easy process and

standardized products due

to presence of only one

centralmarket

§ Aggregation could use

resources from different

DSO-areas.

Marketfunctioning

§ Coordination scheme close

to current markets, so

implementation is straight

forward

§ One central market can

function at low operational

costs

§ Low operational costs in

case DSO grid constraints

arenotconsidered

§ IncaseDSOgridconstraints

are considered, need for

process of data sharing

between TSO and DSO that

might outweigh potential

benefits

Table19stakeholderperspectiveofCentralizedASmarketmodel


5.1.2 LocalASmarketmodel

TheLocalASmarketmodelischaracterizedbytheoperationoflocalmarketsbytheDSO.Thiscould

result inaveryefficientmarketoperationincaseofrelative largeDSOseventhoughtheoperationofa

local market will result in additional costs for the DSO, compared to a situation where the TSO is

responsiblefortheoperationofthemarketforbothresourcesconnectedattransmissionanddistribution

level.Incaseofmultiplesmalldistributiongridshavingeachtheirownlocalmarket,thismightresultin

relativeorevenvery illiquidmarketsandasubstantial increase inoperationalcosts (noeconomies-of-

scale-effect and low liquidity result in high prices for flexibility and high costs for market operation,

possibly even local market power). In this situation, it should be considered if an additional layer of

aggregationcouldbeoptimal,thisisinparticularrelevantincasetheDSOisnotconnecteddirectlytothe

TSObuttoanotherDSO.Also,asharedplatformcouldhelpinreducingoperationalcosts.Inaddition,as

thelocalDSOmarketmightbesmallercomparedtothegeneralTSOASmarket,thecostfortheDSOfor

procuringflexibilitiesmightbehigher.Intheworstcase,theDSOcannotcontractasufficientamountof

flexibilitiesandshould takeunwantedmeasuressuchascurtailmentor loadshedding.Thesmaller the

sizeofthedistributiongrid,thehigherthisrisk.Thepresenceofmanylocalmarketscouldalsoincrease

thecostsforsettinguptheappropriatecommunicationandICTinfrastructure.

TheDSOacts as an aggregator and transfersbids in a smartway to theTSO.TheDSO can act as a

middleman between aggregators and the TSO. The bids submitted to the DSO could have a different

structure compared to the aggregated bids sent to the TSO which could respond more to the TSO

requirements, in case they would differ from the requirements of the DSO. Nevertheless, due to the

fragmentationofmarkets,thepricefortheaggregatedbidsmightbelessoptimalasbidsaredetermined

for each individual DSO-area, eliminating possible combinations of flexible resources, belonging to

differentDSO-areas. Inaddition, theremightneedtobeclearrulestoguaranteethat thedifferent local

marketsaggregatethebidsinaharmonizedway.Theriskofhavingmultiplelocalmarketslaysinthefact

that differentmarket products could exist. This is also a barrier to the development of the activity of

aggregationbyCMPs. However, theexistenceofdifferent localmarketproductscouldbeanadvantage

foraparticularDSOastheproductwouldbetailor-madetotheneedsofthatparticularDSO.

The DSO will activate flexibility resources in order to solve local constraints. This might generate

imbalances.TheDSOwillneedtocommunicatetheseactivationstotheTSO,sotheTSOisabletocorrect

theperimetersoftheBRPandpotentially,makecorrectiveactionstorestorethebalanceinthegrid.

Table20givesanoverviewofthemainbenefitsandattentionpointsrelatedtoTSOgridoperation,

DSO grid operation, other market participants and the functioning of the AS market for the Local AS

marketmodel.



TSOgridoperation

§ TSOreceivesaggregatedbids

thatallrespectlocalgrid

constraints

§ Price of aggregated bids might

be higher due to the fact that

aggregationhappensonlywithin

theindividualDSO-area

§ Priority for the DSO for certain

resources, might increase the

costfortheTSOwhoshoulduse

moreexpensiveresources

§ Activations ofDSOmight create

additionalimbalances

DSOgridoperation

§ DSOgridconstraints

included

§ DSOhasprioritytouse

resourcesfromthe

distributiongrid

§ DSO needs to aggregate local

bids into a format requested by

theTSO

§ Operational costs linked with

theroleofmarketoperator

§ DSO need to communicate

activationstotheTSO


§ Smallermarketsmightcreate

betterconditionsforsmaller

scaledDER

§ Less possibilities to aggregate

several resources into one

common bid due to fragmented

markets

§ Nopossibility to offer flexibility

directlytotheTSO

§ Possibility of having different

products in different local

markets -> need for

harmonization

Marketfunctioning

§ Easyorganizationofthelocal

marketincaseoflimited

numberofmarket

participants

§ In case multiple small

distribution grids have their

own separate local markets,

there could be the risk of fairly

illiquid markets with high

operationalcosts

§ Need for extensive


communication and ICT

infrastructure to implement the

communication between

(multiple)localmarketsandthe

centralmarket

§ Not in line with current

tendenciesofharmonizationand

integration of markets at EU-

level

Table20stakeholderperspectiveoflocalASmarketmodel

5.1.3 Sharedbalancingresponsibilitymodel

TheSharedbalancingresponsibilitymodeltransfersthebalancingresponsibilityfortheDSO-areafrom

the TSO to the DSO, according to a pre-defined schedule. As discussed in section 4.1.3, there are two

possibilitiestodeterminethispre-definedschedule:

• The first method uses only nominations of BRPs, taking the outcome of the energy-only

marketasbasisfortheschedule.Theadvantagesofthismethodarethefollowing:itiseasyto

calculate,thedatacanbeprocessedquicklyanditrequiresfewinteractionsbetweenTSOand

DSO. However, this schedule cannot be determined at the level of the TSO-DSO

interconnectionpoint anddoesnot take into account real-timeornear to real-timeTSOor

DSOgridconstraints.

• Thesecondmethod,basedonhistoricalforecastsattheTSO-DSOinterconnectionpoint,does

takeintoaccountbothBRPnominationsandhistoricandreal-timegridconstraints.However,

thismethodrequiresclosecooperationbetweensystemoperators,includingsharingofdata,

and might be time consuming. This is, especially in the case with multiple small DSOs,

ambitiouswithrespecttotiming.

TheamountofAStobeprocuredbytheTSOwillbelowerinthisscheme,duetothefactthatapartof

the responsibility is transferred to theDSO. In contrast, DSOswill need to procure higher amounts of

flexibilitiesasthisflexibilityshouldbeusedbothforbalancingandcongestionmanagement.Inaddition,

asthelocalDSOmarketmightbesmallercomparedtothegeneralTSOASmarket,thecostfortheDSOfor

procuring flexibilitiesmightbehigher, especially in regionswith relative lowDRESpenetrationor few

flexible loads. In theworst case, theDSOcannotcontracta sufficientamountof flexibilitiesandshould

take unwantedmeasures such as curtailment or load shedding. The smaller the distribution grid, the

higherthisrisk.Alsoforthegridusers,thismightresultinincreasedcostsasintotal,ahigheramountof


AS will be procured due to the fragmentation of markets. In conclusion, although TSO costs might

decrease,DSOcostswill increaserelativelymore, resulting inhighergridcostspotentiallybilled to the

end consumer. In addition, the DSO will need to set up its own system for determining imbalance

penalties.

Table21summarizesthemainbenefitsandattentionpointsrelatedtoTSOgridoperation,DSOgrid

operation,othermarketparticipantsandthefunctioningoftheASmarket.


TSOgridoperation

§ LoweramountofAStobe

procured,resultinginlower

costsfortheTSO

§ TSO has no access to resources

connected at the distribution grid

forASpurposes

§ Riskofimpactonsystemstabilityin

case DSO is not able to fulfill its

balancingresponsibilities

DSOgridoperation

§ DSOgridconstraintsincluded

§ Operational costs linked with the

roleofmarketoperator

§ In case multiple small distributiongridshave theirownseparate localmarkets, there could be the risk offairly illiquid markets with highoperationalcosts

§ Amountofflexibilitytobeprocured

byDSOswillincrease

§ Costofprocurementmightbemuch

higherfortheDSOcomparedtothe

TSO due to the smaller size of the

market

§ DSO-system for determination and

settlementofimbalancepenaltiesis

separatedfromtheTSO-system


Othermarket

participants


betterconditionsforsmaller

scaledDER

§ Risk of curtailment and load

shedding in case of small local

markets that generate insufficient

resources


severalresourcesintoonecommon

bidduetofragmentedmarkets

§ Possible high costs for balancing

resources to be paid by grid users

and/or BRPs, due to the higher

amount of AS to be procured and

thehigherpriceoftheAS

§ No possibility to offer resources

from the distribution grid to the

TSO

Marketfunctioning

§ Definition of profiled schedule

might be complex and time

consuming

Table21Stakeholderperspectiveofthesharingbalancingresponsibilitymodel

5.1.4 CommonTSO-DSOASmarketmodel

Themain characteristic of theCommonTSO-DSOASmarketmodel is the common cost optimization

whereTSOsandDSOslookforacombinedsolutionthatsatisfiestheneedsandminimizesthecost.This

has asmain advantage that grid costs are optimized. It also implies that theDSO has not necessarily

priority to use resources from the distribution grid first. Important will be to define how costs are

allocated to each individual TSO and DSO. In addition, this coordination scheme could be a basis for

further collaboration and/or integrationbetween systemoperators in case this is efficient froma cost

perspective.

Dependenton thechosenvariant, themarketmightbeorganizedasa commonmarket (centralized

variant -CV)orasa setof localmarkets (decentralizedvariant -DV).Thecentralizedvariantcouldbe

seenasanextensionoftheCentralizedASmarketmodelandthedecentralizedvariantcouldbeseenasan

extension of theLocalASmarketmodel. Thismeans that, for the centralized variant, compared to the

CentralizedASmarketmodel,theTSOhasnowtheadvantagetoshareoperationalcostswiththeDSO,but

willalsoneedtoshareresourceswiththeDSO.Inthecentralizedvariant,theTSOandtheDSOsharea


joint responsibility for the operation of themarket. In case responsibility is shared between actors to

allowforefficientwholesystemoutcomes,aclearframeworkandprocessesshouldbeinplacetomanage

interactions. This could for example be achieved by appointing a neutral third party to operate the

commonmarket,undersupervisionofTSOsandDSOs[14].

Inthedecentralizedvariant,theDSOistheoperatorofalocalmarketwhichmightresultinadditional

costs due to market operation, which could be higher compared to a situation where the market is

organizedasonecommonmarketbetweenTSOandDSO.Inthecommonmarket,operationalcostswill

be lower. In addition, standardization can be expected to be easier and communication requirements

mightbelower.However,thereisaneedforbothTSOandDSOtosharedatawiththecommonplatform,

whichrequiresclearrulesforsecurityandprivacyofdata.




TSOgridoperation

§ TSO could share the costs of

market operation with the

DSO(CV)

§ DSO has no priority use any

more over local resources

(DV)

§ TSOwillneedtoshareresources

withDSO(CV)

§ TSOandDSOwillneed toshare

datawithcommonmarket(CV)

DSOgridoperation

§ DSO grid constraints

included(CV&DV)

§ Lowoperationalcostsdue to

thecommonoperationofthe

TSO-DSOmarket(CV)

§ Operational costs linked with

theroleofmarketoperator(DV)

§ In case multiple small

distribution grids have their

own separate local markets,

there could be the risk of fairly

illiquid markets with high

operationalcosts(DV)

§ No priority for the DSO any

more to use resources from the

distributiongridfirst(CV&DV)




markets(DV)

§ TSOandDSOwillneed toshare


datawithcommonmarket(CV)


§ Grid costs are minimized by

minimizing the cost for TSO

and DSO in a common

optimization process

(CV&DV)

§ Structure of bids to be

submittedtothelocalmarket

might be less complex

compared to bids offered

directlytotheTSO(DV)


better conditions for smaller

scaledDER(DV)

§ Easy process and

standardizedproductsdueto

presence of only one central

market(CV)


resources from different

DSO-areas(CV)




markets(DV)

Marketfunctioning

§ Need for extensive

communication and ICT

infrastructure to implement the

communication between

(multiple)localmarketsandthe

centralmarket(DV)

Table22StakeholderperspectiveofcommonTSO-DSOASmarketmodel

5.1.5 Integratedflexibilitymarketmodel

The main characteristics of the Integrated flexibility market model are the introduction of non-

regulatedmarket players as buyers in thismarketmodel. In addition, thismarket set-up requires the

presenceof anewentity, the independentmarketoperator toguaranteeneutrality towardsallmarket

participants. The flexibility is allocated to the market party with the highest willingness to pay. This

createsalreadyafirstattentionpointasinthisscheme,itmightbepossiblethatmarketpartiescompete


forthesameresources,increasingthepriceoralternatively,TSOandDSOmighteachactivateflexibilities

thatnegatively influenceeachother’spositions.This couldeven lead tounnecessaryhigh costsof grid

operation,whichintheendarecarriedbythegriduser.

The introduction of non-regulated market parties might increase the liquidity of the market.

Dependingontheirriskmanagementstrategies,CMPsmightrequirelowervolumesboughtinday-ahead

and intraday as they have the possibility in real-time or near-to-real-time to buy or sell additional

volumes to correct their positions. In addition, both TSOs and DSOs are allowed to resell previously

contractedflexibilitybacktothemarket.Thisissupportingtheliquidityaswell.Nevertheless,clearrules

shouldbedefinedaboutthepriceatwhichsystemoperatorscanresellpreviouslycontractedvolumesin

ordernottostimulateanygamblingbehavior.Apossiblerulecouldforexamplebetoresellallvolumesat

thepreviouslycontractedprice.

Thefactthatthereisonecommonmarketplaceforallflexibilityprovidersandcustomersmightalso

increase theparticipationofDERand facilitate theoperationalprocess foraggregatorsas there isonly

onecommonmarketplatform.Notonlythesellersof flexibilityhaveaninterest,butalsoBRPsthatare

buyers of flexibility might have the possibility to lower imbalance penalties as they can correct their

position closer to real-time.Nevertheless, the presence of both regulated and non-regulated parties in

onecommonmarketmightraisesomespecificconcerns.First,itwillbedifficultfortheTSOtodetermine

the amountofAS tobeprocuredas theCMPs canalsobuy flexibility almost in real-time tokeep their

positionsbalanced.Thiswillofcoursebemainlyanissueatthestartoftheintegratedmarket.Ifseveral

marketsessionshavetakenplace,theTSOhasagoodviewonthevolumestypicallyneeded.Inaddition,

theTSOmightstillprocurereservesoutside thecommonmarketwhichcouldbeusedasanadditional

securitymeasure.However,ASprocurementoftheTSOoutsidethemarket,mightimpacttheliquidityof

themarketitselfandcouldbeabarrierforthedevelopmentoftheintegratedmarket.Inaddition,asmart

balancingsettlementmechanismcouldbe installed,givingCMPs theright incentives toprocure the ‘by

theTSOdesiredamounts’intheflexibilitymarket.AnotherconcernmightbethatopeningtheASmarkets

forCMPs,mighthinderfurtherdevelopmentofintradaymarkets.Seefurtherdiscussiononthistopicin

section5.2.3.

Thepresenceofanadditionalentity,i.e.theIMO,hasthebenefitthatthemarketwillbeoperatedby

anentitythatmightalreadyhaveexperienceinthisfield.TheIMOcouldbeforexampleanentitythatis

alreadytodayresponsiblefortheoperationofday-aheadandintradaymarkets.Inaddition,thepresence

ofanIMOmightguaranteeneutralitywhichisessentialformarketplayers.TheIMOcouldforexamplebe

involvedintheprocessofprequalificationorblockingofbids(seesection4.3foradetaileddiscussion),

to avoid any conflict of interest for theDSO inhis role as seller and inhis role as flexibility feasibility

checker.However, itmight require a clear frameworkwhere responsibilities of the IMO towards both

systemoperatorsandnon-regulatedmarketpartiesareclarified.Inaddition,theoperationofthismarket,


inparticulartheintegrationofgridconstraints,requiresthesharingofdatabysystemoperatorswiththis

independententity.Thisisonlypossibleincaseclearrulesfordatasecurityandprivacyaredetermined.




TSOgridoperation

§ General lower need for

resources as BRPs have

increased possibilities to

balancetheirportfolios

§ Lower cost due to high

liquidity

§ Possibility to resell unneeded

resourcesboughtupfront

§ Accesstounneededpreviously

contracted resources from the

DSO

§ Risk of procuring more

resourcesthanneeded

§ Need for sharing of data with

IMO

§ TSOs and DSOs might compete

forthesameproduct,increasing

totalcost

§ TSOs and DSOs might activate

opposingflexibilities

DSOgridoperation

§ DSOgridconstraintsincluded

§ Lower cost due to high

liquidity

§ Possibility to resell unneeded

resourcesboughtupfront

§ Accesstounneededpreviously

contracted resources from the

TSO

§ Need for sharing of data with

IMO

§ In case the IMO is not

responsible for prequalification

and blocking of bids, potential

conflictofinterest

§ No priority for the DSO to use

resources from the distribution

gridfirst

§ TSOs and DSOs might compete

forthesameproduct,increasing

totalcost

§ TSOs and DSOs might activate

opposingflexibilities

Othermarket

participants

§ Common market place for all

flexibility providers might

facilitateoperationalprocess

§ Lowerimbalancepenaltiesdue

to access to flexibility close to

§ Liquidity of intraday market

mightdecrease


real-time

§ Facilitates the participation of

DERtothemarket


resources from different DSO-

areas.

Marketfunctioning

§ Participation of non-regulated

partiesmightincreaseliquidity

§ One common platform for all

marketparticipants

§ Operational costs of market

operation lower for individual

partyastheycanbesharedby

alargenumberofparticipants

§ Additional market player to be

introduced where clear

definition of responsibilities is

needed

§ Potentialnegativeimpactonthe

development of Intraday

markets

Table23Stakeholderperspectiveoftheintegratedflexibilitymarketmodel

5.1.6 Summaryofbenefitsandattentionpointsofdifferentcoordinationschemes

Table24summarizesbenefitsandattentionpointsofthecoordinationschemes.

CoordinationScheme Benefits Attentionpoints

CentralizedASmarket

model

§ Efficient scheme in case onlythe TSO is a buyer for theservice

§ A single market is low inoperational costs and supportsstandardizedprocesses

§ Most in line with currentregulatoryframework

§ No real involvement ofDSO

§ DSOgridconstraintsnotalwaysrespected

LocalASmarketmodel

§ DSO has priority to use localflexibility

§ DSO supports actively ASprocurement

§ Local markets might createlower entry barriers for smallscaledDER

§ TSO and DSO marketclearedsequentially

§ Local markets might beratherilliquid

§ Need for extensivecommunicationbetweentheTSOmarket and thelocalDSOmarkets

Sharedbalancing

responsibilitymodel

§ TheTSOwillneedtoprocurealoweramountofAS

§ Local markets might createlower entry barriers for small

§ TotalamountofAStobeprocured by TSO andDSO will be higher inthisscheme


scaledDER§ Clear boundaries between

systemoperationTSOandDSO

§ BRPs might face highercostsforbalancing

§ Small local marketsmight be not liquidenough to providesufficient resources fortheDSO

§ Defining a pre-definedschedule methodologyagreed by bothTSO/DSO might bechallenging

CommonTSO-DSOAS

marketmodel

§ TotalsystemcostsofASfortheTSO and local services for theDSOareminimized

§ TSO and DSO collaborateclosely, making optimal use oftheavailableflexibleresources

§ Individual cost of TSOand DSO might behigher compared tootherschemes

§ Allocation of costsbetween TSO and DSOcouldbedifficult

Integratedflexibility

marketmodel

§ IncreasedpossibilitiesforBRPsto solve imbalances in theirportfolio

§ High liquidity and competitiveprices due to large number ofbuyersandsellers

§ Independent marketoperator needed tooperate the marketplatform

§ Negative impact on thedevelopment andliquidity of intradaymarkets

§ TSO and DSO need tosharedatawithIMO

Table24benefitsandattentionpointsofcoordinationschemes

5.2 Feasibilityofcoordinationschemes

The feasibility of a certain coordination scheme depends on the regulatory framework, the

organizationofDSOsand theongoing initiatives forharmonizationand integrationofASmarkets.The

literaturereviewinchapter3illustratedtheongoingdiscussionsontheEuropeanregulatoryframework

and the impact on TSO-DSO cooperation. In this section, themain elements are highlighted that are a

preconditionforacertaincoordinationschemetobeabletobeimplemented.

5.2.1 Regulatoryframework

The main precondition for each of the coordination schemes is the fact that DER are allowed to

participate toASmarkets.Although thisseems tobe trivial, thecountrysurvey inchapter3 illustrated

thatinsomecountries,i.e.Italy,DERarenotyetallowedtoparticipatetoASmarkets.Hence,somenew


marketplayers,i.e.aggregators,arenotrecognizedinsomecountriesordifferentrulesapplydependent

onthecountry.

In addition, the evolution of the roles and responsibilities of system operators will determine the

feasibility of a certain coordination scheme. Today, the TSO has the sole responsibility to balance the

system.IntheSharedbalancingresponsibilitymodel,thisresponsibilityispartiallytransferredtotheDSO.

ExceptfortheCentralizedASmarketmodel,allcoordinationschemesassumethattheDSOcontracts

flexibilityresourcestosolvelocalgridconstraints.Today,thisisnotdonebyDSOsduetoissuesrelatedto

the regulated cost structureofDSOs (flexibilityprocurementnotnecessarily consideredasoperational

expenseandnotrefunded).Therefore,itisimportantthattheprocurementofflexibilityresourceswillbe

recognized as operational expense. In addition, for the Common TSO-DSO AS market model, the key

characteristicisthecommonoptimization.Thisisonlyfeasibleincasetherulesforthecostrecognitionof

flexibilitiesarealignedbetweenTSOsandDSOsandiftheregulatoryframeworkdeterminesacommon

objective tominimize total expenses for TSOs andDSOs. This also implies clear guidelines on how to

makeacorrect trade-offbetween investments in infrastructure, theuseof flexibility resourcesand the

useofe.g.non-firmgridaccesscontracts.

IntheLocalASmarketmodelandtheCommonTSO-DSOmarketmodel(decentralizedvariant),theDSO

actsasanaggregatoronbehalfoftheTSO.Thisisalsoaspecificrolethatneedsclarificationinregulation.

Besidesrolesandresponsibilities,theDSOgridconstraintsandthewaytorespectthemistodaynot

enforced by law. Thismeans that processes for system prequalification or active blocking of bids are

rarelyinstalled.

Table25summarizesthemainregulatorybarriersthatmighthindertheimplementationofaspecific

CoordinationScheme.

CoordinationScheme Regulatorybarriers

CentralizedASmarketmodel§ No process for prequalification or active blocking of bids

byDSOsenforcedbylaw

LocalASmarketmodel§ NocostremunerationforDSOswhocontractflexibilities

§ DSOsnotallowedtobeanaggregatoronbehalfoftheTSO

Sharedbalancingresponsibilitymodel

§ Today,theTSOistheonlyentityresponsiblefortheentire

balancingofthesystem

§ NocostremunerationforDSOswhocontractflexibilities


§ NocommoncostobjectiveforTSOsandDSOs


§ DSOsnotallowedtobeanaggregatoronbehalfoftheTSO




§ Today, commercial market parties are not allowed to

participateinASmarkets

§ TSOs and DSOs should be allowed to resell previously

contractedflexibilitytothemarket

§ No process for prequalification or active blocking of bids

byDSOsenforcedbylaw

Table25Regulatorybarriersforcoordinationschemes

In conclusion, the Centralized ASmarketmodel has the least obstacles for implementation from a

regulatory point of view. This coordination scheme differs the least from current organization of AS

marketsanditistheonlycoordinationschemewhichistodayalreadyapplicableforaselectionofASin

some countries. See also the country review in chapter 3 for more details on the current applicable

coordinationschemesinthesurveyedcountries.Theothercoordinationschemeswillrequiresubstantial

changes in roles and responsibilities for system operators and commercialmarket parties in case the

implementationofoneofthesecoordinationschemesisenvisioned.

5.2.2 Organizationofdistributionsystemoperators

Thecoordinationschemesasdiscussedinchapter4arefocusingontheinteractionbetweenTSOand

DSO,withoutexplicitlyconsideringthewayDSOsareorganizedonanationallevel.Insomecountries,i.e.

Norway or Germany, there are a lot of relatively small DSOs. The question arises how feasible the

differentcoordinationschemesareincasethenumberofDSOsishigh.ThetypeandnatureofDSOs(e.g.

size, DSO-connected or TSO-connected) should be taken into accountwhen designing the instruments

and requirements to deliver the wider objectives, in order to avoid disproportionate or negative

cost/benefitimpacts[14].

In the Centralized AS market model, the DSO is not involved in the process of procurement or

activation. Dependentonthewaylocalgridconstraintsarehandled(seesection4.3),theDSOcouldbe

involvedinaprocessofprequalificationormanualorautomatedblockingofactivations.Incasemultiple

DSOsshouldcommunicatewithonesingleTSO,itisobviousthatthiscanonlybeanautomatedsystem.In

case a systemofmanualblockingof activations is chosen, theoperational costsmightbemuchhigher

comparedtothebenefits.Inaddition,itmightnotbefeasibletoorganizethismanualcheckbymultiple

DSOswithinthelimitedtimeframe,i.e.theiterativeprocessofmultipleclearingshastohappenwithina

dedicatedtimeframeinordertobeabletocommunicatetheresultstoallmarketplayers.

In the Local AS market model, the Shared balancing responsibility model, the Common TSO-DSO AS

market(decentralizedvariant),DSOsareeachresponsiblefortheorganizationofalocalmarket.Incase


therespectivedistributiongridistoosmall,thismightresultinveryilliquidmarkets.Inaddition,forthe

Shared balancing responsibilitymodel, in case the DSO has to comply with a scheduled profile for its

individualDSO-area,thecostsofbalancingmightbemuchhigherduetotheilliquidityofthemarketand

thefactthattheportfolioeffectismuchlower(lowerprobabilityofoppositedeviationsthatcanceleach

otherout).Inordertoavoidthatalargenumberofsmallilliquidmarketsarecreated,atahighcostand

high operational burden, there is need for coordination between DSOs. This could for example by

aggregatingseveral smallerDSO-areas intoonecommonDSO-area.Theorganizationof thisaggregated

DSOmarketcouldbedonebytheDSOsitselforcouldbeoutsourcedtoanindependentactortoincrease

theefficiencyoftheprocessandtoguaranteeneutrality.Thecoordinationschemeswillthendefinethe

interactionbetweentheTSOandtheaggregatedDSO-area.

FortheCommonTSO-DSOASmarket(centralizedvariant)andtheIntegratedflexibilitymarketmodel,

theimpactofthenumberofDSOsislimitedasthecoordinationschemeaggregatesalreadytheentireTSO

andDSOareaofflexibilities. FortheIntegratedflexibilitymarketmodel,thesameremarkisvalidasfor

theCentralizedASmarketmodel, i.e. the integration ofDSO grid constraints should be organized in an

automatedwaytoeasetheoperationalprocess.Also,forverysmallDSOs,itmightbetimeconsumingto

participate to the market themselves and it could be a possibility that the responsibility for market

participationisassignedtoonelargerDSO,oranindependentbody,representingseveralsmallerDSOs.

5.2.3 Europeanevolutiontowardsharmonizationandintegration

SeveralinitiativesareongoinginEuropetopromotefurtherharmonizationandintegrationoftheEUs

internal energymarket. Themarket coupling of day-aheadmarkets is close to being finalized and the

couplingofintradaymarketsisongoing.Thisevolutionoftheintradaymarketisinparticularrelevantfor

theIntegratedflexibilitymarketmodel.Inprinciple,boththeintradaymarketandtheIntegratedflexibility

marketmodelcouldco-existaslongastheycomplementeachother.Thatis,differentservicesareoffered

in eachmarket. However, in case the same services are traded in bothmarkets, it ismore efficient to

integrate bothmarketswhile extending the scope of current intradaymarkets, i.e. allowing for trades

closertoreal-time.

In addition, several initiatives are taken to harmonizeASmarkets. There is for example a common

cross-borderweeklyauctionmarket forFCRbetweenGermany,Austria,TheNetherlands,Belgiumand

Switzerland.ItisexpectedthatalsoDenmarkandFrancewilljointhiscommonauctioninthenearfuture

[33]. Also the markets for AS are subject to further integration. The Network Code on Electricity

Balancing determines further requirements for the harmonization of balancing markets, the effective

cross-bordersharingofbalancingresourcesandthenettingofimbalances[22].Thisalsomeansfurther

cross-borderintegrationforaFRR,mFRRandRR[34].


Theemphasisoncross-borderintegrationandharmonizationofnationalmarketsisimportantinthe

context of the coordination schemes between TSO and DSO. The coordination schemes determine the

possible interactionsbetweenTSOandDSOsonanational level.Asexplainedbefore,dependentonthe

local situations or the type of product, certain coordination schemes might be more appropriate

compared to others. This could result in differences between countries. However,with regards to the

futureDSOandTSOrelationship,CEERbelieves thatgeneralprinciplesshouldbedefinedonEuropean

level, while more detailed regulation, for the implementation of common principles in the respective

countries,shouldbedevelopedatanationallevel[14].

Ofcourse, it isalwayspossiblethat, inadditiontoacommonEuropeanmarket forAS,eachcountry

hasanational(orregional)ASmarket,especiallyforresourcesconnectedatthedistributiongrid.Thisis

areasonableoption,especiallyincountrieswheretheparticipationofDRESfromthedistributiongridto

ASmarkets is still limited. In this case, there is no conflict between a specific nationalmarket and the

evolutiontowardscommonmarketsforASprocurement.

However,thequestionarisesifinasituationwithlargesharesofDERparticipatingtoASmarkets,itis

still efficient to have a commonmarket on the one hand and a local market on the other hand. It is

obviousthathavingtheco-existenceoftwomarketsisnotcost-efficientandmightlimitthesupportDRES

couldgive,i.e.insomecountries,theshareofDRESislargeandcouldalsogivecross-bordersupport.The

problem ismainly relevant forFRRandRRproducts.Asdiscussed in section4.5.4,voltagecontrol isa

very local issue fromaTSO (andDSO)perspective and it seems reasonable to assume that for thisAS

product,themarketwillbeorganizedatanationalorevenmorelocallevel.ForFCR,theCentralizedAS

marketmodel and theCommonTSO-DSOASmarketmodel (centralizedvariant)wereproposedasmain

coordination schemes. As the latter could be seen as a more advanced version of the former, both

coordination schemes are compatible and do not hinder further cross-border harmonization or

integration.

For AS products used for balancing and congestion management, all coordination schemes are in

principlepossible.Itisinthiscasethatmostattentionshouldbegivenhowthesenationalmarketsinthe

futurewillbeharmonizednaturally,especiallyasthemoremarketsareintegrated,thelowertheamount

ofAStobeprocuredwillbe.Ofcourse,achoiceforacertaincoordinationschemeisnotfinalandchanges

inrolesandresponsibilities(e.g.enforcedbynewEUregulation,seealso5.2.1)couldmovecountriesinto

thedirectionofacertaincoordinationscheme.Nevertheless,themainmessageisthat,beforeextensive

investments are made in communication and ICT infrastructure to organize a national market,

discussionsonEuropeanlevelshouldtakeplacehowthesenationaldevelopmentsdonothinderfurther

Europeanintegration.Althoughthediversityofnationalarrangements(e.g.voltagelevelsforelectricity

or pressure levels for gas, roles and responsibilities, capabilities, interests, etc.) may preclude the

development of one-size-fits-all solutions, NRAs, DSOs and TSOs across European countries should


cooperatetoagreecommonapproaches,wherethesebetterfacilitatetheoptimaloperationofthesystem,

i.e.inasecure,sustainableandcost-efficientmanner[14].

5.2.4 Feasibilityofcoordinationschemes:feedbackfromtheconsultation

In terms of feasibility of the coordination schemes, respondents are relatively in line in the

consultation(annex8.2).TheCentralizedASmarketmodelisconsideredasmostcompatiblewithexisting

AS markets and as a result, will be feasible already today or in the near future. Other coordination

schemesseemtobeconsideredasfeasibleby2030,however,clearpreferencesexistforspecificschemes.

Although the Centralized ASmarketmodel is closest to current market organization, it is only put

forward as thepreferred schemeby a limitednumber of respondents.Most respondents consider this

schemeassufficientforthekick-startofthemarketbuttooconstrainedintermsofdynamicinteraction

of TSOs, DSOs and commercial market players. Also, this scheme does not address the DSO needs

sufficiently.

MostrespondentsdonotfavortheLocalASmarketmodelortheSharedbalancingresponsibilitymodel

as they are both considered as not very cost-efficient, lacking economies of scale. Therefore, although

consideredasfeasibleby2030,itisbynoneoftherespondentsthepreferredoption.

Almost all respondents have a clear preference for the Common TSO-DSO ASmarketmodel or the

Integrated flexibilitymarketmodel. Bothmarketmodels seem to provide themost coherent answer to

futuregrid,systemandmarketchallenges.

Respondents with a preference for the Common TSO-DSO AS market model emphasize as most

importantadvantagesthecommonoptimizationoftheuseandthecostofflexibilitybysystemoperators.

RespondentswithapreferencefortheIntegratedflexibilitymarkethighlightthefactthatthemorebuyers

youallowinamarket,thehighertheliquidityandthelowerthecostswillbe.Thismarketmightalsogive

incentivestoinvestorswhichareasinthegridcouldbenefitfrominvestmentsinflexibility.

Intermsofbarriers,respondentsareinline,highlightingseveralrelevantissues.

Ageneralpreconditionforthefeasibilityofthecoordinationschemesisthedevelopmentofflexibility

fromthedistributiongrid.Inaddition,theaccessbyDERtodifferentmarketsiskey.Thisalsoimpliesthat

all(regulatory)barrierstoaggregationshouldberemoved.

Another importantbarrier,emphasizedbymostrespondents is theevolutionoftheroleof theDSO.

DSOsshouldbeallowedtocontract flexibility inacost-efficientway.ThisalsomeansthatDSOsshould

develop the necessary business models and tools to anticipate to the use of flexibility, i.e. for grid

planning,operationalplanningandreal-timemonitoringandcontrol.


In addition, mentioned by several respondents, the incentive regulation for both TSOs and DSOs

shouldtakeintoaccounttheuseofflexibilityandshoulddevelopspecificperformancetargetsthatarein

linewiththeparticipationtotheupcomingflexibilitymarkets.

Tworespondentsunderlinethecurrentstatusofunbundlingasapotentialbarrier.Forexample,there

mightbe the risk that, in caseDSOsarenotunbundled, vertically integrated companies are favoredas

flexibilityproviderbytheDSO.Therules forunbundlingalso limit thetradingpossibilitiesof flexibility

forDSOs.

TworespondentsmentiontheexistenceofmultipleTSOsandDSOsinonecountrythatmighthinder

the implementation of certain coordination schemes. Specific attention should be given to solutions to

facilitateTSO-DSOcoordinationincasemultipleTSOsandDSOsareconcerned.

Onerespondentemphasizestheneedfornewwaysofdatahandlingas,duetotheincreasedreal-time

interactionbetweensystemoperatorsandmarketparties,moredataneedtobeprocessed/sharedwithin

ashorttimeframe.


6 ConclusionsandkeymessagesThe increase of DER, mainly connected at the distribution grid, provides opportunities for system

operators tomake use of flexibility from the distribution grid. Differentmechanisms for coordination

betweenTSO andDSO have been examined in the context of this report. Themain keymessages are

listedbelow.

1. Thechoiceoftheappropriatecoordinationschemeisdependentonmultiplefactorssuchasthe

typeofancillaryservice,normaloperationversusemergencysituations,thestateofthegrid,the

amountofRESinstalled,thecurrentmarketdesignandtheregulatoryframework.

2. TSO-DSOcoordinationcouldbeorganizedonacountry level,butweshouldstrive to integrate

nationalTSO-DSOcoordinationset-upswithintheprocessofEUharmonizationandintegration.

This means that processes and systems should be made dynamically to anticipate on future

harmonizationandintegration.

3. The feasibility of coordination schemes is very dependent on the evolution of roles and

responsibilitiesoftheDSOandviceversa.

4. Atrade-offshouldbemadebetweenthebenefitsofacertaincoordinationschemeandthecostof

implementing this scheme. For example, it might be very costly to install a system of full

observabilitywhereallDSOconstraintsaremonitoredinreal-timeincaseconstraintsarealmost

neverviolated.

5. The choice for a specific coordination schemedoesnot imply that this scheme couldnever be

adapted.Acrosscoordinationschemes,thereisagradualincreaseoftheroleandresponsibilities

of theDSO. Dependent on the national evolution, a country can evolve from one coordination

scheme to another. In particular, the Centralized AS market model, the Common TSO-DSO AS

marketmodel (centralizedvariant)and the Integratedflexibilitymarketmodel sharea common

market architecture in terms ofmarket platform and ICT requirements. A shift between these

coordinationschemesismainlyaquestionofachangeinrolesandresponsibilities.TheShared

balancingresponsibilitymodelcouldbeseenasaduplicationofthesamemarketarchitectureas

well. AlsotheLocalASmarketmodelandtheCommonTSO-DSOASmarketmodel(decentralized

variant)shareacommonmarketarchitecture.


6. Independent of the coordination scheme, the procurement of AS from the distribution grid

shouldbe clear, easy tounderstand, reliable, cost-efficient and fast. In case interactionmodels

aretoocomplex,thevalueforsmallerflexibilityprovidersofDERmightbeheavilyreduced.

7. Independent of the coordination scheme, the procurement of AS from the distribution grid,

should be transparent,non-discriminatory andneutral. This is in particular relevant for small

DSOs, procuring flexibility, in case they are vertically integrated with a non-regulated energy

player.

8. A closer cooperation between TSOs and DSOs will still require that system operators remain

responsiblefortheoperationoftheirgridandthemanagementoftheirdatainasecureway.


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8 Appendices

8.1 Appendix1:OverviewDERparticipationtoASmarkets

AS

product

Productname Procurement

mechanism

TypeofDER

AT

FCR PrimaryControl Tender Hydro

aFRR SecondaryControl TenderDemandresponse,industrialgeneration,

emergencygenerators,storage,etc.

mFRR TertiaryControl TenderDemandresponse,industrialgeneration,

emergencygenerators,storage,etc.

BE

FCR

Primaryfrequency

control(R1-Down

andR1–Load(Up))

Tender Flexiblegenerationandload

mFRRTertiaryreserve

(R3-DP)

Tender(Yearlyand

monthly)

DR(Interruptibleordownwardcontrollable

demand)

DK

FCR PrimaryControlDailyauction

(DK1/DK2)CHPs,electricboilers,battery

aFRRSecondaryReserve

(DK1)

Dailytender

(DK2)

Bilateral(DK1)

CHPs,electricboilers

mFRR

Tertiary(Manual)

Reserve(DK1and

DK2)

5yeartender(DK2)

Dailyauction(DK1)CHPs,electricboilers

ES

FCR

Frequency

containment

reserve

MandatoryAllofthem(uponapprovalfromTSO)

(sinceDecember2015)

FRRFrequency

restorationreserveMarket

Allofthem(uponapprovalfromTSO)

(sinceDecember2015)

RRReplacement

reserveMarket/Mandatory

Allofthem(uponapprovalfromTSO)

(sinceDecember2015)

Other Deviation Market Allofthem(uponapprovalfromTSO)


management (sinceDecember2015)

OtherPowerfactor

controlMandatory Allofthem

FI

FCR

Frequency

controllednormal

operationreserve

(FCR-N)

YearlyandHourly

Market/Bilateral

contracts

Mediumsizeindustrialandcommercialconsumers

suchasalargedeepfreezestoragepilot,and

experimentalbatterystoragesystems.

FCR

Frequency

controlled

disturbance

reserve(FCR-D)

YearlyandHourly

Market/Bilateral

contracts

Mediumsizeindustrialandcommercialconsumers

suchasalargedeepfreezestoragepilot,andan

experimentalbatterystoragesystem.

mFRRFastdisturbance

reserve(mFRR)

RegulatingPower

Market/Bilateral

contracts

100–300MWfromDR.Typevariesdependingon

themarketbuttypicallymediumsizeindustrialand

commercialloads.

Other Peakloadreserve market 10MWfromoneheatpumpNA

Other

Heatingload

reductionforlast

reserve.(Pilot)

Bilateralcontract

betweenDSOand

TSO.(pilot)

About20MWaggregatedfromresidentialhouses.

NO mFRRFastdisturbance

reserve(mFRR)

Dailytender,plus

additionalseasonal

market

Nolimitationsaslongattheactivation

requirementsaremet.

Table26OverviewofDERparticipationtoASmarkets


8.2 Appendix2:Questionsconsultation

RoleoftheTSOandtheDSO:

1.ShouldtheTSOberesponsibleforsolvingbothcongestionattransmissionanddistributionlevel?

2. Should the DSO become themarket operator of a localmarket for flexibilities or should this be

organizedbyanindependentmarketoperator?

3.WoulditbeapossibilitythattheDSObecomesresponsibleforthebalancingofthedistributiongrid

duringnormalday-to-dayoperation?Whatwouldbebenefitsorrisks?

4. Is itrealistictoassumethatDSOswillalsobuylocalflexibilityinreal-timeorneartoreal-timeto

solvelocalcongestion,comparedtonetworkreinforcementsorbuyingflexibilitiesinlongterm?

5.Whatcouldbeotherout-of-theboxoptionstoincreaseefficiencyofTSO-DSOcoordinationwhich

havenotbeendiscussedinthisconsultationdocument?Whatwouldbeadvantagesordisadvantagesof

yoursuggestion?

Marketdesign:

6.Isitfromamarketdesignpointofview,optimal,toorganizelocalmarketsforflexibilityatthelevel

oftheindividualDSO?CouldgroupsofsmallDSOsbepooledtogether?

7.WhatisyouropiniononacommonmarketforbothTSOsandDSOstobuyflexibilityfortheirown

purposes?

8.Shouldcommercialmarketparties(balanceresponsibleparties)haveaccesstothesameflexibility

marketasTSOsandDSOstobuyresourcestobalancetheirportfolio?

9. In casebothTSOsandDSOscontract flexibility from theDistributiongrid in real-timeornear to

real-time:

a.ShouldtherebepriorityfortheTSO?

b.ShouldtherebepriorityfortheDSO?

c. Should the total costs for both TSO and DSO together be optimized, without allocating upfront

priorityforoneofthetwonetworkoperators?


10.ShouldthecommonmarketforTSOsandDSOsbeoperatedbytheTSO,bytheDSO,bytheTSOand

DSOtogetherorbyanindependentmarketoperator?

11. Which of the coordination schemes would facilitate the participation of local flexibility to the

marketthemost,theleast?

Usecases:

12.Howdoyouassesstherelevancyoftheproposedusecaseswithrespecttotheincreasedneedfor

TSO-DSOinteraction.Whichoftheusecasesisthemostimportantandwhy?

13.Arethereadditionalusecases,notproposed,thatshouldbeinvestigatedinthecontextofancillary

serviceprovisionbyTSOsandlocalserviceprovisionbyDSOs?

Feasibilityofthecoordinationschemes:

14. How do you estimate the feasibility of the 5 coordination schemes (feasible today, feasible by

2030,feasibleinthelongterm,notfeasible?)

15. What are the relevant barriers, both at national and European level, for the feasibility of the

differentcoordinationschemeswithrespectto:

§ ThecurrentroleoftheTSO

§ ThecurrentroleoftheDSO

§ Thecurrentmarketdesign

§ Thecurrentrulesandproceduresfornetworkoperation

§ TheremunerationforTSOsandDSOs

§ Europeanregulation(currentandexpected)

§ Otherrelevantaspects

16.HowdoyouseetherelationbetweenTSOsandDSOswithintheprocessofEuropeanintegration

andharmonization?


8.3 Appendix3:Overviewrespondentsconsultation

Nineteenanswerswerereceived for theconsultation.Eighteenanswerswereconsideredcompleteandthefeedbackisintegratedinthereport.

Theanswersprovidedcamefrom10differentcountries.Figure15givesanoverviewoftherespondentspercountry.

Figure15Overviewrespondentspercountry

Thebackgroundoftherespondentswasdiverse,i.e.regulators,systemoperators,researchinstitutes

and commercial companies provided feedback. Figure 16 gives an overview of the respondents per

category.

1

3

2

1

4

1

1

2

21

Overviewrespondentspercountry

Austria

France

Germany

Greece

Italy

Norway

TheNetherlands

Slovenia

Spain

US


Figure16Overviewrespondentspersector

8

5

32

0

2

4

6

8

10

Researchins[tute

CommercialCompany

Systemoperators

Regulator

Overviewrespondentspersector


Thispaperreflectsonlytheauthor’sviewandtheInnovationandNetworksExecutiveAgency(INEA)isnot

responsibleforanyusethatmaybemadeoftheinformationitcontains.