Spatio-temporal coordination of distributed energy and regulation capacity with ISO and DSO operation

This paper proposes a bi-level co-optimization model for coordinating Distributed Energy Resources (DERs) in power distribution systems to offer energy flexibility and regulation capacity in the day-ahead electricity market. The proposed co-optimization model considers the physical constraints of the distribution system and determines the deliverable energy flexibility and regulation capacity of the DERs and flexible loads in the upper-level problem while clearing the day-ahead electricity market in the lower-level problem. To solve the proposed bi-level model, the lower-level problem is replaced with its Karush–Kuhn–Tucker (KKT) conditions, converting the proposed model into a single-level non-linear optimization model. Then, by implementing a combination of auxiliary variables and the strong duality theorem, the proposed model is formulated as a single-level Mixed-Integer Second-Order Cone Programming (MISOCP) problem, solvable using commercial solvers. Simulations are carried out on an IEEE test transmission system connected to multiple distribution systems in multiple cases. The findings verify the effectiveness of the proposed model in identifying the optimal energy flexibility and regulation capacity of DERs and flexible loads that are available in the electricity market while maintaining the quality of service constraints of flexible loads, as well as the physical limits of power transmission and distribution systems. The observations also offer a promising solution to different entities—such as load-serving entities, aggregators, and utilities—to manage local resources and optimize their portfolios in the electricity markets.