A Devolved Scheme of Active Distribution System Operators for Utilizing Flexibility Options under Market Environment

Abstract

This research aims to trigger the devolution of system balancing responsibility, which currently belongs entirely to a single transmission system operator (TSO) to several local distribution system operators (DSOs) by allocating system balancing cost fairly based on the cost-causality principle. Within the devolved system balancing scheme, DSOs would have appropriate motivation for managing the variability and uncertainty caused by units in their own jurisdiction. It would be advantageous for the TSO to share the increasing burden of the system balancing responsibility with multiple DSOs in a future power system having a large number of DRESs. To achieve this goal, first, this dissertation suggests that DSOs be designated as being the representatives of their own jurisdictions, with primary economic responsibility for balancing payments that are originally charged to each energy market participant. Second, this study proves that the cost-causality based cost allocation is superior to the current energy amount based one in terms of economic efficiency. The proof is only valid within the environment where DSOs have the capability to manage their imbalances and are regulated not to 100% pass through their cost to final customers. Third, this dissertation applies the concept of power exchange for frequency control (PXFC) band market to a potential solution for implementing the cost-causality principle in the balancing service charge domain. This PXFC band market provides a contractual relationship between TSO and DSOs. In addition, the operation processes and optimal pricing scheme of the PXFC band market are suggested according to the TSOs regulatory environment. Fourth, given a fixed PXFC band price, a stochastically optimal operation model of an active DSO is comprehensively formulated with some flexibility options within the proposed market environment. Fifth, this dissertation provides the experimental observations on the sensitivity of DSOs band purchase behavior and band violation with respect to the band market parameters. This dissertation shows that an active DSO with proper flexibility options can effectively self-manage its imbalance on the T-D interface flow, through the illustrated examples and the observations. If the PXFC band market is designed well, DSOs would do their best to manage the imbalance on T-D interface flows. Therefore, it can be stated that the devolved system balancing scheme can be implemented through the introduction of the PXFC band market with multiple active DSOs having sufficient flexible options.