This paper proposes five market models for the procurement of flexibility by transmission (TSO) and distribution system operators (DSOs), based on several TSO-DSO coordination schemes, including a disjoint distribution, disjoint transmission, common, fragmented, and multi-level market. The properties of these models are then analyzed. In particular, we prove that the common market is more efficient than the other market models. Then, different methods are proposed to adequately price TSO/DSO interface flows, when procuring cross-grid flexibility. We show that when interface flows are optimally priced, the fragmented and multi-level market solutions converge to those of the common market. To prevent the need for any network information sharing in the coordination schemes, decomposition methods based on bi-level programming and the alternating direction method of multipliers (ADMM) are proposed. A developed case study, considering an interconnected transmission-distribution system, corroborates the greater efficiency of the common market, the effect of adequate interface pricing on reducing procurement costs, and the capability of the decomposition methods to reach optimal market solutions with limited information exchange.

Many smart grid projects make use of dynamic pricing schemes aimed to motivate consumers to shift and/or decrease energy use. Based upon existing literature and analyses of current smart grid projects, this survey paper presents key lessons on how to encourage households to adjust energy end use by means of dynamic tariffs. The paper identifies four key hypotheses related to fostering demand response through dynamic tariff schemes and examines whether these hypotheses can be accepted or rejected based on a review of published findings from a range of European pilot projects. We conclude that dynamic pricing schemes have the power to adjust energy consumption behavior within households. In order to work effectively, the dynamic tariff should be simple to understand for the end users, with timely notifications of price changes, a considerable effect on their energy bill and, if the tariff is more complex, the burden for the consumer could be eased by introducing automated control. Although sometimes the mere introduction of a dynamic tariff has proven to be effective, often the success of the pricing scheme depends also on other factors influencing the behavior of end users. An important condition to make dynamic tariffs work is that the end users should be engaged with them.

This paper presents a real-word implementation of a TSO-DSO-customer coordination framework for the use of flexibility to support system operation. First, we describe the general requirements for TSO-DSO-customer coordination, including potential coordination schemes, actors and roles and the required architecture. Then, we particularise those general requirements for a real-world demonstration in Sweden, aiming to avoid congestions in the grid during the high-demand winter season. In the light of current congestion management rules and existing markets in Sweden, we describe an integration path to newly defined flexibility markets in support of new tools that we developed for this application. The results show that the use of flexibility can reduce the congestion costs while enhancing the secure operation of the system. Additionally, we discuss challenges and lessons learned from the demonstration, including the importance of the engagement between stakeholders, the role of availability remuneration, and the paramount importance of defining appropriate technical requirements and market timings.

There is an intrinsic value in higher integration of multi-carrier energy systems (especially gas and electricity), to increase operational flexibility in the electricity system and to improve allocation of resources in gas and electricity networks. The integration of different energy carrier markets is challenging due to the existence of physical and economic dependencies between the different energy carriers. We propose in this paper an integrated day-ahead multi-carrier gas, electricity and heat market clearing which includes new types of orders and constraints on these orders to represent techno-economic constraints of conversion and storage technologies. We prove that the proposed market clearing gives rise to competitive equilibria. In addition, we propose two decentralised clearing algorithms which differ in how the decomposition of the underlying centralised clearing optimisation problem is performed. This has implications in terms of the involved agents and their mutual information exchange. It is proven that they yield solutions equivalent to the centralised market clearing under a mild assumption of sufficient number of iterations. We argue that such an integrated multi-carrier energy market mitigates (spot) market risks faced by market participants and enables better spot pricing of the different energy carriers. The results show that conversion/storage technology owners would suffer from losses and/or opportunity costs, if they were obliged to only use elementary orders. For the test cases considered in this article, sum of losses and opportunity costs could reach up to 13,000 EUR/day and 9,000 EUR/day respectively, compared with the case where conversion and storage orders are used.

The set-up of Local Flexibility Markets (LFMs) by distribution system operators (DSOs) to gain access to additional sources of flexibility is a highly researched and discussed topic. This paper contributes to the discussion by bringing together DSOs and stakeholders from different countries to discuss two key challenges linked to the set-up and operation of LFMs. A first challenge is related to the integration of LFMs into the time sequence of existing markets, concluding that trade-offs need to be made between increased liquidity and more accurate estimates of flexibility needs. A second challenge discusses how the responsibilities and activities related to market procurement operations should be divided among involved actors. The later challenge concludes that data needs, ownership, and sharing possibilities should be considered when agreeing on role divisions. However, evidence suggests that data constraints can be addressed through solutions that do not require sharing detailed network information. Nevertheless, in cases where data constraints persist (for instance in more complicated meshed grids), it is likely that the DSO is in a better position to take into account grid constraints. We therefore show that despite their differences, demonstrators from three diverging countries come to similar findings, showing potential for market design harmonization.