of resources will be required to coordinate their
operation to balance the whole system. However,
supply and demand curves in electricity systems
change in real time, while the process of price
discovery in decentralised markets takes place
over time through multiple iterative trades.
Therefore, markets between multiple levels of
resource coordination can provide only a partial
optimisation of the electricity system.
A decision needs to be made about how distributed resources will be coordinated, with
several possibilities available. Four possible
models for operating a distribution system of
distributed energy resources are currently being
discussed in the literature, and are illustrated in
Fig. 34. These models are:
• Whole system operator. This model involves
only one level of control. The transmission
system operator (TSO) carries out constrained
dispatch of the whole electricity system. In
other words, it carries out least-cost dispatch
across all resources in the transmission and
distribution systems, taking capacity constraints in both systems into account. In this
model, distribution system operators retain
their current, minimal functions of basic
planning and operation of the distribution
system.
• Whole system operator with distribution system operator. This model has two levels of
control. First, the TSO carries out economic
dispatch of the whole electricity system,
including constrained dispatch of the transmission system. In other words, it carries out
least-cost dispatch across all resources in the
transmission and distribution systems, but
only takes capacity constraints in the transmission system into account. Second, distribution system operators (DSOs) modify the
operation of distributed resources to allow for
capacity constraints in the distribution
system.
• Virtual power plants (VPPs) with distribution
system operator. This model involves three
levels of control. First, VPPs provide the
transmission-level system operator with offer
curves for generation or demand reduction for
the resources they operate. Second, the
transmission-level system operator carries out
constrained dispatch of the transmission system. Third, DSOs modify the operation of
distributed resources to take into account
Fig. 34 There are several possible models for coordinating distributed energy resources. Note TSO = transmission
system operator; DSO = distribution system operator;
DER = distributed energy resources; VPP = virtual power
plant. Source Vivid Economics
Special Report 1: A Study of China’s Energy Supply Revolution
99
operation to balance the whole system. However,
supply and demand curves in electricity systems
change in real time, while the process of price
discovery in decentralised markets takes place
over time through multiple iterative trades.
Therefore, markets between multiple levels of
resource coordination can provide only a partial
optimisation of the electricity system.
A decision needs to be made about how distributed resources will be coordinated, with
several possibilities available. Four possible
models for operating a distribution system of
distributed energy resources are currently being
discussed in the literature, and are illustrated in
Fig. 34. These models are:
• Whole system operator. This model involves
only one level of control. The transmission
system operator (TSO) carries out constrained
dispatch of the whole electricity system. In
other words, it carries out least-cost dispatch
across all resources in the transmission and
distribution systems, taking capacity constraints in both systems into account. In this
model, distribution system operators retain
their current, minimal functions of basic
planning and operation of the distribution
system.
• Whole system operator with distribution system operator. This model has two levels of
control. First, the TSO carries out economic
dispatch of the whole electricity system,
including constrained dispatch of the transmission system. In other words, it carries out
least-cost dispatch across all resources in the
transmission and distribution systems, but
only takes capacity constraints in the transmission system into account. Second, distribution system operators (DSOs) modify the
operation of distributed resources to allow for
capacity constraints in the distribution
system.
• Virtual power plants (VPPs) with distribution
system operator. This model involves three
levels of control. First, VPPs provide the
transmission-level system operator with offer
curves for generation or demand reduction for
the resources they operate. Second, the
transmission-level system operator carries out
constrained dispatch of the transmission system. Third, DSOs modify the operation of
distributed resources to take into account
Fig. 34 There are several possible models for coordinating distributed energy resources. Note TSO = transmission
system operator; DSO = distribution system operator;
DER = distributed energy resources; VPP = virtual power
plant. Source Vivid Economics
Special Report 1: A Study of China’s Energy Supply Revolution
99