The coordination between TSO and DSO in the context of energy transition - A review

This paper reviews and analyzes various coordination schemes between Transmission and Distribution System Operators (TSOs and DSOs) to effectively integrate Distributed Energy Resources, aiming to maintain system balance and prevent network congestion while overcoming technical and market challenges associated with the ongoing energy transition.

The Gist

Imagine the electricity grid as a massive, complex plumbing system for a giant city.

• The TSO (Transmission System Operator) is the manager of the main water pipes. These are the huge, high-pressure pipes that carry water from the reservoirs (power plants) across the entire country.
• The DSO (Distribution System Operator) is the manager of the local neighborhood pipes. These are the smaller pipes that deliver water to individual houses and businesses.
• The Energy Transition is like suddenly replacing the old, steady reservoirs with thousands of tiny, unpredictable rain barrels on every roof (solar panels and wind turbines).

The Problem: Two Managers, One System

In the old days, the main pipe manager and the neighborhood manager worked in separate offices. They didn't talk much. The main manager just turned the big valves, and the neighborhood manager made sure water didn't burst the pipes in their specific street.

But now, with all those rain barrels (renewable energy), things are getting messy.

• Sometimes, a neighborhood has too much water (too much solar power on a sunny day), causing local pipes to burst (congestion).
• Sometimes, the whole city needs more water, but the neighborhood pipes are clogged, so the main manager can't push water through.

If the two managers don't talk, they might accidentally fight each other. The main manager might try to push water in to fix a shortage, while the neighborhood manager is trying to push water out to fix a local flood. This wastes energy, costs money, and risks blackouts.

The Solution: Coordination Schemes

This paper is a review of how these two managers can start talking to each other to fix the plumbing without breaking the pipes. The authors look at different ways they can coordinate, like different "handshake" protocols.

Think of it like a Traffic Light System:

1. Centralized (The "Dictator" Model): The main manager tries to control every single faucet in every house.
   • Pros: Simple logic.
   • Cons: Impossible. The main manager can't possibly know the status of millions of small pipes. It's too much work and too slow.
2. Decentralized (The "Silent Neighbor" Model): The neighborhood manager handles their own street, and the main manager handles the highway. They only talk if there's a disaster.
   • Pros: Fast local decisions.
   • Cons: They might miss the big picture. The neighborhood might block the highway without realizing it.
3. Hybrid/Shared Market (The "Teamwork" Model): This is what the paper suggests is best. They set up a common marketplace.
   • Imagine a digital bulletin board where the neighborhood manager says, "I have 50 gallons of extra water I can sell."
   • The main manager sees this and says, "Great! I need water, but I can only take 30 gallons because your local pipes are thin."
   • They agree on a deal that works for both.

The "Traffic Light" Mechanism

The paper describes a specific process for the Netherlands (which is like a pilot test for the whole world):

1. Pre-qualification (The ID Check): Before a house can sell its extra water to the city, the neighborhood manager checks if the pipes are strong enough. If yes, they give it a "Green Light" ID card.
2. The Offer (The Bidding War): The main manager asks, "Who has water to sell?" The neighborhood manager checks the ID cards and says, "Okay, but remember, your pipes can only handle 15 gallons, not 20." They adjust the offer before sending it to the main manager.
3. Activation (The Flow): When the city needs water, the main manager flips the switch. Because they talked beforehand, the water flows smoothly without bursting the neighborhood pipes.

Why This Matters

Without this coordination:

• Wasted Money: We might build expensive new big pipes when we could have just used the water already in the neighborhood.
• Blackouts: If the managers fight, the lights go out.
• Slower Green Transition: We can't add more solar panels if the grid can't handle the coordination.

The Bottom Line

The paper argues that to reach a "Zero Carbon" future (where we only use rain barrels and windmills), the Main Manager and the Neighborhood Manager must stop working in silos.

They need to build a digital bridge to share data in real-time. They need to treat the whole grid as one team, where the neighborhood manager has a bigger say in how the water flows. By doing this, they can use the "flexibility" of small solar panels and batteries to keep the lights on, save money, and keep the environment clean.

In short: It's about getting the big boss and the local supervisor to hold hands, share a map, and drive the same car, rather than trying to steer it from two different seats.

Technical Summary

Here is a detailed technical summary of the paper "The coordination between TSO and DSO in the context of energy transition - A review" by Hang Nguyen et al.

1. Problem Statement

The global energy transition, driven by the need to reduce fossil fuel dependence and CO2 emissions, has led to a rapid increase in Distributed Energy Resources (DERs) connected to Distribution Networks (DN). While these resources offer flexibility, their integration creates significant technical challenges for System Operators (SOs):

• Operational Silos: Transmission System Operators (TSOs) and Distribution System Operators (DSOs) traditionally operate separately, despite being physically connected. This separation hinders the efficient utilization of flexibility resources located in the distribution network.
• Congestion and Imbalance: Uncoordinated activation of flexibility services (e.g., for balancing vs. congestion management) can lead to grid congestion, voltage violations, and conflicting operational directions.
• Data and Market Barriers: There is a lack of standardized communication protocols, insufficient real-time data exchange, and regulatory hurdles preventing DSOs from actively procuring services to manage local grid constraints.
• Scalability: As DER penetration grows, the computational and modeling burden on TSOs to manage the entire system centrally becomes unfeasible.

2. Methodology

The authors conducted a comprehensive systematic literature review and analysis of existing pilot projects to evaluate TSO-DSO coordination schemes (CS).

• Data Sources: The review utilized international journals (ScienceDirect, IEEE Xplore) and reports from major organizations (ENTSO-E, IRENA, MIT CEEPR, TENET).
• Search Criteria: Keywords included "TSO-DSO coordination," "distributed flexibility," and "TSO-DSO interaction."
• Analysis Framework:
  • Classification: Coordination schemes were categorized based on market design, operational procedures, and data exchange (Centralized vs. Decentralized).
  • Comparative Analysis: The paper analyzes the pros, cons, and specific roles of DSOs in six distinct coordination models.
  • Case Study & Simulation: The authors examined physical pilots (e.g., SmartNet, CoordiNet, GOPACS) and proposed a specific hybrid coordination scheme for the Dutch balancing market, illustrated through sequence diagrams for pre-qualification and offering/activation processes.

3. Key Contributions

The paper makes several technical contributions to the field of power system management:

• Taxonomy of Coordination Schemes: It identifies and details six main coordination schemes:
  1. TSO-managed (Centralized)
  2. DSO-managed (Local AS market)
  3. Shared balancing responsibility (Fragmented market)
  4. TSO-DSO hybrid-managed (Multi-level market)
  5. Common TSO-DSO Ancillary Services (AS) market
  6. Integrated flexibility market
• Critical Assessment: It provides a detailed table comparing the advantages (e.g., cost minimization, respect for local constraints) and disadvantages (e.g., computational burden, conflict of interest, lack of information) of each scheme.
• Data Exchange Requirements: It defines the necessity of exchanging not just power flow and forecasting data, but also pricing, scheduling, and activation data to prevent harmful interferences between balancing and congestion management.
• Proposed Hybrid Model for the Netherlands: The authors propose a specific TSO-DSO hybrid-managed model for the Dutch balancing market. This model introduces a pre-qualification process where DSOs validate technical data of DERs connected to their grid before TSOs approve them for balancing services.
• Sequence Diagrams: The paper presents technical sequence diagrams illustrating the interaction flow between TSO, DSO, and Balancing Service Providers (BSPs) during pre-qualification, offering, and activation phases.

4. Results and Findings

• Decentralization is Preferred: Statistical analysis of literature shows that decentralized models account for over 90% of research, as centralized models impose excessive computational loads on TSOs and require complex communication infrastructure.
• Effectiveness of Hybrid Models: The "TSO-DSO hybrid-managed" and "Common TSO-DSO market" models are identified as the most promising for minimizing total system costs and maximizing social welfare while respecting Distribution Network (DN) constraints.
• Impact of Coordination on Congestion:
  • Without Coordination: A scenario is presented where a TSO activates a 20 MW bid, causing congestion on a distribution line because the DSO simultaneously activated a re-dispatch bid in the opposite direction.
  • With Coordination: By validating bids against DN constraints before activation (via power flow checks by the DSO), the system can update bid limits (e.g., reducing a 20 MW bid to 15 MW) to prevent congestion.
• Pilot Project Insights: Projects like SmartNet and CoordiNet demonstrate that while decentralized schemes are generally optimal, the choice of scheme depends heavily on national characteristics, network topology, and the specific nature of flexibility resources.
• Gap Identification: Current implementations often lack real-time coordination. Most pilots rely on day-ahead or intraday markets, leaving a gap in near real-time (seconds/minutes) coordination for balancing services.

5. Significance

• Enabling the Energy Transition: The paper highlights that effective TSO-DSO coordination is a prerequisite for integrating high levels of renewable energy without compromising grid security.
• Economic Optimization: By unlocking distributed flexibility, the proposed schemes can defer costly grid investments (e.g., new transformers or lines) and optimize operational costs.
• Regulatory and Technical Roadmap: The proposed sequence diagrams and the classification of schemes provide a blueprint for regulators and grid operators (specifically in the Netherlands and EU) to design future markets.
• Future Research Direction: The authors emphasize the need for standardized communication protocols, international data security standards, and further quantification of the benefits of real-time coordination in both transmission and distribution networks.

In conclusion, the paper argues that moving from siloed operations to a collaborative, hybrid coordination framework is essential for maintaining system balance, preventing congestion, and ensuring the economic viability of the future low-carbon energy system.