IEEE Power & Energy Magazine - May/June 2016 - 50

Organizational Models for DSOs
$

Demand

$

$

$

Demand

Power
(a)

Power
(b)

figure 4. (a) Single-sided market clearing and (b) twosided market clearing.

of one kind (kilowatthour sales) for a role as a market facilitator for better coordination and control of DERs, thereby
extending the value streams.

DSO Market Participants
DSO market participants (Figure 5) are any entities that
enable the market to be viable; that is, they provide a product or service that enables the buying and selling of energy,
directly or indirectly, at the local level. Potential market participants would include, but not be limited to, DERs, including
conventional and renewable technologies, for example, PV,
wind, combined heat and power, fuel cells, etc.; battery energy
storage systems, plug-in electric vehicles operating under the
vehicle-to-grid mode, thermal energy storage), flywheels, etc;
microgrids, including operating in islanded or interconnected
mode and providing capacity, energy, and auxiliary services
to the grid; and distribution load response to control actions or
locational marginal pricing, capacity trading via load reduction and curtailment, commonly known as DR.

CHP
Flywheel
Storage

Solar

Microgrid

Wind
DSO

Thermal
Energy

Fuel Cell

Vehicle to
Grid

Battery
Storage

figure 5. DSO market participants.
50

ieee power & energy magazine

Organization models for DSOs differ in what entity will
be responsible for the DSO grid and market functions. Two
potential models for DSO development are the distributed
system platform (DSP) and the independent DSO (IDSO).
The DSP model retains all distribution grid operations within
a single integrated distribution utility and is responsible for
grid operations, animating a market environment, establishing the platform for DER integration, and performing an integrated planning process. This model would put utilities in the
role of brokering wholesale and retail grid energy, capacity,
and reliability transactions from any number of independent
owners and aggregators. An effective operation of this model
depends on the utility incentives and the regulatory frameworks that make the DSP indifferent to the method it pursues,
i.e., either traditional or distributed, in ensuring the distribution grid reliability needs. California's distribution resources
plans are pushing utilities part way toward this vision. The
DSP model would require "organizational firewalls," i.e., a
functional separation of the planning and asset owner roles
within the distribution utility, as a further condition.
On the other hand, the IDSO model proposes the creation
of an IDSO or an overarching entity that would take over many
of the roles of managing the distribution network, similar to
how many existing ISOs/RTOs now manage their transmission
grid. The IDSO would separate the distribution utility around
two distinct functions: an asset owner for the distribution grid
infrastructure and the planner/operator of the distribution grid
(the IDSO). This IDSO would be in charge of animating a market environment, establishing the platform for DER integration, and performing an integrated planning process, as well
as determining the DER investment alternatives for utilities.
Independent power producers argue for "independence" in
the DSO operations and for excluding regulated utilities from
owning/operating rate-based DER assets. However, there are
compelling counterarguments. For example, the purpose of
utility DERs is to be the first mover to create the environment for a meaningful market and to operate the system reliably. Also, the distribution system was not engineered for high
DER penetration where considerable adaptation and heavy
utility participation will be required to let this process develop
without obstacles.

DSO and Reliability
There are three linkages of the DSO to operate the distribution system reliably:
✔✔ operating the grid reliably in the high penetration of
DERs and the market-based environment of the DSO,
which is primarily a question of communications and
control infrastructure and tools, interconnection and
substation standards; architecture of distribution network, and operational IT systems and analytics
✔✔ enhancing reliability via a DSO, which allows "dynamic" or "adaptive" microgrid formation, i.e., islanding
different portions of the feeders based on where faults
may/june 2016



Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - May/June 2016

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IEEE Power & Energy Magazine - May/June 2016 - Cover3
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