IEEE Electrification Magazine - June 2018 - 94

Bilateral Transaction Settlement

The settlement
with the microgrid
depends on whether
the microgrid is
offered to the DSO
as a dispatchable
resource, or is
selling to the bulk
power market with
the DSO acting as a
pass-through agent.

the bilateral schedule involves a
schedule of 10-MW generation from
the der resource, along with a purchase of 10 MWs from the bulk power
market (at ttn2) to serve the 20-MW
ccA load. to accommodate this bilateral transaction, the dsO incurs costs
due to congestion and losses, which
must be charged to the bilateral transaction. in this example, although there
is no distribution congestion associated with the bilateral transaction, there
is a price differential between ttn1
and ttn2 (presumably due to congestion in the bulk power system). this
lMP difference imposes costs on the
dsO accommodating the bilateral
transaction; there are also distribution
losses. the combined impact may be
computed using the bulk power lMPs input to the tdMs
and the dlMPs computed by the tdMs as follows:
dsO cost to accommodate the bilateral transaction
= ccA load × ccA dlMP − der schedule × der dlMP
- shortfall MW from isO × Pnode 2 lMP.
charge to bilateral transaction is 20 × us$34.806 - 10
× us$26.5 - (20 - 10) × us$30 = us$131.12.

A portion of this charge pertains to congestion cost getting the 10 MW from der to ccA (in practice, the der output is used to meet part of the load in load pocket 1, and
the ccA load is met entirely through purchase from isO/
rtO market at ttn2).
the congestion charge is 10 × (us$30 - us$25)
= us$50.00
the charge for distribution losses is therefore
us$131.12 - us$50.00 = us$81.12.
it is up to the parties involved in the bilateral transaction to allocate the distribution charge of us$131.12 among
themselves, depending on their agreed-upon point-ofhandoff. however, as stated previously, the tdMs does
provide for the bilateral transaction to specify a not-toexceed ttcc (us$/MWh) for each pair of delivery and
receipt points. the corresponding transaction segment
will be curtailed if the dlMP difference between points-ofreceipt and delivery exceeds the stated cap.

attributed to reduced sales due to customer-side generation.
regulatory provisions are needed
so that utilities can provide and
charge for new products and services
to fill in the revenue gap, and prosumers can tap into new sources of revenue to cover their investments and
make new investments in consumer/
prosumer side assets. With proper
regulatory provisions, disruptive
trends such as grid divorce can find a
new constructive venue that we refer
to as graceful grid divorce, in which
the prosumers can opt-out of distribution grid services they do not need
and pay for those that they do need;
this requires the unbundling of distribution services. For example, the distribution utility can provide and charge
for transport service as a combination of the connection
cost and the pay-as-you-go transport cost.
the tdMs construct presented in this article provides
the tools needed to compute such transport costs under a
transactive market-based setting. the utility/dsO can
offer hedging instruments to the transacting parties
against potential volatility of distribution transport prices,
computed by the tdMs. the technological advances in
grid-edge devices and systems must be supplemented by
information exchange and analytical tools (such as those
presented in this article by the tdMs) to enable an agile
response to the changing regulatory paradigm.

For Further Reading
F. A. rahimi and s. Mokhtari, "From isO to dsO: A new distribution system Operator construct," Public Utilities Fortnightly,
June 2014, pp. 42-50.
GridWise Architecture council. (2015). GridWise transactive energy Framework, Version 1.0. [Online]. Available: https://
www.gridwiseac.org/pdfs/te_framework_report_pnnl-22946
.pdf
F. rahimi and A. ipakchi, "using a transactive energy
framework," IEEE Electrification Mag., vol. 4, no. 4, 2016. pp. 23-29.
F. rahimi, A. ipakchi, and F. Fletcher, "the changing electrical landscape," IEEE Power Energy Mag., vol. 14, no. 3, 2016,
pp. 52-62.
F. rahimi and s. Mokhtari, "transactive energy evolution
in the quadrants of grid modernization," IEEE Smart Grid
Newslett., June 2017.

biographies

Closing Remarks

Farrokh A. Rahimi (farrokh.rahimi@oati.net) is senior vice

electric utilities are facing both operational and business
model challenges due to a number of factors, primarily
increased der penetration. Operational issues are mostly
related to a lack of visibility and controllability of customer/
prosumer owned and operated der, as well as their variability and unpredictability. the business model issues are

president of Open Access technology international, inc.,
Minneapolis, Minnesota.
Sasan Mokhtari (sasan.mokhtari@oati.net) is the chief
executive officer and president of Open Access technology
international, inc., Minneapolis, Minnesota.

I EEE E l e c t r i f i c a t i on M a gaz ine / j un e 2018

http://www.gridwiseac.org/pdfs/te_framework_report_pnnl-22946.pdf http://www.gridwiseac.org/pdfs/te_framework_report_pnnl-22946.pdf

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