IEEE Power & Energy Magazine - May/June 2016 - 69

The other vision involves a
decentralized, layered-decomposition
optimization structure.

consequences at the scale of DER adoption that we can anticipate based on historical trends. It is therefore crucial for the
industry to address the question of how best to design the functional roles and responsibilities of a DSO vis-à-vis the operator
of the transmission grid and wholesale markets around the T-D
interfaces. To that end, we have presented the layered decentralized model as an alternative to the current trajectory and offered
reasons why the alternative is preferable and can facilitate the
successful evolution of the high-DER TE electric system.
That said, there are some areas requiring further work;
these have to do with the evolutionary path to the layered
structure. In many ISO/RTO areas, expansion of DER participation in the wholesale markets is already underway. We
do not suggest an abrupt shift of the operational paradigm,
but we do urge an abrupt shift of thinking to view and then to
shape the present trajectory as a transition to a future layered
optimization structure.
The pace of the transition will vary, depending on the rate
of DER growth among other things. Different regions and
states-even different cities and counties in a given utility
service territory within a state-will approach the transactive
future at different rates based on their customer mix, climate
zone, natural resources, geography and public policy goals.
Still, there should be common elements and strategies based
on the laws of physics governing the movement of electricity
through wires and transformers, the tools of grid architecture
and control theory, and widely held goals such as reliability,
system security and resilience, efficiency, and affordability.
As a concrete example, the staging of distribution infrastructure investment needs to be considered within a holistic
framework that includes market design, telecommunications
and control strategies, business models, economic incentives, and public policy goals. The sensing and control needs
of a grid with a low penetration of DERs and little or no
market activity are much simpler than those of a system with
greater amounts of DERs, some of which provide operational services to the DSO. And the needs of the latter are
simpler in turn than those of a system to support peer-to-peer
transactions among DERs. Similarly, the design of markets
at the distribution level must be linked directly to the policy
goals of the jurisdiction. If the goal is to incentivize DER
expansion, are locational spot prices an effective strategy or
is longer-term revenue certainty required?
In the electricity system, these questions are all intertwined. To ignore the holistic discipline of grid architecture
at this time of rapid change is to risk massive stranded
may/june 2016

investment in market and operational systems that work
poorly, delay or even derail beneficial system evolution, and
fail to achieve desired societal goals. The value of adopting the layered decentralized optimization as the end-state
operational paradigm at this time is that it grounds industry
transformation and TE discussions in physical reality and
thus provides a foundation for addressing the entire constellation of regulatory, market design, business model, and
infrastructure investment questions.

For Further Reading
P. De Martini and L. Kristov. (2015, Oct.). Distribution systems in a high distributed energy resources future: Planning,
market design, operation and oversight. Lawrence Berkeley National Lab. Series on Future Electric Utility Regulation. [Online]. Available: https://emp.lbl.gov/sites/all/files/
FEUR_2%20distribution%20systems%2020151023.pdf
L. Kristov. (2015, May). The future history of tomorrow's energy network. Public Utilities Fortnightly. [Online].
Available: http://www.fortnightly.com/fortnightly/2015/05/
future-history-tomorrows-energy-network?page=0%2C0&
authkey=afacbc896edc40f5dd20b28daf63936dd95e38713
e904992a60a99e937e19028
L. Kristov and P. De Martini. (2014, May). 21st century
electric distribution system operations. [Online]. Available:
http://smart.caltech.edu/papers/21stCElectricSystemOpera
tions050714.pdf
J. Taft and P. De Martini. (2012). Scalability, resilience,
and complexity management in laminar control of ultralarge scale systems. Cisco. [Online]. Available: http://www.
cisco.com/c/dam/en/us/products/collateral/cloud-systemsmanagement/connected-grid-network-management-system/
scalability_and_resilience_in_laminar_control_networks.pdf
J. D. Taft and A. Becker-Dippmann. (2015, Jan.). Grid
architecture. Pacific Northwest National Lab. [Online].
Available: http://www.pnnl.gov/main/publications/external/
technical_reports/PNNL-24044.pdf

Biographies
Lorenzo Kristov is with the California Independent System
Operator, Folsom, California.
Paul De Martini is with ICF International, San Francisco,
California.
Jeffrey D. Taft is with Pacific Northwest National
p&e
Laboratory, Richland, Washington.
ieee power & energy magazine

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https://emp.lbl.gov/sites/all/files/ http://www.fortnightly.com/fortnightly/2015/05/ http://smart.caltech.edu/papers/21stCElectricSystemOpera http://www http://www.cisco.com/c/dam/en/us/products/collateral/cloud-systems http://www.pnnl.gov/main/publications/external/

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