Local market framework for exploiting flexibility from the end users

This paper introduces a decentralized implicit interaction framework for trading flexibility available from proactive end users (prosumers) in an economically-efficient way. The proposed framework consists of two mechanisms: ahead planning via markets and real-time dispatching. The ahead, market-based planning includes two mechanisms, day-ahead and intra-day, which are operated by a local flexibility market operator. Each local market seeks to adjust the energy programs before they will be forwarded to the wholesale energy market such that, if accepted, the programs will result in no congestion issues in the distribution grid. The real-time dispatching consists of a set of control actions that are determined and implemented by the DSO to resolve a network congestion issue, should the market-based planning fail. The second part of the paper focuses on establishing a strategy for the DSO to procure the flexibility it needs from the above-mentioned day-ahead and intra-day markets, as well as through real-time dispatching, at the lowest possible cost. To this end, a hierarchical, bi-level optimization problem is proposed, which is mathematically proven to yield the optimal bidding strategy (including prices and volumes) for the DSO.