Novel LEM flexibility mechanism and distributed flexibility coordination framework for sustainable operation of distribution systems

Distributed flexibility (DF) is a cost-effective solution for network modernization. Procured through contracted flexibility services, the flexibility of network customers and distributed generators coordinated with active network technologies (i.e., network flexibility) has a great potential to spread growing electricity demand, avoiding the need for costly network reinforcement. However, when it is a single alternative to time-consuming reinforcement, Distribution System Operators (DSOs) are vulnerable to opportunistic flexibility suppliers that can make the service uneconomical. Therefore, more flexibility mechanisms are needed, especially during the early stages of DF integration. To address this gap, the paper offers three main contributions to the field of distribution system management. First, it proposes the novel DF mechanism for the DSO to access the flexibility of Local Energy Markets (LEMs) through the withdrawal of market transactions and their market-based remuneration. Second, it offers the optimal and unbiased DF coordination mechanism based on bi-level optimization to fairly resolve the conflicting objectives of the DSO and the LEM participants following the social welfare maximization principle to stimulate trading. Third, it provides a framework to integrate a new active network technology known as Soft Open Point (SOP) for its most effective utilization within the distribution system, supporting not only networks but also the operation of LEMs. Using realistic flexibility demand and supply data, the numerical study revealed that in congested networks when LEM flexibility is coordinated with SOP daily network operation costs can be reduced by half, occasionally even eliminating the need for DSO contracted flexibility services.