This deliverable is one in a series of three reports that are looking into regulatory aspects of implementation of methodologies and coordination schemes developed in the SmartNet project, with the aim to facilitate integration of significant levels of Distributed Energy Resources (DERs) into the network and their participation in provision of AS at both transmission and distribution levels. This requires new market/trading architectures and operational arrangements that will affect networks at both transmission and distributions levels as well as the interface between these networks. The aim of the SmartNet project is to provide architectures for optimized interaction between TSOs and DSOs in managing the exchange of information for the acquisition of ancillary services (reserve and balancing, voltage regulation, congestion management) from DER located in distribution networks. The main project results include the technical-economic assessment of a set of five TSO-DSO Coordination Schemes (CSs) with their market architecture. This is done through the set-up of a new simulation platform and ad-hoc national scenarios at 2030 aimed at assessing the operation of the proposed schemes so as to feed a cost-benefit analysis. The five proposed CSs are: • Centralized AS market • Local AS market • Shared balancing responsibility • Common TSO-DSO AS market • Integrated flexibility market. The different coordination schemes all have specific benefits and attention points related to the TSO and/or DSO grid operation, other market participants and the functioning of the market in general. In addition, implementation of or transition from one to another Coordination Schemes will require a significant change in roles and responsibilities, which are assigned to the central market actors. As already mentioned, in order to carry out the technical-economic comparison of the different CSs, a large-scale simulator, has been developed to realistically model the behaviour of complex systems which include transmission and distribution networks, bidding and market processes, as well as fundamental physics behind each flexible device connected to the system. This simulator includes three main layers: • Market Layer – representing the mFRR market • Bidding Layer – representing aggregation and disaggregation processes • Physical Layer – physical network including controls and protections and aFRR regulation The main objective of this report is to present the regulatory trends and stakeholders’ position on several issues, which the project considers to be essential for the definition of a well-functioning TSO-DSO interaction. To facilitate this analysis, we have identified 25 main issues, here referred to as topics of interest, which are associated with solutions and assumptions implemented in each of the simulator layers. These topics have been evaluated in a comprehensive screening study, based on more than 40 different documents such as position papers, strategies, roadmaps and legislation/regulation (EU Directives, Network guidelines, national regulatory Decisions). A general conclusion from the review is that EU regulations are not directly addressing several of the topics identified by SmartNet, i.e. crucial topics for large-scale utilisation of Distributed Energy Resources in ancillary services, as for example timing of the markets. Without common EU regulations different solutions will develop in the distribution areas, the most diverse and non-harmonized solutions will be implemented in agreement between DSOs and adjoining TSO (e.g. nation- or region-wise under influence of TSO). This will not necessarily hamper the utilisation of local flexibility in the transmission grids, but it will certainly make more difficult the development towards cross-border utilisation of distributed energy resources. The final conclusions and recommendations will be presented in deliverable D6.3. The preliminary impression is that hardly any of the present or proposed regulation is explicitly in contrast to the hypotheses at the basis of the SmartNet work. However, for one topic, the EU legislation is somewhat different with configuration of SmartNet coordination schemes. For incorporating bottlenecks into the pricing, SmartNet selected to use nodal market organisation for ancillary services, European architectures (unlike the US implementations) implement a zonal organisation. When it comes to the stakeholders' opinions, currently the situation is that ENTSO-E suggests that all congestion management needs, both for TSOs and DSOs, should be fulfilled by a common bid submission process from providers of distributed flexibility resources [18] in document "Distributed Flexibility and the value of TSO/DSO cooperation". A common process will among other ensure liquidity of the market [18]. ENTSO-E supports a common centralized solution for three system and grid services: • For electricity balancing from Frequency Restoration Reserves and Replacement Reserves. • For internal or cross-border congestion management in the transmission network • For congestion management in the distribution network Disregarding the selected approach (centralised or not) it is advised by ENTSO-E [18] that the market design should allow both DSOs and TSOs to set limitations and to activate flexibility resources based on the connection point of the resource as it is advised by ENTSO-E. On the other hand “TSO-DSO data management report1” [13] mentions different points of attention coming from DSOs and TSOs, where DSOs are essentially concerned about possible misalignments of actions between TSOs, DSOs and other market players, which could lead to loss of control over the distribution grid and drive inefficient grid expansion. DSOs think that certain balancing actions could be delegated to them to procure balancing services on their network as a subsidiary activity to support TSOs (see page 15 in [13])
