Distribution locational marginal price based hierarchical scheduling framework for grid flexibility from virtual energy storage systems

Maintaining generation and demand equilibrium under large scale renewable energy integration is challenging. Conventional flexibility providers such as grid-scale Energy Storage Systems (ESS) have potential but are costly solutions. With evolving smart grid scenario, aggregated demand response from Thermostatically Controlled Loads (TCLs) is utilized as Virtual Energy Storage Systems (VESS) and considered as innovative and cost efficient solution to provide fast response reserves. VESS units are often scheduled and controlled in a centralized manner considering limited distribution system constraints. However, accurate operational flexibility potential of diversified VESS units for various grid services needs to consider distribution network constraints. It can be fully utilized when Distribution System Operators (DSO) coordinate with Transmission System Operators (TSO) to transfer grid services from VESS of its area. Local ancillary service TSO-DSO coordination scheme ensures in this perspective significant flexibility of TSO and allows both TSO and DSO to access VESS flexibility. For such controlling of diversified VESS units where DSO is responsible for aggregate flexibility and local area balancing, a hierarchical scheduling framework is more practical. In this context, this paper proposes a two-stage hierarchical approach for optimal scheduling of TCLs as VESS to optimize energy and provide grid flexibility. At the lower stage, TCLs are scheduled based on Distribution Locational Marginal Price (DLMP) provided by DSO, while ensuring consumers' comfort. At the upper level, DSO provides additional flexibility to TSO through optimal scheduling of aggregated VESS considering local ancillary services TSO-DSO coordination scheme. The simulation results indicate that VESS scheduling improves system flexibility by maintaining a generation-demand balance.