Roles and Functions of Distribution System Operators in Local Electricity Market Development

The increasing application of distributed energy resources (DERs) alongside digitalization and decentralization drives the development of electricity distribution system. Decentralization is essentially devolving responsibilities from transmission to distribution systems on account of the optimal use of DERs. However, the current distribution system cannot integrate DERs without major network modifications or investment, posing a major threat to their growth at a local level. Introducing energy markets and network services at the distribution level will not only support cost-effective integration of DERs, but will also critically deliver value to DERs to accelerate their growth. These emerging markets require a more active management of distribution systems, which leads to the necessity of exploring the roles and functions of the distribution system operator (DSO). During this process, the current approach focuses on comprehensive DSO functions and activities in a future situation in which there is high penetration of DERs. Therefore, it fails to consider the development of DSOs a dynamic progress and to provide sufficient attention on the coordination of DSOs with other system-oriented activities. In this article, we proposes the future structures of markets in the distribution system by synchronizing the transition of distribution system evolution; categorizes four roles of the DSO based on functions and illustrates variations in its activities; analyses the evolution of the responsibilities to be taken by DSOs under diverse future market structures, and their coordination with other system-oriented activities. Taking the UK distribution market as a reference, the exploration of market operations and regulations covered in this paper provide relevant experiences for other countries.