IEEE Power & Energy Magazine - March/April 2021 - 50

three largest projects during the past decade were iPower,
EcoGrid 2.0, and EnergyLab Nordhavn. In iPower, flexibility
modeling was combined with a coherent market approach at
the system and distribution level based on well-defined, flexibility-based services. This was further developed, refined,
and demonstrated in EcoGrid 2.0, where a large number of
flexible units were controlled to provide services at either the
system or distribution level, based on an optimal bidding strategy for the aggregators. In EnergyLab Nordhavn, the coordinated operation of electricity and district heating systems was
investigated to exploit cross-sector flexibility, and integrated
multidomain markets were assessed.
An important function of research projects is that they
can provide valuable learnings for system operators. These
could refer to operational strategies, new market mechanisms, and the provision of novel system services, among
others. This knowledge can provide insight and valuable
experience regarding the direction that power markets and
system operation should or should not take. For example,
EcoGrid 2.0 revealed the real-life challenges associated with
the use of commonly agreed upon baselines in the provision of DSO services in a local flexibility market and pointed
toward the direction of explicit operational limits as a more
viable solution.
Pilot projects are also particularly important tools for system operators because they allow collaboration and knowledge sharing between system operators and market participants by testing new business models and ideas. Energinet,
the Danish TSO, brings the experience from research to
operation with the use of such pilot projects, where smallscale participation of new technologies or changes in market regulation are tested in real-time operation together
with market participants. The obtained experience is used
for the fast market implementation of new technologies as
well as for the identification and, subsequently, reduction
of possible regulatory barriers. In the following section, we
focus on different system integration mechanisms that have
been proposed in various research projects and are currently
being investigated in Denmark to facilitate the utilization of
demand-side flexibility.

Facilitating the Use of Demand-Side
Flexibility in the Power System
As discussed in the previous section, a substantial number
of research projects and demonstrations have proven the
capabilities of DER and demand-side management to offer
power system services. Recently, the focus has been shifting
toward the investigation of mechanisms that can unlock this
flexibility so that it can be safely and efficiently integrated
into both system operation and markets. To this end, several
mechanisms have been proposed and are currently investigated in Denmark, such as
✔ time of use (ToU) tariffs
✔ dynamic tariffs
✔ a finer geographical granularity of power markets
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✔ bilateral agreements
✔ local flexibility markets.

These mechanisms should not be seen as mutually exclusive. Instead, more than one mechanism can coexist because
each of them has different characteristics, addresses varying problems, and has its own limitations. In the following
section, we describe the characteristics of each mechanism,
with a focus on a Danish application perspective. We assess
the mechanisms based on four criteria:
✔ effectiveness of congestion management: how effective each mechanism is in preventing and alleviating
congestion
✔ ease of implementation: how easy each mechanism is
to implement on a technical level
✔ market compatibility: how easy it is to integrate each
mechanism into the current power market structure
✔ impact on system balancing: the impact that each
mechanism has on the function of demand-side flexibility as a balancing source of renewable production
and consumption at a system level.
These mechanisms can be implemented on transmission,
distribution, and feeder levels. By feeder, we refer to the
low-voltage branch departing from a 10/0.4-kV distribution
transformer, and distribution refers to voltage levels below
50-60 kV. For this reason, their effectiveness in congestion management is assessed separately for each level. The
results are presented in Table 1.
ToU tariffs are probably the oldest and simplest way,
both in terms of implementation and market compatibility, to shift consumption away from peak hours. Such tariffs were only recently introduced in Denmark. In their
conception, those tariffs were used by integrated system
operators to reduce peaks and shift consumption to offpeak periods. Nowadays, ToU tariffs are set by DSOs such
that peak consumption is reduced to minimize the risk of
the overloading of lines or transformers or of unacceptable voltage levels. They are the same over relatively large
geographical areas (usually the same per DSO) and change
infrequently over the year. Such rigid tariffs cannot alleviate transmission-level congestion, which is usually caused
by hard-to-predict events (e.g., faults, market actions, or
large variations in renewable production from the forecasted values).
The same is also true on a distribution and feeder level.
Such inflexible tariffs cannot cope with the different topologies and load compositions over the distribution network or
with the high shares of renewables that lead to unpredictable load patterns of flexible demand, which follows highly
volatile market prices. Furthermore, ToU tariffs cannot
cope with the possible congestion that may occur because
of the activation of balancing power or ancillary services,
which can happen at any point in time. Such tariffs can also
have an impact on the use of demand-side flexibility for
system-balancing purposes because they do not adapt to the
state of the system, and their inflexible nature may lead to
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IEEE Power & Energy Magazine - March/April 2021

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - March/April 2021