Considering the potential for rapid growth of distributed energy resources (DERs), the Ontario electricity system is particularly well suited to hosting a shared platform for integrating distribution and transmission-level operations. This is one of the key findings in the IESO’s latest research paper on managing innovation and sector evolution, and a potential hot topic for power industry discussions, both formal and informal, in the upcoming consultations on market design.
The white paper “Development of a Transmission-Distribution Interoperability Framework” was prepared by the consulting firm ICF, which has been advising the IESO in related areas throughout its broader Innovation Roadmap process. The IESO released the paper in July. ICF explains that the paper was intended to provide “a foundation to guide the evolution of Ontario’s electricity grid by illustrating how the province could consider potential system architectures and assess the relative merits of each.” The paper summarizes the results of research carried out that first examined high-level objectives for the system and then developed a “framework for Ontario to make future decisions about T-D interoperability.” A number of options were compared, assessing the relative strengths and weaknesses of each, and changes were identified that may be needed to achieve an appropriate system design.
Given the number of LDCs in Ontario and the wide differences in their operational circumstances, a common platform would be highly beneficial to Ontario, largely because it would dramatically reduce the costs and complexity associated with each LDC taking its own independent approach to DER integration. The question of transmission-distribution interoperability has become increasingly prominent in the IESO’s consultations with industry during the past year. Industry experts believe the potential scope of interactions between DERs and wholesale markets is growing rapidly as DERs become capable of economically providing a wider range of services. Despite the benefits they can provide, their presence on the system creates new operational risks and complications at both wholesale and retail levels.
The ICF paper was intended “to re-examine traditional roles at the transmission and distribution levels, and assess the potential for an electricity system architecture that incrementally builds on existing capabilities, as well as the current responsibilities of transmission and distribution operators and how they interact with each other to serve the evolving and future needs of the system.”
The research was based on a model with four components:
• A set of system objectives
• The system features needed to achieve these objectives
• The roles and responsibilities of and interfaces between key players and
• The operational systems needed to enable this coordination.
The researchers explain that “a detailed framework should be developed for the services DERs can provide, and the rules defined for wholesale market participation by DERs and DER aggregations (DERAs). To help ensure decisions to guide system evolution are sound, the framework should reflect Ontario-specific objectives and electricity system architecture principles.” They note that the first step for developing this decision framework is “specifying high-level objectives for the system, from the more traditional focus on reliability, affordability and safety, to newer goals such as flexibility, resilience and environmental impacts.”
They go on to say, “The structure – key players and their roles, responsibilities, capabilities and interactions – is the foundation of any T-D interoperability architecture.” The diagram below, from the report, shows how the architectural approach to T-D interoperability maps the interactions between key players as distinct layers to reflect physical power flows, operational controls, market interactions, and information/data exchanges. Different assignments of functional responsibilities to the TSO and the DSO are shown in these diagrams in order to compare the pros, cons and implementation requirements of various options. The authors explain that, “there must be mechanisms through the information/data exchange layer (see diagram) to coordinate distribution operations with the IESO, individual DERs and DER aggregators to ensure wholesale market participation does not compromise distribution system safety and reliability. For example, if LDC operations determines that a wholesale-participating DER must be taken offline due to distribution system conditions, a mechanism
Given the apparent direction of technology evolution, the researchers contend that a central question for this time is “whether to maintain the centralized structure for coordinating high volumes of DERs or to transition to a more decentralized layered structure. The choice must be grounded in the operation of the physical system and the traditional objectives of reliability, efficiency and safety.”
Many may ask, understandably, why doesn’t the power grid operate as one seamless whole, why is there a need for two separate systems, one wholesale and one retail, one transmission and one distribution? The answer to this question is fundamentally technical. Wholesale transmission systems are not set up to manage the huge number of assets and data points that are required for distribution system management, and to do so in the near future would introduce a much higher level of technical complexity into the system. Significant challenges arise from the different topologies and operating regimes of today’s transmission and distribution systems. Most experts have concluded that, based on the current system characteristics, it may be too complex to manage as one single system. For these reasons, attention has focused on how best to evolve the two-level system, recognizing that this creates a need for work on co-ordination and interoperability between transmission and distribution level systems in the near term.
Bearing this in mind, the ICF paper outlines the sequence of its research that led to the common platform proposition: “One conceptual approach … builds upon the status quo, involves each LDC and the IESO individually identifying and implementing the technologies they require to support high volumes of DERs (i.e., both distribution-connected and behind-the-meter DERs), and interconnection and utilization for bulk power and distribution services (i.e., both deferral and operations services). A second conceptual approach is based on leveraging a common platform for Ontario to unify market and operational coordination to support a variety of T-D interoperability structures, as well as vastly simplify the protocols for establishing various interfaces.” It summarizes the two paths as follows:
Approach 1: Separate IESO and LDC technology investments
This approach leads to a greater likelihood that the IESO and LDC investments will result in duplication of operational capabilities, given the inability to leverage shared systems and the requirement for each to actively manage (albeit to potentially varying degrees) aspects of DER integration. Additionally, this type of approach will likely result in greater operational complexity given the volume of interfaces and diversity of protocols to support them.
Approach 2: Shared DER lifecycle management platform
While the approach described above represents an extension of the status quo, another more proactive approach mitigates the complexity and added costs of the first, by avoiding separate IESO and LDC operational systems, and multiple operational interfaces and standards. This second approach is emerging in North American markets (e.g., California) that use DERs to provide grid services, and is being actively explored in other jurisdictions, including Australia.
The paper notes that “Ontario may prefer to develop these capabilities only for those T-D interfaces – the physical points where the transmission and distribution systems interconnect – characterized by higher numbers of DER penetration rather than for all LDC systems across Ontario. … The development of a shared platform for the IESO, LDCs and DER providers would enable Ontario to have a single interface that centralizes market and operational coordination. This would include DER providers submitting bids to the wholesale market, the IESO issuing dispatch instructions to DER providers and the LDC ensuring DER providers have information about distribution system conditions that impact DER operations. Overall, this type of platform would help reduce both complexity and costs for the IESO, LDCs and DER providers by simplifying interfaces between them and allowing LDCs greater flexibility to leverage existing operational systems and acquire other functionalities. “
The shared platform approach would likely facilitate collaboration between the IESO, LDCs and DER providers on operational coordination requirements and systems.
ICF says, “In Ontario, the shared platform approach could significantly lower costs for all parties, reduce the complexity around communications standards and protocols, and provide greater flexibility for LDCs to integrate existing systems on an individual basis, only paying for the incremental functionalities they need. A high-level cost assessment for the province is included. … Discussions in Ontario should continue about how best to structure this coordination in the near term, considering the potential for developing a shared DER lifecycle management coordination platform.”
The benefits are considerable: “[L]everaging this type of platform would vastly simplify the operational interfaces described in Section 5.1.3 for all entities involved – the IESO, LDC, DER aggregators and individual DERs – and drastically reduce the scale of existing interface points. Rather than maintaining separate coordination links with each other (e.g., a DER aggregator having to communicate separately to the IESO and LDC to facilitate wholesale market participation), each entity would be able to have one direct link to the shared platform where all parties could input and extract required information. This benefit grows significantly as the number of DERs increases.
“While standards harmonization targeted by California’s Rule 21 may still be desirable for Ontario, this type of shared platform could support a wide range of standards, making it less critical for the industry to align on a single standard in the near term. In the longer term, standards could be introduced that the platform did not originally support, but the likelihood of stranded assets would be reduced because it is easier and more cost effective for a single platform to adopt capabilities to support new standards rather than requiring multiple DERs and aggregators to adopt them. … Given the diversity of LDCs in Ontario, the province is uniquely positioned to leverage this type of shared platform to significantly reduce costs and complexity for the IESO, smaller or less capable LDCs and DER providers.”
A previous IESO white paper in this series introduced the concept of distribution locational marginal prices (DLMP) that reflect the cost of marginal losses (which could be material at lower voltage levels and at times of high demand), as well as any constraints in the distribution system. The calculation of DLMP may become an important function for distributors going forward and a component of their interoperability systems that would benefit from standardization.
Reconciling multiple objectives for system design
The paper also examines the challenges inherent in defining a more precise and functional set of objectives for system development. In a key passage, it provides an example of the need to consider tradeoffs between concurrent objectives: “[A]n objective to enable a competitive marketplace for third-party DER providers could help direct decisions about whether to bundle the LDC and DSO functions. As described in Section 4.2, creating an independent DSO (IDSO) could prevent the DSO from giving its affiliates a competitive advantage by virtue of owning and operating the distribution system, but it would also create more complex coordination requirements between the LDC and the IDSO. Alternatively, Ontario could establish a regulatory framework for a bundled DSO-LDC that addresses the financial incentives and open-access rules necessary to enable a competitive arena for third parties.” However, these changes could undermine the ability to achieve regulatory simplicity, highlighting the fact that model choices inevitably involve trade-offs, rarely maximizing the achievement of all objectives simultaneously.
The authors explain that, by determining answers that promote competition, it becomes evident that the system architecture of the future would allow the DSO wider scope to operate an open and transparent distribution system marketplace. This suggests a more layered approach would be better suited to meet this objective, versus the more centralized approach characterized by an M-DSO (Minimal DSO) with greater limitations on its functional capabilities.
Moving forward
Stressing the diversity that exists between LDCs in Ontario, the report finds that “This variation between current LDC capabilities could justify a shared platform for the IESO, LDCs and DER providers to manage the entire DER lifecycle. This platform would give LDCs the flexibility to integrate existing systems, or alternatively subscribe on a software-as-a-service (SaaS) basis with a third-party platform provider, to acquire the incremental functionality required to facilitate market and operational coordination under the applicable T-D interoperability approach. A flexible approach could enable LDCs and the IESO to save money and mitigate the complexities resulting from continued investment in separate systems and the likelihood of duplicating functions.”
In its conclusion, the research paper highlights what it calls “key takeaways” as follows:
• “Key takeaway #1: Defining objectives for Ontario’s electricity grid will help determine the most suitable T&D interoperability model to achieve those goals.
• Key takeaway #2: System reliability is the first consideration when determining the types of interactions between key players and their roles and responsibilities.
• Key takeaway #3: A flexible approach to coordinating operations is necessary to address the diversity among and also within local distribution companies in Ontario.
With this work, the research team clearly poses a challenging new proposition that will likely become the focus of significant attention for LDCs, the IESO and others working in the power system.
The report was prepared by the ICF team of Samir Succar, Mike Alter, Homaira Siddiqui, Lorenzo Kristov and Paul De Martini.
For more information, see the section of the IESO website set up to facilitate the Innovation and Sector Evolution White Paper Series at this location, and the following articles:
• Engagements and white papers consider early steps for integrating DERs
• “It’s time to resolve the ownership options for DERs,” LinkedIn September 2019.