TSO-DSOs Stable Cost Allocation for the Joint Procurement of Flexibility: A Cooperative Game Approach

--In this paper, a transmission-distribution systems flexibility market is introduced, in which system operators (SOs) jointly procure flexibility from different systems to meet their needs (balancing and congestion management) using a common market. This common market is, then, formulated as a cooperative game aiming at identifying a stable and efficient split of costs of the jointly procured flexibility among the participating SOs to incentivize their cooperation. The non-emptiness of the core of this game is then mathematically proven, implying the stability of the game and the naturally-arising incentive for cooperation among the SOs. Several cost allocation mechanisms are then introduced, while characterizing their mathematical properties. Numerical results focusing on an interconnected system (composed of the IEEE 14-bus transmission system and the Matpower 18-bus, 69-bus, and 141-bus distributions systems) showcase the cooperation-induced reduction in system-wide flexibility procurement costs, and identifies the varying costs borne by different SOs under various cost allocations methods. The increasing integration of distributed energy resources (DERs) and electrification of the consumer energy space (e.g., transportation and heating) pose challenges for grid operation, due to the induced uncertainty and changing load patterns. In this respect, the introduction of market mechanisms for the procurement of flexibility from flexibility services provides (FSPs) has been increasingly recommended in policies [1], and has been the center of several recent works in the literature [2]-[7] and demonstration projects [8]. As FSPs could provide their flexibility as a service to different system operators (SOs), a major branch of the literature has focused on the SOs' joint procurement (i.e. In particular, a key focus has been shed on the need for coordination between SOs to achieve joint procurement, not only for optimization of economic efficiency but also to ensure that the activated flexibility meets grid operational constraints of all the grids involved [2]-[5], [9], [10]. The authors are with the Flemish Institute for Technological Research VITO/EnergyVille, Thor Park 8310, 3600 Genk, Belgium. The authors have equally contributed to this work. This work is supported by the EU's Horizon 2020 research and innovation programme under grant agreement No 824414 - CoordiNet project. Flexibility is the ability to dynamically modify consumption and generation patterns providing, as a result, a service to system operators. Towards this end, we first introduce a novel flexibility market model including a TSO and multiple DSOs for jointly procuring congestion management and balancing services while explicitly accounting for grid constraints. This framework is developed by first introducing disjoint TSO and DSO level markets and joining them in a common market setting.