Distributed Energy Resource Integration for Carbon Neutral Power Systems: Market‐Based Approaches to Ancillary Services and Microgrid Operation

Abstract

Electricity, as a sustainable energy carrier, plays a central role in the transition scenarios for carbon neutralization of energy systems. Expanding the potential of electricity requires intelligent integration of electricity infrastructures and electricity markets with distributed energy resources (DERs) including roof‐top solar photovoltaics (PVs), controllable loads, and storage batteries. This integration will advance the management of power distribution grids, resulting in harmonization of the distribution grids and variable renewable generation. In the foreseeable future, the DERs will be actively used to perform advanced management of power distribution grids and compensate fluctuation in variable renewable power generation such as PVs and wind power. Market‐based coordination mechanisms are already practiced in large‐scale electricity production, electricity trading and transmission around the world. Using these mechanisms at the distribution grid level to integrate numerous flexible devices into the grids remains an important research topic. This paper reviews the role of DER integration toward carbon‐neutral power systems, the state‐of‐art and challenges associated with market‐based approaches for integrating flexible demand, distributed generation, and storage. Methods for assessing the value of DER aggregation such as virtual power plants and microgrids are also explored. © 2024 Institute of Electrical Engineer of Japan and Wiley Periodicals LLC.