Joint and sequential DSO-TSO flexibility markets: efficiency drivers and key challenges

This paper compares the efficiency of two increasingly adopted transmission-distribution coordinated flexibility market models, namely: the (joint) common market and the (sequential) multilevel market. Novel mathematical market clearing formulations are first introduced for each market model and then applied through a case study to identify several practical factors impacting their efficiencies. Those factors include (i) the transmission-distribution interface pricing method, (ii) the ability of flexibility service providers to diversify their bids in sequential markets, (iii) differing entry barriers in the different market models, and (iv) the underlying varying impacts of bid formats and clearing requirements.