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White Paper

DSO Models for Utility Stakeholders - DSO Organizational Models for a Digital, Distributed Modern Grid

Establishing new Distribution System Operator (DSO) functions that include an open and transparent distribution market is the next evolutionary step required to create a “new energy” economy that empowers utilities, consumers, producers, third-party aggregators, technologists, and new business models to enable more DER adoption and creating greater efficiencies, cleaner and cheaper power, better reliability and more resilience. 

While working on a DSO strategy for a California IOU this Fall, I spent a couple of weeks reading everything I could find on DSO modeling.  Frankly, there isn’t much out there.  And, what I did find, I walked away a bit confused – even after reading some of the papers multiple times.  I spent hours at the whiteboard drawing what I thought I had read and had the epiphany that THERE ISN’T JUST ONE DSO MODEL that works for everyone.  Instead, there is a spectrum of potential DSO models ranging from highly centralized transmission level models to highly decentralized peer-to-peer level models.  Over this spectrum, there are other models that fall in-between.  And, when we think about a DSO, we shouldn’t think of it as an organization.  Rather, the DSO is a set of roles that may be in one organization or spread across multiple organizations. And, finally, that how you model a DSO (and distribute the roles) in one region should be designed based on local conditions – regulatory environment, DER penetration, weather, politics, bulk market design, grid topography, constraints, and capabilities, etc. – meaning that one DSO model that fits well in one area might not be the optimal DSO model in another area.

As a result of this, my B&V team developed a structured process for working with experts within utilities to optimize a DSO model design and strategy for the California utility we were working with.  After completing the modeling workshop, I developed a white paper on what I had learned to help other utilities gain a perspective on the spectrum of DSO model opportunities and to help them determine which model(s) best fit their situation.

The bottom line is that there is not ONE ANSWER for the “best” DSO model.  There is an informed process that should be followed – and a clear spectrum of possibilities that should be considered thoughtfully.  I hope that this paper will help utilities, regulatory bodies, and ISOs wrap their heads around the problem with a little more clarity and consider all of the possibilities before “jumping to the answer”.

The DSO functions and different models described in our document lay the foundation for considering how to enable a “new energy” economy ecosystem from an organizational standpoint based on your local politics, regulatory environment, grid constraints, and other local considerations.

Let’s get the conversation going.

White Paper

Stuart McCafferty's picture

Thank Stuart for the Post!

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Richard Brooks's picture
Richard Brooks on January 3, 2019

This paper does a good job of describing the range of 6 possilbe organizational/functional models that could be applicable to a DSO approach. The paper also recognizes that there may be other models that are variations of these base models.

I find the authors analysis to be honest and objective and fully agree with the paper's conclusion: "there is a spectrum of DSO models that range from highly centralized to highly distributed" and "that one DSO model that fits well in one area might not be the optimal DSO model in another area."

Some items I wish the paper covered include:

  • Mapping of DSO responsibilities to the NERC functional model
  • A detailed listing of what services are included in "distribution services" that might be market based, ref page 8: "Market Operator Responsible for managing a platform for Utility and third-party bids, offers, and bilateral transactions for distribution services, as well as transaction clearing and settlement."


    Today, the ISO's operate DA/RT energy markets, set’s LMP,s, clears bids/offers and provides markets for ancillary services. Does the DSO DMO model add more market based services than those already provided by an ISO, such as ISO New England.

Overall, I believe the paper achieves its objectives and provides the community with a starting point to begin discussions of DSO designs. It's well written and easy to read/comprehend. Well done.


Charles Botsford's picture
Charles Botsford on January 3, 2019

I really like the white paper with its description of the six models. My sense is that models 5 and 6, especially 6, could focus more on the end customer economic benefits (consumer, aggegator). These models still seem a bit utility- and ISO-centric in economic thinking. For example, an individual EV driver may contribute to potential grid services, and will likely be very engaged regarding the economics. Even more so the aggregator of ten thousand EV driver residential chargers. To this end, energy services transaction costs will need to be determined, communicated, and minimized. All of that plays into the big picture of how everyone makes money (or serves their organizational charter) from the consumer on up.

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