Assessment of TSO-DSO Coordination to Enhance Flexible Grid Operation

Abstract The growing penetration of renewable energy sources (RES) and distributed energy resources (DERs) has introduced new challenges in power system stability voltage regulation, and congestion management. Therefore, effective TSO-DSO coordination is crucial for addressing these operational complexities and ensuring a reliable and flexible grid. This paper examines critical coordination domains, including voltage control, congestion management, frequency control, operational planning, system restoration, and ancillary services. We evaluate three principal coordination models—TSO-managed, DSO-managed, and hybrid TSO-DSO approaches—alongside six market schemes that define flexibility service procurement processes. Through analysis of centralized, distributed, and hierarchical technical solutions, we identify structural, regulatory, and technical gaps limiting effective coordination. Our examination of existing initiatives reveals that many projects treat balancing and congestion management as separate processes rather than integrated functions, overlooking potential synergies. Integrating these functions could enhance market efficiency, reduce system costs, and improve grid reliability, particularly within Nordic balancing market frameworks. The paper concludes by recommending innovative technologies, market designs, and operational strategies to enhance grid resilience, optimize DER integration, and promote efficient flexibility markets across transmission and distribution networks, contributing to the development of sustainable, reliable power systems.