Complexity Reduction for TSO-DSO Coordination: Flexibility Aggregation vs. Distributed Optimization

The increasing number of flexible devices and distributed energy resources in power grids renders the coordination of transmission and distribution systems increasingly complex. In this paper, we discuss and compare two different approaches to optimization-based complexity reduction: Flexibility aggregation via Approximate Dynamic Programming (ADP) and distributed optimization via the Alternating Direction Method of Multipliers (ADMM). Flexibility aggregation achieves near-optimal solutions with minimal communication. However, its performance depends on the quality of the approximation used. In contrast, ADMM attains results closer to the centralized solution but requires significantly more communication steps. We draw upon a case study combining different matpower benchmarks to compare both methods.