From ISO to DSO


Imagining a new construct – an independent system operator for the distribution network.

Imagining a new construct – an independent system operator for the distribution network.

Fortnightly Magazine - June 2014
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in submitting bids and offer to the DSO, but also in bilateral arrangements among themselves. This is the ultimate construct in which the "Transactive Energy" model prevalent in wholesale markets is extended to the retail domain. In its role as the operator of the distribution system, the DSO is still responsible for secure operation of the distribution system and will have to maintain reliable system operation while facilitating such retail transactive market.

The Future is Transactive

Transactive techniques have been used in bulk power operation and trading in the U.S. since the mid-nineties. Although restructuring had as its main goal customer choice and reduced cost to consumers, the demand-side was still for the most part passive.

GridWise Transactive Energy Framework [Ref.3] defines Transactive Energy as " A set of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter."

This definition emphasizes the balance of supply and demand based on "value" without explicit reference to temporal and geographical aspects that may determine or modify the "value." In reality, the term "transactive" emphasizes the notion of a "transaction" as a basis for exchanging information regarding quantity, value, time, and location. Since electric energy is an instantly perishable product, whether trades are physical or financial, they reflect the expected worth of energy when it is eventually produced or consumed. In forward time frame trades are primarily financial, but the closer they get to real-time delivery, the more the physical deliverability aspects come into play.

With the advent of smart device technologies and emphasis on smart grid operation the role of demand side participation in retail markets is changing from passive or submissively active to proactive. The notion of Transactive Energy primarily involves extension of trading to end-use consumers. Thus, the DSO construct discussed here will provide a roadmap for the gradual extension of the transactive framework from wholesale to retail - and to end-use prosumers. The maximalist DSO embodies a full convergence.


1. U.S. Patent Pending. Oapen Access Technology International, Inc. All rights reserved.

2. See, NY PSC Case 14-M-0101, Order Instituting Proceeding, Apr. 25, 2014.

3. Id., at p. 4.

4. Curtailment Service Provicers (CSPs) are also known as Aggregators of Retail Customers (ARCs).


[1] Farrokh A. Rahimi and Ali Ipakchi, "Transaction-based Techniques for Bulk Power Operation under the Smart Grid Paradigm",  IEEE Smart Grid Newsletter , September 2011

[2] Farrokh A. Rahimi and Ali Ipakchi, "Transactive Energy Techniques: Closing the Gap between Wholesale and Retail Markets",  Electricity Journal , Vol. 25/8, November 2012 (pages 29-35)

[3] GridWise Transactive Energy Framework  (Draft Final), Prepared by The GridWise Architecture Council; October 2013

[4] J. Medina, N. Muller, and I. Roytelman "Demand Response and Distribution Grid Operations: Opportunities and Challenges",  IEEE Transactions on Smart Grid , Vol. 1, No. 2, September 2010 (pages 193-198)

[5] The Role of Distribution System Operators (DSOs) as Information Hubs, EURELECTRIC Networks, June 2010

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