Kirstov [1] lays out two possible scenarios for a restructuring of power delivery that addresses potential complications
from increasing distributed energy resources (DER) on a grid that has historically been powered by a small number of
centralized large-scale generators. How will efficient markets be run with so many energy sources? The first scenario is
the so called Grand Central Optimization, a top down scheme in which DERs participate in whole sale markets, and the
centralized TSO sets market prices and directly controls all the DERs and perhaps even has a hand in controlling the
demand side.[2] The authors find such a scheme intractable due to the high level of detail and control required by the
centralized authority to meet its operational requirements. The problem is just too big and complex. It may be a case of
“commies with computers” in which starry eyed advocates believe computational power and sensors will finally vindicate
Marx. Instead, the authors favor a bottom up decentralized scheme called the Layered Decentralized Optimization in which
each segment of the grid is lumped together at the DSO level, and DSO’s communicate with TSO through a single node. This
makes each DSO responsible for delivering power to its users by balancing its DERs with imported energy from the TSO. A
TSO would be unaware of all the DER data and demand within the DSO and would only need to respond to each DSO’s bids and
asks. Essentially, the authors propose separate layers of the grid that have simple communication and separate
responsibilities, knowledge, and decision making to make a tractable grid that can support increasing DER and could
scale indefinitely.
