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In this paper, a framework is proposed to coordinate the operation of theindependent system operator (ISO) and distribution system operator (DSO) toleverage the wholesale market participation of distributed energy resources(DERs) aggregators while ensuring secure operation of distribution grids. Theproposed coordination framework is based on parametric programming. The DSObuilds the bid-in cost function based on the distribution system marketconsidering its market player constraints and distribution system physicalconstraints including the power balance equations and voltage limitationconstraints. The DSO submits the resulting bid-in cost function to thewholesale market operated by the ISO. After the clearance of the wholesalemarket, the DSO determines the share of its retail market participants (i.e.,DER aggregators). Case studies are performed to verify the effectiveness of theproposed method.

ISO and DSO Coordination: A Parametric Programming Approach