*3.5. Storage*

This agen<sup>t</sup> consumes and generates electricity and has the ability to store it for using it afterward.

Storage is rapidly becoming a key technology in energy systems. Storage systems can help balance and flatten the electricity load profile. They are characterized by very fast responses, which provide storage with the capability to efficiently deliver operation services such as frequency response, black-start capability, load following, or capacity mechanisms [51]. Additionally, storage can participate in the wholesale market, leveling the load, competing with other peak power plants [52], and balancing short-term deviations. Storage was pointed out as one of the key factors to ensure reliable large renewable penetration in power systems [4], mainly because of its ability to balance the excess and deficit of renewable production, thereby avoiding curtailment and also helping the system operator.

This agen<sup>t</sup> has the capability to store energy in other forms such as thermal, potential, mechanical, or chemical. This includes technologies such as pumped hydro, flywheels, molten salts, hydrogen, and electrochemical batteries [53]. The storage agen<sup>t</sup> also has to have available information and control systems to be allowed to participate in the electricity market.

The storage agen<sup>t</sup> implements power and energy transactions with the grid it is connected to (distribution or transmission). If connected to the transmission grid, storage injects and absorbs electricity from the grid to perform its activity and provide operation services with a minimum power (POS-T) to the TSO that manages the transmission grid. If connected to the distribution grid, the storage may exchange power and operation services with a minimum size (POS-D) not only in the distribution grid and the DSO but also through VPP. These could be implemented through bilateral contracts, which can occur for aggregating capacities to better participate in the markets. With respect to economic transactions, storage can receive payments from the wholesale market, local market, and VPPs for the energy sold. It can also receive payments from the TSO, DSO, VPP, and generators for operation services. Storage can also buy electricity from the wholesale market, local markets, and VPPs, and it may have to pay for the associated fees of markets and grid assets.

## *3.6. Transmission System Operator*

This agen<sup>t</sup> ensures the correct operation of the transmission system. Its main activities are to guarantee secure operation of the power system. This agen<sup>t</sup> has to obtain the resources to operate the network not only from traditional generators but also eventually from VPPs, large customers, and storage as proposed in the architecture. To do so, the TSO needs information that is provided by the WMO, transmitter, and other agents connected to the transmission grid. The TSO is committed to balancing the system and identifying network restrictions, which requires a reliable monitoring and control capability either for committed generators or VPPs and, eventually, demand response resources, directly managed or through aggregators. These control signals require fast and reliable communication.

For doing so, the TSO needs to have assets to ensure the information and measurements flow is available, regarding the operation of the transmission network through a control center. The communication and cooperation between a DSO and TSO are essential in this new conceptual architecture. Furthermore, the TSO also has to manage exchanges with other power systems considering the capacity of the interconnections.

In the proposed model, the TSO has to also consider the use of resources to operate the transmission network not only from traditional generators but also eventually from VPPs, large customers connected to transmission, and storage. All these operation services require a minimum but homogeneous power (POS-T) for all participants that is determined according to the size of the system. Agents need to fulfil these requirements to compete in equal conditions. The TSO rewards economic payments in exchange for operation services to generators, VPPs, aggregators, storage systems, and consumers connected to the transmission network. As the main beneficiaries of the reliable and secure operation of the transmission grid are consumers, they pay the maintenance of the TSO via fees.
