Comillas Pontifical University. Madrid (Spain)
June 5th, 2026
Summary:
Power systems are undergoing rapid structural changes driven by decarbonization policies, the electrification of demand, the expansion of data centers, and increasing penetration of variable renewable generation. While this transition supports emissions reductions, grid modernization, innovation, and new business opportunities, it also increases variability and uncertainty in supply and demand, with direct implications for distribution system reliability and congestion. Conventional congestion mitigation relies on network reinforcement and expansion, but these measures are capital-intensive and often slow to deploy. This motivates the use of non-fossil flexibility resources that can relieve congestion and defer investment while maintaining secure operation.
Specifically, this thesis examines congestion management in active distribution networks, understood here as the mitigation of assets' thermal overloads and bus voltage-limit violations, through the joint use of distribution system operator (DSO)-owned flexibility, implemented through distribution network reconfiguration (DNR), and third-party non-fossil flexibility procured through local flexibility markets (LFMs). Although DSOs operate multiple grid-flexibility resources to mitigate congestion, including transformer tap-changers, capacitor banks, and power-electronic devices such as static synchronous compensators and soft open points, DNR is prioritised because switching tie and sectionalising devices directly alters feasible power-flow patterns and can reshape congestion zones, thereby affecting which third-party flexibility service providers are electrically deliverable and, in some cases, enabling providers outside the initially constrained area to contribute to congestion relief. Furthermore, the thesis focuses on DNR in medium-voltage distribution networks, where partial meshing and sufficient levels of automation make this type of reconfiguration feasible in practice.
On the third-party side, while flexibility can be accessed implicitly, for instance through network tariffs, or explicitly, for instance through flexible-connection agreements and rule-based schemes, the thesis concentrates on market-based procurement in line with the European regulatory trajectory that increasingly positions competitive procurement as the default mechanism for acquiring local network services.
The thesis argues that, despite the complementary roles of DNR and LFMs, existing studies either treat DNR and LFMs separately or consider only partial forms of coordination that do not reflect current practical implementations and regulatory requirements. In particular, there are no unified modeling frameworks that (i) capture real-world DNR implementation aspects, (ii) represent DNR-LFM interaction under the current LFMs’ governance arrangements, that is, whether LFM is operated by a DSO or by an independent third-party entity, (iii) quantify how network topology influences the eligibility and effectiveness of flexibility service providers (FSPs), and (iv) characterize how DNR and LFM interaction changes when network investment decisions are jointly considered alongside congestion management. These gaps motivate the methodological developments in this thesis. The analysis begins with a structured synthesis of distribution system flexibility and the respective roles of DNR and LFMs, emphasizing their operational benefits, implementation challenges, and the limited state of the art on their coordinated use. Building on this foundation, the thesis advances through a sequence of quantitative frameworks that progress from (i) a practical DNR model for congestion management that remains computationally tractable for large distribution networks, to (ii) operational DNR-LFM coordination under alternative governance arrangements, and finally to (iii) a unified planning model that co-optimizes investment, reconfiguration, and market-based procurement of third-party flexibility.
In the first framework, DNR is formulated as an operational congestion management tool that is both scalable and operationally realistic, provided that three elements are combined: an explicit congestion identification stage, congestion-driven screening of candidate switchable lines, and a multi-period DNR formulation that incorporates switching costs and intertemporal topology constraints. This integrated workflow addresses a key weakness in much of the DNR literature, where congestion relief is often incidental to other objectives and operational realism is limited by the omission of switching costs and by the assumption that all switches are controllable and relevant. Results show that including switching costs is essential to obtain topology schedules consistent with operational feasibility and DSO practices. Moreover, congestion-driven screening of switchable lines is decisive for computational tractability in large-scale distribution systems. However, results also reveal a practical limit of DNR as a stand-alone corrective measure. Under high loading scenarios, topology changes alone may be insufficient to fully eliminate overloads and voltage violations, suggesting that DNR should be viewed as one element of a broader congestion-management toolbox rather than as a universal substitute for reinforcement or flexibility procurement.
In the second framework, this thesis shows that the governance structure in DNR-LFM coordination is not a purely institutional detail. It can significantly impact congestion management outcomes through its effects on coordination, information availability, and the representation of network constraints in the market-clearing process. Two governance models are formalized and evaluated: an integrated co-optimization model in which the DSO acts as both the flexibility buyer and the market operator, and a sequential coordination model in which a third-party operates the market and the DSO procures flexibility through that market. Results show that when third-party flexibility is abundant and well distributed, both governance models converge to similar outcomes, eliminating network violations and yielding comparable system costs. However, when flexibility availability is limited, governance becomes decisive: the integrated co-optimization model maintains secure and reliable operation, achieving stronger congestion relief in the analyzed case, whereas the sequential model results in residual expected energy not served (EENS) and higher total costs.
The third framework shows that economically efficient congestion management requires an explicit trade-off between capital-intensive reinforcement and operational flexibility instruments. The case study results reveal a hierarchy that depends on the severity and persistence of the congestions. Under moderate demand growth, operational measures, particularly DNR, can be sufficient and cost-effective. As congestion intensifies, adding LFM-based procurement can defer or partially substitute reinforcement, contingent upon the availability of flexibility and location. Under high congestion conditions, the most robust strategy is typically a coordinated portfolio that combines targeted investment with operational flexibility, yielding the strongest reduction in EENS and improved loading and voltage performance across representative operating conditions.
Overall, this thesis provides a practical foundation for structuring and assessing how DSOs can coordinate DSO-owned flexibility and third-party flexibility procurement, as well as how these operational options compare with or complement network investment decisions. The central conceptual and quantitative insight is that network topology is not merely a constraint. It is an endogenous operational decision that reshapes feasible power flow patterns, thereby changing the geographic eligibility, effectiveness, and required procurement volumes of FSPs. Consequently, credible DNR-LFM coordination frameworks must treat topology control and flexibility procurement as coupled decisions, whether coordinated sequentially or optimized jointly. A key implication is that performance depends not only on the aggregate volume of available flexibility, but also on its spatial distribution and topology-dependent deliverability.
Future research directions include evaluating the proposed strategies using reliability and resilience assessments, extending the frameworks to additional third-party flexibility mechanisms beyond LFMs, and incorporating capital expenditures for DNR automation and LFMs’ communications, monitoring, and market platforms to support a complete comparison with grid investment. Additional work is needed to incorporate uncertainty through stochastic, robust, or multi-scenario formulations, and to extend the planning model toward multi-year investment dynamics, including phased reinforcements and investment delays. Further research should also examine market power, and strategic bidding in geographically constrained flexibility markets, validate the methods across diverse networks and regulatory settings, and analyze the integration of DNR-LFM solutions within existing electricity markets and alternative mechanisms to procure flexibility: flexible connection agreements, dynamic local network tariffs, or bilateral contracts.
Spanish layman's summary:
Esta tesis ofrece una base práctica para estructurar y evaluar cómo los DSO coordinan la reconfiguración de redes de distribución y los mercados locales de flexibilidad para gestionar congestiones, y cómo estas opciones se comparan o complementan la inversión en red.
English layman's summary:
This thesis provides a practical foundation for structuring and assessing how DSOs can coordinate Distribution Network Reconfiguration and Local Flexibility Markets for congestion management, as well as how these operational options compare with or complement network investment decisions.
Descriptors: Technological Sciences, Electrical technology and engineering, Power technology, Power distribution
Keywords: congestion management, distribution network reconfiguration, distribution systems, local flexibility markets, power system flexibility; gestión de congestiones, mercados locales de flexibilidad, reconfiguración de la red, sistemas de distribución, flexibilidad del sistema eléctrico.
Citation:
M. Valarezo, "Evaluating the Interaction Between DSO-Owned and Third-Party Non-Fossil Flexibility Resources in Distribution System Operation and Planning", PhD. dissertation, Comillas Pontifical University, Madrid, Spain, 2026.
