TSO-DSO Integration in Brazil: Technical and Regulatory Proposals for the Systemic Integration of Distributed Energy Resources

Operator (TSO) or the Distribution System Operator (DSO), while the national peak demand stands at approximately 100 GW. This evolving scenario urges for a new operational and regulatory paradigm, based on an orchestration of the system with decentralized operational resources and strengthened coordination between TSO and DSO.

To address this challenge, the Brazilian Electric System Operator (ONS), in collaboration with consulting firms PSR and Daimon, developed a comprehensive study proposing a new model for TSO-DSO integration in Brazil’s context. The central proposal is the implementation of an intermediate dispatch mechanism, whereby ONS issues operational instructions to the DSOs, who then operate DER connected to their grid. This model enables DER to contribute to the system needs, especially frequency control and congestion management, while respecting the operational boundaries and institutional roles of each stakeholder.

The study was structured in three phases. The first phase involved an international benchmark related to the experiences with TSO-DSO coordination and a report of the national experience with DER integration both from TSO and DSO perspectives. The second phase focused on identifying the types of products and services that the DER could offer to the system operation, such as active and reactive power support, ramping capabilities, and transmission lines’ congestion relief. Finally, the third phase defined the technical and regulatory actions required to implement the proposed model in Brazil.

The proposed model is designed for gradual implementation, suggesting pilot projects and regulatory sandboxes to test and refine the approach. The goal is to be implementable in the short term, but compatible with a more sophisticated model in the long term. This strategy ensures that DER can be progressively integrated as operational resources, enhancing the security, efficiency, and sustainability of the BIPS.

The Brazilian experience demonstrates how a proactive and technically grounded TSO can lead regulatory innovation and foster effective coordination with the DSO. The insights and frameworks developed in this study offer valuable contributions to the international dialogue on modernizing power system operations in the face of increasing DER penetration.