  We design a coordination mechanism between a distribution system operator
(DSO) and distributed energy resource aggregators (DERAs) participating
directly in the wholesale electricity market. Aimed at ensuring system
reliability while providing open access to DERAs, the coordination mechanism
includes a forward auction that allocates access limits to aggregators based on
aggregators' bids that represent their benefits of aggregation. The proposed
coordination mechanism results in decoupled DSO and DERAs operations that
satisfy the network constraints, independent of the stochasticity of the
renewables, wholesale real-time locational marginal prices, and individual
DERA's aggregation policy. Optimal bidding strategies by competitive
aggregators are also derived. The efficiency of the coordination mechanism and
the locational price distribution at buses of a radial distribution grid are
demonstrated for a 141-bus radial network.

Systems and Control;Systems and Control