1 Managing electric flexibility from Distributed Energy Resources: A review for incentives, aggregation and market design Cherrelle Eid a,1 , Paul Codani b,2 , Yannick Perez b, 3 , Javier Reneses Guillén c,4 , Rudi Hakvoort a,5 a Delft University of Technology, P.O. Box 5015, 2600 GA, Delft, The Netherlands b Group of Electrical Enginnering Paris (GEEPs), UMR CNRS 8507, CentraleSupelec, UPSud, UPMC, Gif-sur-Yvette, France c Instituto de Investigación Tecnológica, Universidad Pontificia Comillas, c/Alberto Aguilera 23, 28015 Madrid, Spain 1 Corresponding author, C.Eid@tudelft.nl, Tel.: +31152781588 (permanent), + 41767218131(present) 2 Paul.Codani@supelec.fr 3 Yannick.Perez@u-psud.fr 4 Javier.Reneses@iit.upcomillas.es 5 R.A.Hakvoort@tudelft.nl Abstract In many places worldwide the amount of connected distributed energy resources (DER) at the distribution grids is increasing. The electricity feed-in and consumption of those resources requires an adaptation the management of the system in order to secure reliability of supply. At high voltage levels under responsibility of the system operator, different trading mechanisms like contracts for ancillary services and balancing markets provide opportunities for economic efficient supply of system flexibility services on lower voltage levels. In a situation with smart metering and real-time management of distribution networks, similar arrangements could be enabled for medium and low voltage levels. This paper reviews distributed energy resources from a technical perspective, the related system needs for electric flexibility and the economic and technical arrangements like load aggregation and tariffs to incentivize efficient operation of DER. Keywords: Distributed generation, electricity tariffs, decentralized, demand response, smart grid 1 Introduction Traditionally low voltage grids have been designed to transport electricity towards residential users for consumption. However, due to the increased penetration of distributed energy resources (DER), low voltage grids are increasingly used as carriers of bi-directional electricity flows. The penetration of DER such as distributed generation (DG), electric storage, electric vehicles (EVs) and demand response significantly affect the operations of distribution grids [1], [2]. In Germany for example, the growth of Solar Photovoltaics (PV) reached a level of 38 GW installed in 2013 and affected grid stability in some local areas [3]. Large numbers of PV installations are noticed in The United States (US) within California, Arizona and Hawaii (Greentech Media & Solar Energy Industries Association, 2013). Other examples of DER rises are a significant growth of EVs in Norway – where EVs stood for 12.5% of new car sales in 2014 – and California – with almost 130.000 plug-in vehicles on the roads by the end of 2014 – and CHP in Denmark [4]. On one hand, this DER development is positive due to reductions in CO 2 emissions with sustainable DG, decreased use of transmission lines, increased self-consumption and the increasing independence of customers from central grid power [5]. However, regardless of those, DER is potentially problematic for grid stability and reliability due to congestion and voltage issues [6], [7]. These