The electric grid is rapidly transforming from a one-way system delivering power from centralized generation to consumers to a two-way network that accepts power from both centralized and distributed resources and then delivers the electricity to consumers who wish to buy power. The grid of future is represented by the following infographic:
Note that various distributed resources provide power into the distribution grid while centralized resources contribute power into the transmission system. Flows on the transmission system are coordinated by a Transmission System Operator (TSO). In the U.S., the TSO in many regions is an Independent System Operator, or ISO. Flows on the distribution system are similarly managed by a Distribution System Operator (DSO). Power may flow from the transmission system into the distribution or vice versa depending on demand and amounts of distributed supply. Trading markets are created both in the bulk power system (these are the wholesale power markets familiar in today’s electric business) and in the local power market. Local power markets are in their infancy today, but ultimately may allow any customer to sell services to multiple parties using trading platforms coordinated with the DSO.