With the growth of distributed energy resources (DERs) and the potential benefits of using DERs as grid resources, there is a greater need for an entity to manage the scheduling and dispatch of these resources in a manner similar to how ISOs and other balancing authorities schedule and dispatch transmission-level resources.
One potential model to provide this function is the distribution system operator (DSO). The DSO would provide the same function for distributed energy resource dispatch, distribution system operations, and facilitation of distributed markets that ISOs provide for the bulk electric system. Like ISOs, the DSO would be an unbiased entity without ties to any market participant. The DSO would interact with the distribution utility, which would likely become a distribution network operator (DNO), simply responsible for maintaining and operating the distribution facilities much like a transmission operator (TO) in the ISO model. To facilitate active retail markets, the DSO would bid aggregated distributed resources into competitive ISO wholesale markets in competition with centralized generators.