  This paper investigates sequential flexibility markets consisting of a first
market layer for distribution system operators (DSOs) to procure local
flexibility to resolve their own needs (e.g., congestion management) followed
by a second layer, in which the transmission system operator (TSO) procures
remaining flexibility forwarded from the distribution system layer as well as
flexibility from its own system for providing system services. As the TSO does
not necessarily have full knowledge of the distribution grid constraints, this
bid forwarding can cause an infeasibility problem for distribution systems,
i.e., cleared distribution-level bids in the TSO layer might not satisfy local
network constraints. To address this challenge, we introduce and examine three
methods aiming to enable the grid-safe use of distribution-located resources in
markets for system services, namely: a corrective three-layer market scheme, a
bid prequalification/filtering method, and a bid aggregation method.
Technically, we provide conditions under which these methods can produce a
grid-safe use of distributed flexibility. We also characterize the efficiency
of the market outcome under these methods. Finally, we carry out a
representative case study to evaluate the performances of the three methods,
focusing on economic efficiency, grid-safety, and computational load.
