  Optimal Volt/VAR control (VVC) in distribution networks relies on an
effective coordination between the conventional utility-owned mechanical
devices and the smart residential photovoltaic (PV) inverters. Typically, a
central controller carries out a periodic optimization and sends setpoints to
the local controller of each device. However, instead of tracking centrally
dispatched setpoints, smart PV inverters can cooperate on a much faster
timescale to reach optimality within a PV inverter group. To accommodate such
PV inverter groups in the VVC architecture, this paper proposes a bi-level
optimization framework. The upper-level determines the setpoints of the
mechanical devices to minimize the network active power losses, while the
lower-level represents the coordinated actions that the inverters take for
their own objectives. The interactions between these two levels are captured in
the bi-level optimization, which is solved using the Karush-Kuhn-Tucker (KKT)
conditions. This framework fully exploits the capabilities of the different
types of voltage regulation devices and enables them to cooperatively optimize
their goals. Case studies on typical distribution networks with field-recorded
data demonstrate the effectiveness and advantages of the proposed approach.
