A Blockchain-aided Flexibility Procurement Bargaining for TSO-DSO Coordination

The integration of large-scale distributed energy resources (DERs) necessitates coordinated management between transmission and distribution systems to address system imbalances. This paper proposes a blockchain-aided Nash bargaining framework to optimize flexibility coordination between a transmission system operator (TSO) and distribution system operators (DSOs). By engaging in a bargaining process, the TSO and DSOs collaboratively determine energy exchange levels and dispatch strategies to minimize operational costs. A key challenge lies in solving the non-convex Nash bargaining problem, which we address by decomposing it into two tractable sub-problems: a social cost minimization task and a benefits-allocation optimization. To preserve privacy during negotiations, the Alternating Direction Method of Multipliers (ADMM) is employed, enabling secure computation of optimal flexibility trades and associated payments. Furthermore, we further develop blockchain-based smart contracts to automate the bargaining process, ensuring transparency, auditability, and efficiency in TSO-DSO interactions. Numerical simulations demonstrate that participation in the Nash bargaining framework reduces operational costs for both TSO and DSOs, validating the economic value of coordinated flexibility management.