| Summary: | In order to enable cost-effective renewable energy integration and realize decarbonization targets, the power system requires the efficient utilization of resources on both sides of the market and not just on the supply side. This paper aims to deconstruct the complexity of electricity market design in light of the growing importance of decentralized flexibility and related current developments. The paper concludes that the aggregation of decentralized flexibility and its subsequent participation in the electricity market can help enable system reliability, with the help of explicit demand side management programs. Aggregators play a central role in enabling decentralized flexibility, as they have to actively demonstrate to system operators their ability to deliver the required services. The evolution of a specific market for decentralized flexibility, however, depends on existing market arrangements and the availability of resources.
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