The penetration of intermittent Distributed Generation (DG) brought additional uncertainty to the system operation and planning. To cope with uncertainties the Distribution System Operator (DSO) could implement several strategies. These strategies range from the inclusion of smart technologies which will increment system’s flexibility and resiliency, to improvements in forecasting, modeling, and regulatory pledge that will facilitate the planning activity. Regardless of the nature of the solutions, they could be collected in a sort of toolbox. The planner will access the toolbox to conform cost effective plans, better able to deal with any uncertainty. The present work will address the problem of distribution system planning under uncertainties, considering smart solutions along with traditional reinforcements, in the short-term lead time up to 3 years ahead. The work will be focused on three aspects that are the cornerstones of this work:

 • A planning facilitating strategy: Distribution Capacity Contracts (DCCs).

 • A flexibility enabler technology: Energy Storage.

 • A binding methodology: Multistage Stochastic Programming. Stochastic dual dynamic programming (SDDP). 

Under the present directive of the European Parliament concerning common rules for the internal market in electricity, distribution companies are not allowed to own DG but entitled to include it as a planning option to differ investment in traditional grid reinforcements. An evaluation of the regulatory context will lead this work to consider DCCs as a planning alternative available in the toolbox. The impact of this type of contract on the remuneration of the DG owner will be assessed in order to provide insight on its willingness to participate. The DCCs might aid the DSO to defer grid i ii investments during planning stages and to control the network flows during operation. 

Given that storage solutions help to match in time production from intermittent sources with load consumption, they will play a major role in dealing with uncertainties. A generic storage model (GSM) based on a future cost piecewise approximation will be developed. This model inspired by hydro-reservoirs will help assessing the impact of storage in planning decisions. This model will be tested by implementing it in short-term hydro scheduling and unit commitment studies. 

To trace a path towards the future of this research work, a discussion on the planning problem formulation, under consideration of the lead time, the expansion options, the smart strategies, and the regulatory framework will be presented. Special focus will be given to multistage stochastic programming methods and in particular to the SDDP approach.

The increasing penetration of distributed energy resources (DERs) has posed challenges to the distribution system operator (DSO) from the operation and regulatory point of view. High penetration of DERs could have negative impacts on the performance of the distribution grid, and depending on the regulatory framework, the DSO's remuneration as well. In liberalized electrical systems, the focus on promoting eciency has led to the implementation of an incentive-based regulation that exerts additional pressure on the DSOs to reduce costs. Additionally, the European Parliament Directive 2009/72/EC establishes a regulatory unbundling among the distribution, production, and retailing activities within the same vertically integrated electric utility.

A way of helping the DSO to cope with the posed challenges is by providing it with exibility. This exibility can be acquired from the planning stage, and later be used during the system operation. This exibility can stem from the DSO's ability to exert control on the demand and the supply side to balance the system and correct its operational state.

Based on the European DSOs' current situation at facing the increasing penetration of DERs, this thesis investigates in non-wired exible grid tools to solve the distribution network expansion problem. The investigation focuses on exibility providers, in particular on energy storage systems and hydropower, and also on capacity mechanisms to translate the capacity from DERs into the grid's capacity for planning purposes.

Given that the share of renewable sources among the DERs is increasing, and considering the importance of energy storage systems in providing exibility to balance renewable energy production, the eort has been turned on to developing a hydropower model and a generic storage model that t both planning and operational studies.

Given the need for gearing the DERs' behavior into the DSO's decision making process during the planning and operational timescales, the design and implementation of a distribution capacity mechanism have been developed. The design of the capacity mechanism has been conceived considering its integration within the distribution network expansion problem.

The outcomes of this thesis can be synthesized as follows: 1) A generic hydraulic/storage model provided with an equivalent marginal cost that aids in considering the impact of present decisions in the future costs. 2) A market oriented distribution capacity mechanism that gears DERs and the DSOs to benefit mutually. 3) A distribution network expansion planning formulation that integrates the capacity resource from DERs through the distribution capacity mechanism.