Operation and Appraisal of HDPS (WP2)

This work package focuses on the assessment of the technical and economic feasibility of HDPS. It also examines the fiscal and regulatory context required to facilitate these developments where they have been identified as beneficial.

G.P. Hammond and A.B. Winnett, "Interdisciplinary Perspectives on Environmental Appraisal and Valuation Techniques", Proc. Instn Civil. Engrs: Waste and Resource Management, 159(3): 117-130

Techniques of environmental appraisal and valuation play an important role in the context of sustainability assessment. They are at the heart of methods for quantifying economic and social costs and benefits, as well as the direct ecological impacts that are an inevitable sideeffect of material ‘progress’. Concepts such as the physical life cycle of products and processes, and the need for clearly defined system boundaries, are key elements in environmental problem-solving. However, some economists would claim that, as a ‘normative’ discipline, their methods can be extended to incorporate all of society’s environmental concerns. In contrast, engineers and environmental professionals have at times argued that economic techniques (such as cost–benefit analyses) may well obscure the impacts of different courses of action, and that decision makers consequently become less well informed rather than the reverse. Aggregate decision criteria, for example, often conceal the weighing of various impacts. By contrast, the sort of ‘prescriptive’ analytical tools emanating from engineering and the physical sciences can provide alternative insights that complement those that spring from economics. These include thermodynamic (energy and exergy) analysis and environmental life-cycle assessment. A range of interrelated environmental project appraisal techniques is therefore examined in order to determine their relative merits. Practical examples involving resource (energy and hydraulic oil) use, pollutant emissions, and waste disposal and recycling (of hydraulic oils) indicate that many of these methods can play an important evaluative role as part of an interdisciplinary toolkit within a general systems framework. Nevertheless, caution needs to be used when adopting economic and engineering analysis techniques so as to ensure that they are fit for their sustainability purpose.

A.Alarcon-Rodriguez, E. Haesen, G.Ault, J. Driesen, R. Belmans; "Multi-objective Planning Framework for Stochastic and Controllable Distributed Energy Resources"; IET Renewable Power Generation -- June 2009 -- Volume 3, Issue 2, p. 227-238

The amount of distributed energy resources (DER) in the grid is continually increasing, and the potential benefits and drawbacks are becoming clearer. However, there is still a lack of clarity in how these multiple effects interact and which trade-offs should be made in the integration of new DER. There is a clear need for appropriate DER planning tools in the current market environment, in which both DER operators and distribution system operators (DSOs) may have multiple, often conflicting objectives and where uncertainty remains present as to which targets can be reached with a high amount of DER in the grid. A novel multi-objective planning framework is presented for the integration of stochastic and controllable DER in the distribution grid. A case study that illustrates the proposed framework is presented. Active DER management in terms of curtailment as well as dispatch of units is studied using the proposed multi-objective approach. Additionally, the extent to which active DER can be used as an alternative for grid reinforcements is analysed. The results show that the proposed multi-objective approach permits a better evaluation of the potential of active DER to support system operation.

A. Alarcon-Rodriguez, G. Ault, R. Currie and J. R.McDonald, "Planning Highly Distributed Power Systems: Effective Techniques and Tools", The International Journal of Distributed Energy Resources, Vol. 4 No.1, January 2008

In recent years, environmental concerns, technological advances and new regula-tory trends have resulted in a shift towards a more distributed structure of power systems. Consequently, in the coming decades many countries are expected to ex-perience a high penetration of small scale energy generation and storage devices. Highly Distributed Power Systems (HDPS) utilise a diverse combination of energy sources and technologies to supply dispersed loads. While some concepts of tradi-tional power system planning can be used for HDPS planning; the additional chal-lenges associated with HDPS create the need to develop more appropriate planning techniques. These techniques must reflect the complex nature of HDPS planning: multiple and conflicting objectives, the dynamic nature of the problem, diversity of energy sources and the intricate relationship between generation and demand at a highly distributed level. In this work, the aforesaid aspects of the HDPS planning problem are discussed. The requirements for a solid and flexible planning frame-work for HDPS are outlined. The suitability of existing distributed generation plan-ning techniques for HDPS planning is analyzed. Some initial results are presented that illustrate the adequacy of the proposed approach. Finally, the next steps to-wards a fully functional planning framework are discussed. (This paper is published in the International Journal of Distributed Energy Resources Volume 4 Number 1 January - March 2008)

S.R.Allen, G.P. Hammond and M.C. McManus, "Prospects for and barriers to domestic micro-generation: A United Kingdom perspective", Applied Energy, 2008, 85 (6): 528-544

(A revised version of a paper originally presented at the ‘3rd International Green Energy Conference’ (IGEC-III). Mälardalen University, Västerås, Sweden, 18-20 June 2007, pp. 1284-1295.) Approximately 38% of current UK greenhouse gas emissions can be attributed to the energy supply sector. Losses in the current electricity supply system amount to around 65% of the primary energy input, mainly due to heat wasted during centralised production. Micro-generation and other decentralised technologies have the potential to dramatically reduce these losses because, when fossil fuels are used, the heat generated by localised electricity production can be captured and utilised for space and water heating. Heat and electricity can also be produced locally by renewable sources. Prospects and barriers to domestic micro-generation in the UK are outlined, with reference to the process of technological innovation, energy policy options, and the current status of the micro-generation industry. Requirements for the main technology options, typical energy outputs, costs to consumers, and numbers of installed systems are given where data is available. It is concluded that while micro-generation has the potential to contribute favourably to energy supply, there remain substantial barriers to a significant rise in the use of micro-generation in the UK.

O.M.Butcher, G.P. Hammond and C.I. Jones, "Technological Potential for Zero or Low Carbon (ZLC) - Energy Options in the UK Building Sector", Proc 2nd Joint International Conference on Sustainable Energy and Environment (SEE 2006) 21-23 November 2006

The UK Government is committed to developing a sustainable energy economy in the 21st Century, and to taking a lead in reducing carbon dioxide (CO2) emissions amongst the industrialised (OECD) countries. An aspirational target of reducing these emissions to 60% of their existing figure by 2050 has been adopted. The only way in which this fall could be achieved is by significantly reducing primary energy consumption to between 45-75% of the present demand; depending on the energy supply technology mix (fossil fuels, nuclear power, or renewable energy technologies). This will require the widespread adoption of energysaving measures across the economy that would necessitate action by many individual stakeholders. In the domestic sector, where buildings contributes around 30% of final energy demand and some 23% of greenhouse gas emissions, the uptake of zero or low carbon (ZLC) technologies may play an important role in CO2 abatement. Several of these technologies have been assessed in terms of their techno-economic feasibility. They have included solar hot water heaters, solar photovoltaic panels, small-scale wind turbines, and ground source heat pumps. Investment appraisal of these micro-generators indicates that they are presently uncompetitive under current UK liberalised market conditions, even with the aid of government grants. Improvements in the next generation of ZLC technologies, their manufacturing processes, and production volumes are necessary in order to lower their capital costs. Only then will they be economic in comparison with separate supply via the electricity or natural gas networks, enabling them to deliver their undoubted environmental benefits.

G.P.Hammond, "Energy and sustainability in a complex world: Reflections on the ideas of Howard T. Odum", International Journal of Energy Research, 31 (12): 1105-1130

(Keynote Lecture presented at the ‘2nd International Green Energy Conference’ (IGEC-2). UOIT, Oshawa, Ontario, Canada, 25-29 June 2006.) The late Howard T. Odum (1924-2002), the renowned American ecologist and systems analyst, viewed thermodynamic constraints as limiting the development of self-organizing biological organisms. In work with his then colleague Richard C. Pinkerton in the mid-1950s he devised the so-called maximum power and optimum efficiency axiom for ecology. This led to a means for analysing the energetics of systems more generally with the notion of EMERGY, or energy memory, at its core. This rightly allowed for differences in the quality of energy sources, although the practical application of the property has had its critics over time. Later in his life, Odum was concerned with the need for human society to embrace a new ethics and set of policies for the descent away from a growth path in order to ensure a prosperous way down for this complex world modelled on the pulsing paradigm in nature. Here, Odum's ideas are critically assessed from outside his own circle in terms of insights gleaned from the use of engineering thermodynamics (energy and exergy analysis) and environmental appraisal methods, as well as those provided by the modern paradigm of sustainability. This contribution forms part of a sequence of papers in which the author and his collaborators have re-evaluated the use of thermodynamic ideas outside their traditional domain of energy systems. (This paper is published in the International Journal of Energy Research Volume 31 Issue 12, Pages 1105 - 1130)

G.P. Hammond and S.S. Ondo Akwe, "Thermodynamic and related analysis of natural gas combined cycle power plants with and without carbon sequestration", International Journal of Energy Research, 2007, 31 (12): 1180-1201

Thermodynamic and related exergoeconomic performance criteria have been used to evaluate natural gas combined cycle (NGCC) power generation systems, with and without carbon dioxide (CO2) removal technologies. These plants were previously studied by the US National Energy Technology Laboratory employing conventional energy and mass balance results, and have now been evaluated using detailed energy, exergy and exergoeconomic analyses. The plant consisted of a gas turbine together with a steam cycle having three pressure levels. Such NGCC plants show the least exergetic improvement potential amongst competing fossil fuel generators going forward, because they are already enhanced by use of a thermodynamic topping cycle. Carbon capture was simulated on the basis of CO2 recovery from the flue gas stream that leaves the heat recovery steam generator via a commercial amine process. Ninety per cent of the CO2 was captured in this way, and then compressed into a high-pressure liquid. This was achieved with significant power penalty (some 21%) and increase in generating cost per MWh (44%). Combustion and heat transfer processes are the main sources of exergy degradation within power cycles. Fuel combustion accounted for some 32% of exergy destruction. Even with CO2 sequestration, the NGCC system is still a thermodynamically attractive option compared with modern fossil fuel alternatives. Overall, the exergoeconomic results indicate that significant improvements can be achieved by considering the power generation systems as a whole, rather than concentrating on the improvement in performance of individual components (which is a common practice in exergoeconomic optimization studies).

S.R.Allen, G.P. Hammond, H. Harajli, C.I. Jones, M.C. McManus, and A.B. Winnett, "Integrated Appraisal of Micro-Generators: Methods and Applications", Proc. Micro-Cogen 2008, Ottawa, Canada, 29 April - 1 May 2008, Paper MG2008-SG-005, 8pp

A range, or ‘toolkit’, of integrated appraisal techniques have been utilised to study the performance of various domestic micro-generators. Energy, environmental impact and cost-benefit analysis methods, employed on a ‘whole systems’ or life-cycle basis, are described. The application of the appraisal techniques is illustrated via the evaluation of three micro-generators: a micro- wind turbine with 1.7m rotor diameter and power rating 600W at 12m/s; a generic 15m2, 2.1kWp, monocrystalline solar photovoltaic array; and a solar hot water system based upon a 2.8m2 collector. They are estimated to typically provide 25–49% of the average UK household electricity or hot water demand, and have energy paybacks well within their estimated lifetimes. Significant life-cycle environmental impacts are associated with the use of aluminium to produce the solar hot water unit and micro-wind turbine. All three domestic micro-generators were found to be uncompetitive in the present UK liberalised market. Increased production volumes, and technical improvements in the next generation of devices, such as their manufacturing processes and operational efficiencies, are necessary in order to improve their economic performance.

A. Alarcon-Rodriguez, G. Ault and J.R. McDonald, "Planning the development of highly distributed power systems", 19th International Conference on Electricity Distribution, Session 4. Paper No 0259. Page 1 / 4, Vienna, 21-24 May 2007.

In this paper the particular aspects of Highly Distributed Power Systems (HDPS) are described and the HDPS planning problem is discussed. The requirements for a flexible HDPS planning framework are outlined. Some initial results that illustrate the adequacy of the proposed approach are presented. Finally, the next steps towards a fully functional planning framework are discussed.

D. Pudjianto, C. Ramsay and G. Strbac, "Virtual power plant and system integration of distributed energy resources", Renewable Power Generation, IET, Vol.1, No.1, pp.10-16, March 2007

A concept is presented along with the overarching structure of the virtual power plant (VPP), the primary vehicle for delivering cost efficient integration of distributed energy resources (DER) into the existing power systems. The growing pressure, primarily driven by environmental concerns, for generating more electricity from renewables and improving energy efficiency have promoted the application of DER into electricity systems. So far, DER have been used to displace energy from conventional generating plants but not to displace their capacity as they are not visible to system operators. If this continues, this will lead to problematic over-capacity issues and under- utilisation of the assets, reduce overall system efficiency and eventually increase the electricity cost that needs to be paid by society. The concept of VPP was developed to enhance the visibility and control of DER to system operators and other market actors by providing an appropriate interface between these system components. The technical and commercial functionality facilitated through the VPP are described and concludes with case studies demonstrating the benefit of aggregation (VPP concept) and the use of the optimal power flow algorithm to characterise VPP.

DPudjianto, G.Strbac and J Mutale, "Access and pricing of distribution network with distributed generation", 2007 Power Engineering Society General Meeting, Page(s):1-3, 24-28 June 2007

Effective integration of distributed generation (DG) in distribution networks can be stimulated by providing adequate economic signals to inform DG developers and operators about the preferable locations and the value of DG in the context of providing network flow control services and deferring network reinforcement. DG which contributes positively in the reduction of network investment cost should be rewarded and DG which drives network reinforcement should be penalized. In that context, this paper discusses the importance of having cost reflective access and distribution network pricing and highlights the need for recognizing the link between network design and planning, drivers for investment and pricing.

C. Marnay, H Asano, S Papathanassion, and G. Strbac, "Policymaking for microgrids", Power and Energy Magazine, IEEE, Vol.5, No.3, pp.66-77, May-June 2008

Technically, microgrids are emerging as an outgrowth of dispersed on-site and embedded generation via the application of emerging technologies, especially power electronic interfaces and modern controls, and similarly, microgrid economic and regulatory analysis is generally rooted in the same approaches used to evaluate distributed energy resources (DER). As in the economics of many traditional on-site generation projects, the economics of heat recovery and its application by combined heat and power (CHP) systems is central to the evaluation of microgrids, and integration of this capability is a key requirement whenever CHP appears as an option. The recovery of waste heat offers a key advantage to generation close to loads but at the same time adds significantly to analysis complexity because of the need to simultaneously meet requirements for electricity and heat, plus the inevitability of storage, both active and passive, entering the equation. More novel is the economics of power quality and reliability (PQR), which in microgrids can potentially be tailored to the requirements of end uses in a manner only considered to a limited degree in utility-scale system; e.g., by interruptible tariff options. The economics of microgrids arises from evaluation methods for on-site generation from the customer perspective and from the traditional utility economics of expansion planning from the utility perspective. Both of these areas have received considerable attention, so a growing toolkit exists, but methods need reinforcement in some key regards. Central to public policymaking will be consideration of the societal impact of microgrids, especially since their adoption may change macrogrid requirements.

A.M.Pais da Silva, M.S.Mohammadu Kairudeen, J.Dragovic, P.Djapic, G.Strbac and R.Allan, "Reliability evaluation of distribution networks and performance comparison using representative networks", Electricity Distribution, Session 5. Paper 712, pp1/4, 2007

The regulation of distribution network monopolies has been shifting from asset-based to performance-based regulation and therefore is becoming more depending on the quality of customer service. Consequently, there has been increasing interest in developing analysis capability and tools that can support quantitative assessments of alternative Distribution Network Operator (DNO) investment plans in terms of costs and benefits involved. Furthermore, it is very important to appreciate the differences in performances across DNO networks and understand the impact that various historical design and operation practices, different topology and population characteristics may have on the network performance. It is also important to understand cost associated with setting individual performance targets to DNOs. Clearly, there is a need for a framework that enables network performances to be objectively compared, the differences to be understood and explained, and cost and benefits of alternative distribution network investment strategies to be evaluated.

A.M.Pais da Silva, M.S.Mohammadu Kairudeen, P.Djapic, G.Strbac and R.Allan, "Reliability evaluation of underground distribution networks using representative networks", Probabilistic Methods Applied to Power Systems, pp1-6, 11-15 June 2006

There has been a shift in focus in the regulation of distribution network monopolies, from asset based to performance-based regulation. The overall distribution revenue is a function not only of the operating and capital costs incurred by the network owner in providing the service, but also depends on the quality of customer service. Moreover, present regulation continues to encourage year-on-year performance improvements and requires that these improvements be achieved in a cost- effective way. Clearly, there is a need for a framework that enables network performances to be objectively compared, the differences to be understood and explained, and cost and benefits of alternative distribution network investment strategies to be evaluated (improvements in customers' service). The essential idea has been to analyse a small number of networks that represent large number of real feeders of the system. The approach can be used to assess individual companies on an absolute basis or to compare the relative performance between companies. Furthermore, representative networks could be optimised to achieve a most favourable balance between network expenditure and benefits in the form of improved performance. This process consists on the calculation of reference networks which would then enable the design of efficient investment policies.

V.Levi, G.Strbac and R.Allan, "Assessment of performance driven investment strategies of distribution systems using reference networks", Generation, Transmission and Distribution, IEE Proceedings, Vol.152, No.1, Page(s):1-10, 10 Jan. 2005

Distribution systems are inherent monopolies and therefore they have generally been regulated to protect customers and to ensure cost-effective operation. In the UK this is one of the functions of the Office of Gas and Electricity Markets (OFGEM). Initially the regulation was based on the value of assets but there is now a trend towards performance-based regulation. To achieve this, a methodology is needed that enables the reliability performance associated with alternative investment strategies to be compared with the investment cost of these strategies. At present there is no accepted approach for such assessments. An approach based on the concept of reference networks is proposed. The essential idea is to analyse a small number of networks that represent the real feeders of the system being considered. The main stages are: to classify the real feeders into coherent clusters, to construct a representative network for each cluster, to assess the reliability of these representative networks and to re-aggregate the results to give those for the overall system. These representative networks are then analysed repetitively for different investment scenarios and the corresponding reference networks derived. The approach can be used to assess individual companies on an absolute basis or to compare the relative performance between companies. The approach, its implementation in conjunction with a number of distribution companies, and its effectiveness when approach using the underground part of a real system are described

J.Bai, H.Gooi, G.Strbac and B.Venkatesh, "Effects of demand side biding on market clearing price", European Transactions on Power Systems, Vol.16, pp.161-173, 2006

In this paper, a market clearing study is examined by incorporating demand-side bidding (DSB) where customers are allowed to submit load reduction bids. The relationship between the bulk purchase and load reduction bids is presented. A Lagrangian Relaxation optimization method is developed to simultaneously clear generation and demand reduction bids, while maximizing the overall benefits for market participants. Case studies performed demonstrate that, in general, DSB aids in reducing system marginal price (SMP) but there are times where the value of DSB is affected when offer bids of inflexible units are replaced by higher DSB bids. The results also indicate that while load recovery addresses customer needs, it reduces the value of DSB.

D. Pudjianto, A.A. Shakoor, P. Djapic, C. Ramsay, G. Strbac, "System Level Implications of HDPS", First International Conference and Workshop on Micro-Cogeneration Technologies and Applications National Arts Centre, Ottawa, Ontario, April - May 2008

Using a range of techniques and models this paper analyses the implications of increasing penetration of Renewable Energy Sources (RES) and Distributed Generation (DG) on the integral electricity system. From the generation perspective, as the level of intermittent and inflexible generation increases, the system will value DG with a high capacity credit and opportunities for flexible operation. Our models explore the ability of RES and DG technologies to displace incumbent generation capacity and quantify the value of flexibility in the emerging system. From a network perspective, key findings obtained from some case studies show the positive impact of some DG technologies on distribution network losses and deferral of network reinforcement where output is well aligned with peak demand conditions.

G. Strbac, J. Mutale and D. Pudjianto, "Pricing of distribution networks with distributed generation", Future Power Systems, 2005 International Conference,Page(s) :6, 16-18 Nov. 2005

This paper discusses the objectives of distribution network pricing and presents a detailed exposition of network cost drivers. Key policy questions in the context of developing a new Distribution Use of System (DUoS) charging methodology for distribution networks with distributed generation are addressed in this paper. This paper proposes a methodology based on the forward looking network investment cost. The methodology is illustrated through an example and the results of evaluating the charges are discussed.

Lincoln, R.W., Galloway, S. and Burt, G.M., "Unit commitment and system stability under increased penetration of distributed generation", Proceeding of the European Electricity Market 4th International Conf., pp 205-211, May 2007

A paradigm shift is occurring in the way power systems and energy markets are structured and operated in Europe. Concern over energy usage and global warming is promoting the connection of generating technologies at the distribution level and on the consumers side of the meter. This paper tackles the problem of efficiently controlling a system in which there is a high penetration of distributed generation, active load and storage technologies. Plant types that are expected to see increased popularity in future power systems are categorised and modelled. The unit commitment problem in this new context is then modelled as a mixed integer mathematical programming problem. On implementation this model will provide a unique tool for studying the controllability of subsections of large highly distributed energy systems.

Allen, S. R., Hammond, G. P., & McManus, M. C. 2008. "Energy analysis and environmental life cycle assessment of a micro-wind turbine", Proceedings of the Institution of Mechanical Engineers, Part A: Journal of Power and Energy, vol. 222, no. 7, pp. 669-6

The life cycle energy use and environmental impact of an installed micro-wind turbine for domestic (residential) electricity generation has been determined. The turbine examined was a horizontal-axis wind turbine, which has a rotor diameter of 1.7 m, a power rating of 600W at 12 m/s, and an assumed lifetime of 15 years. The system boundaries for the study encompass energy and material resources in the ground and extend to the point of delivery of electricity. The energy output of the turbine in different terrains has been estimated via a dataset of hourly measured wind speeds, and the environmental impact of producing and maintaining the micro-wind turbine was determined. The environmental performance of the turbine was assessed by assuming that each unit of electricity generated displaces (avoids the use of) a unit of grid electricity. The whole life cycle performance of a micro-wind turbine was found to be dependant on a number of factors, primarily the geographical positioning of the turbine, the available wind resource, and the use of recycled materials within the production of the microturbine.

Allen, S.R., G.P. Hammond, H. Harajli, C.I. Jones, M.C. McManus and A.B. Winnett, 2008. 'Integrated appraisal of micro-generators: methods and applications', Proc. Instn Civil Engrs: Energy, 161 (2): pp. 73-86.

A range of integrated appraisal techniques have been utilised to study the comparative performance of various domestic micro-generators that have been proposed as possible decentralised energy resources for ‘low carbon’ buildings. Energy, environmental impact and cost–benefit analysis methods, employed on a ‘whole systems’ basis, are described. The application of this ‘toolkit’ is illustrated by way of the evaluation of three microgenerators: a micro-wind turbine; a (generic) solar photovoltaic array; and a solar hot water system. It is estimated that all three generators, in appropriately sited installations, have energy and carbon paybacks well within their lifetimes. Significant life-cycle environmental impacts are associated with the use of aluminium to fabricate both the solar hot water unit and the microwind turbine. All three domestic micro-generators were found to be economically unattractive in the present liberalised British energy markets from a societal perspective. Increased production volumes and technical innovations in the next generation of devices, such as improvements in their manufacturing processes and operational efficiencies, are necessary in order to render micro-generators economic propositions. However, there are likely to be many external and unpredictable changes to the global energy market during the years to 2050. These could dramatically alter the prospects for distributed generation.

Hammond, G. P. & Waldron, R. 2008. "Risk assessment of UK electricity supply in a rapidly evolving energy sector", Proceedings of the Institution of Mechanical Engineers, Part A: Journal of Power and Energy, vol. 222, no. 7, pp. 623-642.

A range of major risks associated with a rapidly changing United Kingdom (UK) electricity sector have been identified and quantified with the aid of various stakeholder groups (academic researchers, civil servants, electricity companies, ‘green’ groups, power system engineers, and various others), who completed an online internet questionnaire. Each stakeholder ranked potential risks according to the perceived ‘severity of impact’ and ‘likelihood of occurrence’ using a three-point scale. The data were then used to perform a ranking of the risks by multiplying scores for impact and occurrence. There was some variation between the different stakeholder groups, but similar risks were ranked highly by each group. The main risks were identified as being energy security issues (the highest score), lack of investment in new infrastructure, the closure of old coal and nuclear plants leading to reduced network capacity, severe weather events, and inadequate spare capacity margins generally. The trial illustrates the potential of using risk assessment techniques to evaluate developing risks to the UK power landscape. Clearly such an exercise would need to be carried out periodically if it were to maintain its value to the industry, its stakeholders, and to policy makers.

E. Haesen, A. Alarcon-Rodriguez, J. Driesen, R. Belmans, G. Ault, "Opportunities for Active DER Management in Deferral of Distribution System Reinforcements"

Power systems worldwide have gone through a transition from vertically integrated into liberalized energy markets. At the same time, increased environmental concerns are promoting the use of renewable and efficient generation technologies. Consequently, a growing number of small-scale Distributed Energy Resources (DER) are being installed in distribution systems. Passive operation of DER can result in severe grid operation problems. In contrast, active DER management can bring mutual benefits for the DER owner as well as Distribution System Operators (DSO). In this article a flexible multi-objective optimization scheme is presented in which DER placement and optimal ancillary services are evaluated and compared with conventional grid reinforcements. This allows assessing the potential of optimal active DER management and evaluating different tariff schemes for DER connection at different levels of DER in the grid. The proposed method uses a hybrid Strength Pareto Evolutionary Algorithm (SPEA2) with a distribution Optimal Power Flow (OPF). Results are analyzed using the UKGDS 355-bus system.