Flexible block offers and a three-stage market clearing method for distribution-level electricity markets with grid limits

•The three-stage market clearing method offers more incentives to flexibility providers.•Three types of flexible block offers have been designed.•Flexibility prices are specified in the proposed flexible block offers. This paper proposes a new flexibility management method which can offer incentives to flexibility service providers so that they are encouraged to actively participate into the congestion management of distribution grids. The proposed method consists of a three-stage market clearing method and three types of flexible block offers: flexible demand bids, flexibility service offers, and energy arbitrage blocks. These cover most of the needs of flexibility providers. These flexible block offers are more efficient in terms of computation burden in comparison with the other flexibility offers in the existing literature. Flexibility prices are specified in these flexible block offers, which can guarantee a certain level of rewards for the customers who can help in the congestion management process. Case studies on a modified Roy Billinton Test System demonstrated the efficacy of the proposed flexibility management method for managing congestion and encouraging customers to provider flexibility services.