Power systems are evolving to the networks with proliferated penetration of renewable energy resources to leverage their environmental and economic advantages. However, due to the stochastic nature of renewables, the management of the rapidly increasing uncertainty and variability in power system planning and operation is of crucial significance. This paper represents a comprehensive overview of power system flexibility as an effective way to maintain the power balance at every moment. Definitions of power system flexibility from various aspects are explained to reach the reliable and economic planning and operation of the power system. The effects of the high penetration of variable energy resources on power systems and the evolution of flexibility in response to renewables are studied. A variety of resources during the flexibility evolutionary transition are introduced and discussed. As an influential flexibility solution in current power systems integrated with renewable resources, market design improvement is widely reviewed in this paper, and required modifications in market design mechanisms are investigated pertaining to various time horizons.

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This study proposes a single-leader-multi follower game to model a bilevel retail market among an aggregator and multiple microgrids to determine the optimal demand scheduling of the consumer, as well as price-power bidding strategies of microgrids in an interactive scheme. In the lower level, microgrids which include several distributed energy resources and energy storage units, compete with each other and offer the optimal energy-price bids such that their individual profit is maximised, while energy dispatch among their energy resources is also determined. Then, in the upper-level problem, the aggregator leads the competition taking advantages of demand-side management including interruptible and shiftable loads to minimise its energy payment for real-time pricing of generation units. By means of Karush-Kuhn-Tucker optimality condition, the bilevel optimisation of Stackelberg game is reduced to a single-level mixed-integer linear programming problem. Moreover, impact of microgrids' integration on the retail market clearance mechanism, as well as required incentives for such integration has been discussed in a separate scenario.