Although the Japanese electricity grid has traditionally operated by transmitting power from large-scale power plants over long distances to demand centres, due to the trend towards decarbonization, many variable renewable energy sources (VRE) have been installed near demand centres, and the flow structure has been changing. Handling the VRE power variation accompanying this change has become a problem, and as there has also been a relative decrease in the level of parallelism of conventional large-scale balancing generators, this change has increased the need for distributed energy resources (DER) to also provide balancing reserve. The Transmission and Distribution Grid Council, made up of Japanese transmission system operators (TSOs), is planning to implement communications for sending balancing commands from a central load dispatching system to the generators based on IEC 61850. Although studies have been conducted on using IEC 61850 to implement the communication of balancing commands and performance data at conventional large-scale power plants, there have been no similar studies on distributed energy resources. This study has modelled the monitoring and control functions for controlling and measuring DER by using IEC 61850-7-420 based on the assumption of power supply trading on the balancing energy market and on the spot market.