Evaluating Flexibility of Business Models for Distributed Energy Resource Aggregators

Abstract

A transition from a traditional power system towards a low-carbon power system requires unlocking new sources of flexibility a t t he distribution level a nd engaging distribution system users to become electricity market participants. These users are usually too small to adequately position themselves in electricity markets. Therefore, the latest package of the European Commission highly encourages aggregating them into a single market entity. Aggregation of distribution system users can be realized through different business models. The main intention of this paper is to analyze two potential business models to be used for aggregation of distribution system users. The first one illustrates the case in which the supplier also offers aggregation services in markets or auctions on behalf of its customers. The second model considers the case in which a new market participant, called the “independent aggregator”, enables distribution system users to actively participate in electricity markets or offer services to the grid operator. The paper elaborates on the advantages of both models through simplified examples by positioning them within the current European market setup.