A (not so) Independent Aggregator in the Balancing Market Theory, Policy and Reality Check

Abstract

The aggregator has been touted as the key enabler of active engagement of distributed energy resources and promises to contribute to greater economic efficiency in the European balancing markets by providing cheap sources of flexibility. This paper presents an empirical analysis of how aggregators organize themselves in relation to other market participants given the rules of the balancing market and the impact thereof on their participation. We reviewed how market design influences their choices by comparing three countries, Austria, Germany and the Netherlands, in the light of the goals set by the EU. Despite the EU policy drive to integrate aggregators, the participation of independent aggregators in the balancing market is so far limited. Relaxing the agreement requirements, allowing pool-based prequalification and standardizing compensation mechanisms unlocks more possible business models for the aggregator and may help create synergies among aggregators, suppliers and balance responsible parties.