Aggregation Potentials for Buildings—Business Models of Demand Response and Virtual Power Plants

Zheng Ma,Bo Jørgensen,Joy Billanes

doi:10.3390/en10101646

Abstract

Buildings as prosumers have an important role in the energy aggregation market due to their potential flexible energy consumption and distributed energy resources. However, energy flexibility provided by buildings can be very complex and depend on many factors. The immaturity of the current aggregation market with unclear incentives is still a challenge for buildings to participate in the aggregation market. However, few studies have investigated business models for building participation in the aggregation market. Therefore, this paper develops four business models for buildings to participate in the energy aggregation market: (1) buildings participate in the implicit Demand Response (DR) program via retailers; (2) buildings with small energy consumption participate in the explicit DR via aggregators; (3) buildings directly access the explicit DR program; (4) buildings access energy market via Virtual Power Plant (VPP) aggregators by providing Distributed Energy Resources (DER)s. This paper also determines that it is essential to understand building owners’ needs, comforts, and behaviours to develop feasible market access strategies for different types of buildings. Meanwhile, the incentive programs, national regulations and energy market structures strongly influence buildings’ participation in the aggregation market. Under the current Nordic market regulation, business model one is the most feasible one, and business model two faces more challenges due to regulation barriers and limited monetary incentives.

Highlights

Energy stability and flexibility are essential for the entire power system [1]
This paper aims to (1) understand two existing business models in the energy aggregation market (DR and Virtual Power Plant (VPP)) including market players and their relationships; (2) evaluate building energy aggregation potentials; and (3) develop business models for different types of buildings to participate in the energy aggregation market
Under the current situation of the Nordic electricity market, Business Model 1—‘buildings participate in the implicit Demand Response (DR) program via retailers’ significantly provides the highest value to the whole aggregation market

Summary

Introduction

Energy stability and flexibility are essential for the entire power system [1]. Flexibility is the ability of electricity systems to maintain the balance between energy supply and demand [2]. Flexibility addresses generation-load imbalance, reduces peak load, power outage, electricity cost, and improves grid reliability [3]. Energy aggregation provides an efficient solution for providing flexibility in power systems. Two models have been discussed broadly that can provide aggregation potentials in the electricity system: Demand Response (DR) and Virtual Power Plants (VPPs). Various stakeholders in the electricity market can participate in the energy aggregation market with new roles or new presence. Consumers convert to prosumers, and new market players such as service aggregators appear

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Conclusion