Aggregators’ business models for flexibility from electricity consumers

Abstract

In order to limit the amount of greenhouse gas emission, transitioning to renewable energy sources (RES) is critical. However, integrating RES in the existing power system is not straightforward since RES possess variable and uncertain characteristics. Due to these characteristics, as the penetration of RES increases, maintaining the balance between electricity demand and generation becomes more challenging. Therefore, to deal with variability and uncertainty of RES, the power system needs to become more flexible. Flexibility from the demand side is acquired by modifying the electricity demand of the consumers’ assets, such as appliances and battery energy storage systems. Nevertheless, the electricity demand and generation of individual consumers in residential and service sectors is too small to participate in electricity markets, and to contribute substantially to flexibility. To overcome this, these consumers can be represented by aggregators. To trade flexibility and make profit from it, the aggregator can choose between different business models and strategies to implement these. To make a business model viable in the long run, it should be feasible in a multi-actor context, i.e., for the aggregator, the consumers and the power system. It should contribute to the aggregator’s profit and it should reduce consumers’ cost, the economic feasibility. Moreover, it should provide flexibility to the power system to maintain the system balance, and should operate the consumers’ assets in a suitable way, the operational feasibility. This thesis aims to analyze the operational and economic feasibility of aggregators’ different business models in a multi-actor context. For this purpose, first an overview of the possible business models is provided, as well as the extent to which they differ in terms of the operational and economic aspects. After that, various optimization models are employed to study the economic and operational feasibility of these business models, the economic relation between the aggregator and the consumers, and the combination of different business models.