Abstract
The European energy transition increasingly requires flexibility to ensure reliable operation of the electricity system, making use of demand response, a promising concept. With technological advances in the fields of big data analysis and the internet of things, small- and medium-sized prosumers could also provide flexibility services through aggregators. A lot of conceptual work has been conducted recently to formulate business models in this context, but their viability still remains unclear. In this paper, a quantitative validation is conducted of two business models that are frequently proposed in the scientific discussion. The aim of this work is to explore the economic limits of these business models and show under which conditions they can be profitable for small- and medium-sized prosumers. For this purpose, a multi-level contribution margin calculation for several scenarios, customer segments and target markets is conducted. The results show that the profitability for the participation of small loads is still very low under current market conditions. Especially for household consumers, transaction costs are too high to be covered by the revenues. Considering the quantitative results, in the future profitable business cases can only be expected for medium-sized tertiary consumers.
Highlights
The results suggest that by applying this dual strategy, costs of the aggregator and the prosumers can be reduced by 40% compared to an inflexible scenario and by 20% compared to participation in a single market
The detailed results of the multi-level contribution margin calculation for the Aggregator business models (BMs) are shown in Tables 6 and 7 for the Austrian market and in Table 8 for the UK
For the Austrian market, scenarios have been calculated for all target segments and all building sizes
Summary
The widespread roll out of decentralised and fluctuating renewable energy generation poses challenges to the reliability of the electricity network, requiring increased flexibility in the system. Flexibility can be provided by generators, and by consumers, which is commonly referred to as Demand Response (DR). DR can be understood as “voluntary changes by end-consumers of their usual electricity use patterns—in response to market signals [ . In Europe, EU policies regarding DR have evolved significantly in the last decade, laying the foundation for a fully market-based approach towards DR with a focus on enabling end-users to participate more actively in electricity markets. In the Energy Efficiency Directive of 2012 [3], Art. 15.8 encourages demand response either through direct market participation or aggregation [4].
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