Allowing independent aggregation is an important step towards increasing flexibility in the power system. The power system needs flexibility to keep production and consumption balanced at all times. Independent aggregation also provides end users with new ways to participate in the electricity market.
Aggregation is referred to in the Electricity Market Act (497/2023) as an activity that combines several end-user loads or electricity production for sale, purchase, or auction in the electricity market. An independent aggregator is a party who is not tied to the end-user’s open electricity supplier. An aggregation agreement is an agreement between an aggregator and an end-user concerning the use of demand-side flexibility at an electricity accounting point by aggregation.
Aggregation is currently allowed in all marketplaces in the balance chain. Independent aggregation is currently allowed in the FFR, FCR-D, FCR-N and aFRR products. In these reserve market products, an independent aggregator can pool flexible resources belonging to different balance responsibilities in accordance with the terms and conditions of each reserve market product. More information about reserve markets is provided here.
Market participation must be fair and non-discriminatory. End-users do not need the permission of the system operator or electricity supplier to enter into an aggregation agreement. The Electricity Market Act requires independent aggregators to compensate the end-user’s open supplier or the relevant balance responsible party for the costs incurred during the aggregator’s activation of demand-side flexibility in the day-ahead market, intraday market, or balancing energy market. The Act tasks Fingrid with defining the method for calculating compensation (also referred as the compensation model).
The Government may subsequently issue decrees on the verification of demand-side flexibility offered by an independent aggregator, how it is accounted for in the imbalance settlement, and how the payment of financial compensation is managed.
The EU is preparing a Network Code for Demand Response, which will lay down more detailed guidelines on matters such as independent aggregation models and market access. The draft Network Code will be completed in March 2024, and the EU regulation is expected to take effect in late 2024. More information about the Network Code is provided here.
Fingrid is preparing a model for independent aggregation in the aFRR energy market. The model is expected to go live during autumn 2024
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