Development project for aggregation on the reserve market – aiming at a cost-efficient and flexible electricity system

As the proportion of fluctuating electricity production increases, so does the need for flexibility in the electricity system. Fingrid maintains and actively develops the reserve market, aiming at cost-effective maintenance of the power balance in the electricity system and the utilisation of its full potential for flexibility. On 1 September 2016, Fingrid launched a pilot project to examine third party aggregator participation in the reserve market and the compilation of reserve bids from regulation-capable units in different balances. Sustainable Energy Management Asset Oy acts as a partner in the aggregation pilot project.

Aggregation generally means the combination of several regulation-capable electricity consumption or production units into a bid made on the reserve market so that the bidin its entirety meets the requirements of the marketplace. If the aggregated reserve units are in the balances of different balance-responsible parties, this is called third party aggregation. For the time being, aggregation on the reserve market maintained by Fingrid is only possible under the same balance responsibility party, and the reserve supplier must be the owner of the site or a party in its electricity supply chain, either an electricity supplier or a balance-responsible party. In the pilot project, Fingrid examines the enabling of aggregation from several balances, and the participation of third party aggregatorsin the reserve market.

Aggregation from several balances and the participation of third party aggregatorsin the reserve market have recently been highlighted in development discussions for the electricity and reserve markets at the European level. Fingrid has also been contacted concerning the matter, and the company proposed aggregation as a development area for the reserve and balancing power markets in its 'Electricity markets need fixing' report, published in spring 2016. A well-functioning aggregation model enables the extensive utilisation of small units with potential for flexibility, as well as the participation of more actors in the reserve market. This will increase competition and make the electricity market more efficient.

The aim of the aggregation pilot is to find out what the aggregation model would mean in practice, how the energy caused by the activation of reserves would be dealt with in imbalance settlement, and what kind of changes to information systems would be needed to implement the model.

The pilot project was launched on 1 September 2016, and its planned duration is four months. In the pilot, Sustainable Energy Asset Management Oy offers reserve capacity on the hourly market for frequency containment reserve for normal operation (FCR-N), composed of consumption and production sites in the balances of three different balance-responsible parties.

After the pilot, Fingrid will present the results to its stakeholders and decide on further measures. Furthermore, Fingrid is preparing the implementation of a similar aggregation pilot for the balancing power market.

Further information:
Specialist Laura Ihamäki, tel. +358 30 395 5166