Demand aggregator optimal strategies: from the bidding to the execution

Mattia Barbero

Cristina Corchero Garcia

Energy System Analytics (IREC)

Europe is in the midst of an energy revolution. The old paradigm where large power plants produce energy and passive consumers use it is coming to an end. The penetration of distributed renewable resources and the electrification of consumption will change the way electricity is produced, managed and consumed. In addition, the current socio-political situation accelerates the need for Europe to end its energy dependence on other countries and fossil fuels. Citizens are now more committed to the environment and want to be an active part of the energy transition. In this context, advances in the “Internet of Things (IoT)” allow data to be collected and different devices to be remotely controlled. At the same time, European directives encourage consumers to play an active role in electricity markets. However, it is not easy to manage the coexistence of consumers and generators in the same markets, due to their intrinsic differences. Demand aggregators are the new figure of the electricity market that will put consumers at the center of the electricity system. The role of aggregators is to aggregate, offer, and manage the flexibility of different consumers in electricity markets. Demand flexibility is the ability of a consumer to modify their consumption depending on certain situations, such as the price of electricity or network needs. This doctoral thesis explores the optimal strategies of an aggregator that manages the flexibility of different consumers in electricity and flexibility markets, from the construction of offers to real-time execution. To achieve the objective, the thesis first analyzes the regulation of four European markets, with the aim of detecting barriers and facilitators for a large-scale commercial development of demand aggregators. Next, the thesis explores the optimal operations of the demand aggregator: 1) the thesis proposes three algorithms to predict the consumption of four types of consumers, proposing a methodology to compare them; 2) the work proposes models to predict the flexibility of different energy assets and to allow offering this flexibility in different markets and 3) the thesis proposes two new optimization models to allow the combined participation of consumers in electricity and flexibility markets in real time. The results demonstrate the technical and economic feasibility of the participation of demand aggregators in the analyzed markets and the novelty in the proposed methodology. Different lines of future research are also identified. Despite the difficulties of the context, based on the algorithms and knowledge developed during this thesis, the author, together with his director, founded BambooEnergy in 2020. BambooEnergy is a company created to commercialize the software developed during the thesis, making demand aggregation a reality in Spain. This thesis presents a success story of what began with the first steps in a research environment, ending up becoming a disruptive spin-off in the context of aggregated demand management.

Possible clients and problem solved for them: The functionalities developed enable any entity to become demand aggregator by manage its client portfolio to offer flexibility to the market. At the same time, it enables end consumers to unlock their flexibility potential , putting consumers at the center of the electricity system. - Energy retailers: For energy retailers it is very difficult to differentiate themselves from the competence and are in a transformation toward bening energy service companies (ESCOs). Nowadays in Spain they are the only ones that can act as aggregator and they have never operated physical assets nor participated in flexibility markets. The technology developed will be an enabler for them to be demand aggregator and offer this new service to their clients. The technology developed during the thesis will help them in the following ways: o Differentiate from the competence by offering new services to their clients. o Find a new source of revenues by trading in flexibility markets. o Improve their corporate image, by being innovative and environmentally responsible. o Offer cheapest tariffs to their customers taking advantage from the flexibility available. - Asset manager and end consumer: End consumers can take advantage of their flexibility by adapting their consumption to cheapest hours. In this way, they can generate direct savings in their bill. Apart from this, end consumers can also participate directly or through the figure of the demand aggregator in flexibility markets to obtain extra revenues. The technology developed helps end consumers to: o Generate savings and additional revenues thanks to the flexibility management (between 5 and 10 % of the overall electricity cost). o Reduce CO2 emissions and consequently improving the social and corporative responsibility. Demand flexibility indirectly helps the renewable energy integration in the grid and directly substitutes fossil fuel generation plants in flexibility markets. o Digitalize and automatize their energy process. This means to have more insights about how energy is consumed inside their processes and helps to detect possible energy efficiency improvements. - Energy community’s manager: Energy communities are a new driver of the energy transition. The new regulation allows people to collaborate in energy projects such collective self-consumption, collective energy trading or investments in collective batteries. The technology developed helps energy communities to: o Monitor and manage shared energy assets such as photovoltaic, batteries or electric vehicle chargers. o Reduce energy costs inside the community by maximizing self-consumption and reduce peak loads. This means that energy communities can reach faster their return on investments. o Allow energy communities to participate in flexibility markets to gain extra revenues and take advantage of their flexibility to consume during cheapest hours.

Energy Revolution; Distributed Renewable Resources; Electrification of Consumption; Energy Dependence; Fossil Fuels; Energy Transition; Internet of Things (IoT); Electricity Markets; Demand Aggregators; Demand Flexibility; Optimal Strategies; Offer Construction; Real-Time Execution; European Market Regulation; Barriers; Facilitators; Commercial Development; Consumption Prediction Algorithms; Consumer Types; Flexibility Prediction Models; Energy Assets; Combined Participation; Optimization Models; Technical Feasibility; Economic Feasibility; Novel Methodology; Future Research; BambooEnergy; Software Commercialization; Demand Aggregation in Spain; Disruptive Spin-off; Aggregated Demand Management.