A review of the value of aggregators in electricity systems. (September 2017)

• Record Type: Journal Article
• Authors: Burger, Scott; Chaves-Ávila, Jose Pablo; Batlle, Carlos; Pérez-Arriaga, Ignacio J.
• Is Part Of: Renewable & sustainable energy reviews. Volume 77(2017)
• Page Start: 395
• Page End: 405
• Publication Date: 2017-09
• Subjects: CAISO California Independent System Operator -- DER Distributed Energy Resource -- DSO Distribution System Operator -- ERCOT Electric Reliability Council of Texas -- GW Gigawatt -- ICT Information and Communication Technologies -- ISO Independent System Operator -- ISO-NE New England Independent System Operator -- LMP Locational Marginal Price -- MISO Midcontinent Independent System Operator -- MW Megawatt -- MWh Megawatt-hour -- NYISO New York Independent System Operator -- RTO Regional Transmission Operator -- SO System Operator -- TSO Transmission System Operator; Aggregation -- Retail electricity economics -- Distributed energy resources -- Demand response -- Regulation -- Electricity retail; Renewable energy sources -- Periodicals; Power resources -- Periodicals; Énergies renouvelables -- Périodiques; Ressources énergétiques -- Périodiques; 333.794
• DOI: 10.1016/j.rser.2017.04.014
• Languages: English
• ISSNs: 1364-0321

Abstract

Abstract: Distributed energy resources ("DERs") are being adopted throughout the world. Aggregators are lauded by some as critical in enabling DERs to provide these valuable electricity services at scale; in this light, regulatory and policy bodies are discussing the role of aggregators and even the need to support their market entry. In order to shed light on the economically efficient regulation of aggregators in electricity systems, this paper systematically assesses the economic fundamentals of aggregators. We perform a critical review of the value of aggregators, defining the factors that determine their role in power systems under different technological and regulatory scenarios. We identify three categories of value that aggregators may create: fundamental, transitory, and opportunistic. Fundamental value is intrinsic to aggregation and is independent of the market or regulatory context. Transitory value can be significant in the near term, but may be diminished by technological or regulatory advances. Finally, opportunistic value emerges as a result of regulatory or market design flaws and may endanger the economic efficiency of the power system. This paper provides a template for regulators to encourage the efficient development of aggregators while eliminating the potential for economic inefficiencies through opportunistic aggregation.