green aggregators

Balancing market discrepancy cost hike for green aggregators

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Renewable energy production discrepancies in the balancing market will, from now on, result in higher costs for green aggregators and, subsequently, RES producers, market sources have told energypress.

Renewable energy facilities operating with feed-in premium and feed-in tariff arrangements have, as of November, 2022, assumed full balancing-market responsibilities, which essentially means they bear the cost of any discrepancies in declared RES production and actual RES production.

An upper limit that remained valid until the end of 2023 mitigated these costs, but they will now rise as the cap is being removed, the sources noted. RES producers can expect the cost of balancing market discrepancies to rise from 1 euro per MWh to between 2 and 3 euros per MWh, they added.

This cost needs to be kept at sustainable levels as, otherwise, it can greatly impact the earnings of green aggregators and, by extension, RES producers, market sources stressed.

Mytilineos uses aggregator permit for country’s first demand-response transaction

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The Mytilineos group, through a portfolio including its Aluminium of Greece company, has become the country’s first company to use an aggregator (FOSE) permit in a demand-response program, established as part of an EU proposal aiming to reduce energy consumption by 5 percent.

The Mytilineos group conducted its first such transaction on May 28, energypress sources informed.

In the lead-up, RAE, the Regulatory Authority for Energy, had approved a 500-MW permit for Mytilineos to use in this demand-response program, while power grid operator IPTO conducted trial runs to ensure the system’s platform was ready to operate.

The demand response system enables variation of electricity consumption by end-users such as commercial and industrial enterprises in order to balance the electricity network during periods of peak production or consumption.

Sympower Greece, also holding a 500-MW aggregator permit for the demand-response program, has registered to participate but had not conducted any transactions until last Friday, the sources noted.

NRG holds a 100-MW aggregator permit for the the demand-response program, Optimus Energy possesses a 350-MW permit, power utility PPC holds a 1,500-MW permit, and Elpedison holds a 500-MW permit. These companies are believed to be preparing to conduct their first aggregator demand-response transactions.

 

Green aggregators playing an increasingly crucial role

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Green aggregators, representing RES producers in the market, are offering power purchase agreements (PPAs) for durations now reaching up to ten years, as is customary in more mature markets abroad, and, as a result, are developing into a key part of the sector offering bilateral green-energy contracts.

Until recently – during a transition period that has enabled RES projects to directly participate in the market – nominal durations of PPAs, reaching up to 20 years, were rarely honored, their average duration lasting just two to three months, and, in certain cases, about a year.

Upfront determination of PPA cost is vital information for banks assessing projects, subsequently increasing their chances of securing financial support. Otherwise, if RES producers with PPAs turn to banks for project support but do not incorporate PPA costs into their loan applications, banks will attach PPA price levels based on figures provided by consultants, which tend to be overestimated.

Green aggregators are specialized and innovative companies applying sophisticated market tools for optimal commercial management of green-energy plants, achieved by minimizing balancing costs and making accurate production forecasts.

Given the deepening energy-mix penetration of renewables, as well as the complexity of their market participation, an extremely difficult task for RES producers to handle alone, green aggregators are playing an increasingly crucial role.

Up until December, 2022, a total of 33 green aggregation licenses were granted for a total capacity of 16.1 GW, according to data provided by RAE, the Regulatory Authority for Energy.

Green aggregators hit by price cap, big non-compliance penalties

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Green aggregators, believing their balancing costs are excessive, causing cash-flow problems and creating additional cost passed on to customers, have called for intervention and revisions from power grid operator IPTO and RAE, the Regulatory Authority for Energy.

RES units operating under incremental support contracts have assumed full balancing responsibilities for their electricity generation since November 30, when Greece entered Europe’s cross-border intraday XBID continuous market, through coupling with Italy and Bulgaria.

However, the implementation of a cap on the day-ahead and intra-day markets has created broader risks for green aggregators, including overestimating RES generation levels.

In such an event, the overestimation’s discrepancy is initially compensated based on the clearing price of the day-ahead market, or price cap, and then priced at the balancing market’s deviation price, which is not capped and may be many times over the day-ahead market level, a financial setback for green aggregators.

New non-compliance charges introduced on December 1 as a result of the cap represent an additional problem for green aggregators as they can lead to exceptionally high penalties, reaching levels well over those of balancing costs.

Demand response aggregators part of energy saving strategy

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The use of demand response green aggregators in power grid operator IPTO auctions, as part of the effort to reduce electricity consumption by 5 percent, a European Commission requirement to be introduced December 1 for all EU member states, was one of the tools discussed at a broad energy ministry meeting focused on establishing an energy-saving strategy ahead of the requirement.

Besides energy ministry officials, the meeting, staged last Friday, also involved representatives of RAE, the Regulatory Authority for Energy, IPTO, distribution network operator DEDDIE/HEDNO and the country’s five licensed aggregators.

In Greece, electricity usage restrictions will be imposed from 6pm-9pm on weekdays, with an additional hour, either between 9am and 10am or 9pm and 10 pm. Weekend restrictions may also be enforced to help achieve the 5 percent electricity consumption cut.

 

Balancing market entry imminent for demand response

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The imminent approval by RAE, the Regulatory Authority for Energy, of a legal framework for demand-response green aggregators represents a first step towards the entry of a second category of players into the balancing market.

RAE president Athanasios Dagoumas made reference to the prospect this week during a speech delivered at an Ecomobility conference staged by HAEE, the Hellenic Association for Energy Economics.

“One of the first revisions to be made in 2022, early on, too, concerns demand response participation [in the balancing market],” the RAE head told the conference.

Demand-response green aggregators will offer balancing services to the grid through appropriate consumption adjustment of load portfolios managed by them.

The energy ministry and RAE are aiming to include the demand response system into the balancing market within the year’s first quarter, sources told energy press.

 

 

 

Green PPAs exchange platform, industrial subsidies in making

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A Market Reform Plan being prepared by the government, to be submitted to the European Commission, includes provisions for the establishment of an energy exchange transaction platform concerning power purchase agreements (PPAs) between RES producers, as well as green aggregators, with suppliers and major-scale consumers.

The green PPAs, when concerning energy-intensive industrial enterprises, will receive state support, while a subsidy package for this category of agreements is also in the making, according to the plan.

Funds stemming from the recovery fund, the green fund as well as the RES special account will be used to fund the subsidy package, according to the government plan.

The aim of the effort is to ensure, in advance, the sale of prospective energy to be produced by new RES units, the intention being to  facilitate bank financing for their development given the fact that they will no longer be entitled to fixed tariffs, through auctions, over 20-year periods, as has been the case until now.

The plan is expected to result in lower-priced green energy for industrial consumers and also facilitate the development of new RES investments.

Foreign firms seeking local demand response service roles

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Major European companies with considerable interests in energy exchanges abroad are now seeking to represent local industrial producers for demand response services in Greece’s balancing market.

Two major international players, currently assembling new related divisions in Greece, have already approached Greek producers to take on their representation.

Demand response system entry into Greece’s new balancing market is expected to begin within 2021, barring unexpected developments.

Once launched, foreign representatives will be able to assume demand-response, green-aggregator roles in Greece, offering balancing services to the system.

Power grid operator IPTO, in its effort to ensure grid stability, will be able to utilize the flexibility major-scale electricity consumers are capable of offering.

RES stations now facing market alone or as green aggregators

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Today marks a historic day for the country’s renewable energy sector as RES stations begin their gradual departure from the security of fixed prices and start facing market challenges for payment of production either alone or through green aggregation arrangements.

RES stations with feed-in tariff agreements will, as of today, need to submit their Day-Ahead Schedule production offers for the next day, as is required of thermal stations.

For the time being, these offers will not concern payments for RES stations but, instead, be limited to their projected output.

Energy aggregation enables a group of companies or local institutions to partner together to buy energy from a single developer, or multiple developers, at smaller volumes while retaining the economic advantages of a high-volume purchase.

At present, 103 RES stations offering a total capacity of approximately 560 MW are obligated to operate through Day-Ahead Schedules. Of these, 455 MW are wind energy facilities, 77 MW are solar energy units, and the remainder concern other RES technologies.