Financial viability of the aggregators participation in the regulation reserve market

Abstract

There is an urgent need to reduce the combustion of fossil fuels and replace these sources with renewable energy sources. The two major renewable energy resources, solar PV and wind generation, are variable. This variability makes balancing the electrical system more difficult. One way to manage this volatile system is to use markets for ancillary services to ensure that the electrical grid can operate in a safe, efficient and reliable manner. This paper proposes a methodology for a group of smaller consumers to be aggregated together so that they can effectively bid into markets for ancillary services. The methodology is tested on the Portuguese reserve regulation market and the financial viability of such aggregation is explored. Results show that aggregating consumer bids for downward regulation services can be financially viable in the Portuguese market. Reducing the minimum bid size increased the participation of the consumers thus increasing revenues.