The regulatory framework for independent aggregators

• Published in: The Electricity journal 2021-07, Vol.34 (6), p.106971, Article 106971
• Main Authors: Schittekatte, Tim, Deschamps, Vincent, Meeus, Leonardo
• Format: Article
• Language: English
• Subjects: Demand response; Independent aggregation; Innovation; Regulation; Retail markets
• ISSN: 1040-6190; 1873-6874
• DOI: 10.1016/j.tej.2021.106971

•Independent aggregation can lead to imbalances and foregone revenues for suppliers.•The imbalance issue has been handled with a perimeter correction in most EU countries.•The need for a compensation for foregone revenues is more controversial.•Several supplier compensation models are being tested in the EU.•More guidance is needed at EU-level to converge into a more harmonized approach. The importance of independent aggregators has been acknowledged in the recently adopted EU Clean Energy Package (CEP). The CEP obliges all Member States to develop a regulatory framework to allow these players to enter the market, but it leaves many of the details of implementation to the national level. In this paper, we take stock of current practices in regulating the contractual relationship between the supplier and the independent aggregator. The actions of an independent aggregator can cause an imbalance in a supplier’s portfolio, and suppliers have also asked for a compensation payment for forgone revenues. We find that the first issue has been handled with a perimeter correction in most countries, while the second issue is more controversial. The need for a compensation payment has been challenged and many different compensation models are being tested. We distinguish between the regulated, the corrected, and the contracted model. We conclude that more guidance is needed at EU-level for convergence on a more harmonized approach.