Aggregators

When grouped together, a sufficient number of small-scale consumers or producers of energy for heating or cooling can control both electricity consumption (in distributed heat pumps) or the use of distributed generation (from users’ PV production) to lower costs, maximise efficiencies and provide valuable flexibility services to system operators. Aggregators thus create “virtual power plants” with a degree of market power akin to that of a conventional generator.

The flexibility that individual heat pumps or rooftop solar arrays can provide is far too limited to have an impact on the grid. However, aggregating many units together creates a major source of flexibility that can be marketed to grid operators. For example, in Belgium, demandresponse operations using 40 000 residential heat pumps can provide 100 MW of upward reserve at a cost of EUR 0-14/MWh, lower than the local historical price of EUR 32/MWh offered by conventional reserves (Georges et al., 2017).