DESCRIPTION An aggregator is a grouping of agents in a power system (i.e., consumers, producers, prosumers or any mix thereof) to act as a single entity when engaging in power system markets (both wholesale and retail) or selling services to the operator (MIT, 2016). In the context of this brief, an aggregator is a company that operates a virtual power plant (VPP), which is an aggregation of disperse DERs with the aim of enabling these small energy sources to provide services to the grid. VPP operators aggregate DERs to behave like a traditional power plant with standard attributes such as minimum / maximum capacity, ramp-up, ramp-down, etc. and to participate in markets to sell electricity or ancillary services. The VPP is controlled by a central information technology (IT) system where data related to weather forecasts1 , electricity prices in wholesale markets, and the overall power supply and consumption trends are processed to optimise the operation of dispatchable DERs included in the VPP. An aggregator can help in better integration of renewable energy resources by providing both demand- and supply-side flexibility services to the grid. Demand-side flexibility is provided by aggregating demand-response resources or energy storage units to act to grid requirements. Supply-side flexibility is provided by optimising power generation from flexible resources such as combined heat and power (CHP) plants, biogas plants, etc. and the use of energy storage units. Operation optimisation is done based on data on historical and forecasted data on demand, generation and prices. Figure 1 provides an overview of how an aggregator operates the distributed energy resources.
CONTRIBUTION TO POWER SECTOR TRANSFORMATION By bundling DERs and creating VPPs, aggregators create a sizeable capacity that becomes eligible to participate in wholesale power markets. The aggregator can provide various grid services such as frequency regulation, operating reserve capacity, etc. by optimising a suitable portfolio of distributed energy resources. A VPP can include fast-response units such as super capacitors and batteries, along with CHP and biogas power plants and demand-response resources to provide different flexibility services (Ma et al., 2017).
KEY FACTORS TO ENABLE DEPLOYMENT A liberalised wholesale power market with no price caps (especially with spot markets in place) is essential for establishing aggregators. The main incentives for creating an aggregator are given by the difference between peak / off-peak pricing on wholesale markets or by signals from transmission system operators to deliver control reserve or other ancillary services. The regulatory framework should enable aggregators to participate in the wholesale electricity market and also in the ancillary services market. For example, the New York Independent System Operator (NYISO) proposed aggregating DERs connected to the same bulk transmission node to ensure that these resources are compensated based on their locational and temporal value (NYISO, 2017). While NYISO has restricted aggregation of DERs to a specified geographical limit, other system operators can allow DER aggregation without geographical barriers.
IMPLEMENTATION REQUIREMENTS: CHECKLIST
DESCRIPTION Peer-to-peer (P2P) electricity trading is a business model, based on an interconnected platform, that serves as an online marketplace where consumers and producers “meet” to trade electricity directly, without the need for an intermediary. P2P electricity trading is also known as the “Uber” or “Airbnb” of energy, as it is a platform that allows local distributed energy generators to sell their electricity at the desired price to consumers willing to pay that price. This electricity is usually transacted between users (buyers/sellers) of the platform that also become members of the platform, for example by paying a pre-determined monthly subscription fee. Just like an open market economy, suppliers seek the highest possible price, keeping their costs and profit in consideration, and consumers choose the lowest price possible based on their needs and preferences. Where the supply and demand offers – that is, the sell and buy bids – are matching, a trade occurs. The common practice with traditional power supply is that consumers purchase electricity from utilities or retailers through fixed tariffs or time-of-use tariffs.
KEY FACTORS TO ENABLE DEPLOYMENT The key success factors for P2P electricity
trading platforms are the reliability of the platform, good customer service, the availability of a conducive regulatory framework and a reliable grid. Digitalisation In addition to the physical layer of P2P electricity trading for which a network is needed (e.g., minigrids, micro-grids, distribution network, etc.), another layer that is needed for this business model to be implemented is a virtual (i.e., digital) layer (Figure 7). An energy management system (EMS) is an integral part of it.
P2P trading is facilitated by platforms where a large number of peers can interact. Data from both producers and consumers need to be collected and analysed to check the reliability of the power system. Smart meters, broadband communication infrastructure, network remote control and automation systems (network digitalisation) are thus fundamental enablers of platform-based business models, such as the P2P electricity trading model (see the Innovation Landscape briefs: Internet of Things [IRENA, 2019d] and Artificial Intelligence and big data [IRENA, 2019e]). The P2P trading platform can work efficiently with the help of distributed ledger technologies, of which the most prominent type is blockchain. Blockchain technology can help reduce the transaction costs for electricity trading among prosumers in a P2P trading scheme (see the Innovation Landscape brief: Blockchain [IRENA, 2019f]). For example, the P2P blockchain developer LO3 Energy operates the Brooklyn Microgrid, which augments the traditional energy grid, letting participants tap into community resources to generate, store, consume (i.e., buy and sell) energy at the local distribution level. Another example of P2P trading using blockchain technology is the Power Ledger platform in Australia, which records the generation and consumption of all peers in real time. The P2P project piloted in Malaysia is built on the Power Ledger platform, which is also running trials in Australia, Japan, Thailand and the United States (US) (Ledger Insights, 2019).
This brief provides an overview of the Energyas-a-Service (EaaS) business model, a customercentric business model that emerged to share and monetise the value created by increased digitalisation and decentralisation of the power system. The brief highlights different innovative services offered by energy service providers and their revenue models, as well as the impacts of these new business models on the deployment and integration of higher shares of variable renewable energy, like wind and solar.
COMMUNITYOWNERSHIP MODELS INNOVATION LANDSCAPE BRIEF Community-ownership structures, in the context of the global energy transition and the decentralisation of power systems, refer to the collective ownership and management of energy-related assets, usually distributed energy resources (DERs). Through cost-sharing, community-ownership models enable individual participants to own assets with lower levels of investment. Community-ownership projects var in size but are often between 5 kilowatts (kW) and 5 megawatts (MW) in size, depending on where they are being implemented (Gall, 2018). While energy generation is their most common purpose, community-ownership initiatives can also deploy energy storage, energy efficiency, distribution network, and district heating and cooling systems. A community-ownership project is characterised by local stakeholders owning most of the project and voting rights and by control resting with a community-based organisation. Most of the project’s socio-economic benefits are therefore distributed at the local community level (IRENA Coalition for Action, 2018).
PAY-AS-YOU-GO MODELS INNOVATION LANDSCAPE BRIEF Nearly 840 million people worldwide do not have access to electricity, and over 1 billion people are connected to an unreliable grid (Lighting Global, GOGLA and ESMAP, 2020). As the unserved population is not connected to the main grid, extending the grid is an integral part of providing those populations with energy access. However, extending the grid involves significant capital outlay and long lead times for the construction of new infrastructure. An alternative to grid extension is power from distributed solar photovoltaic (PV) systems. The decreasing costs of such systems represent an opportunity for these communities to gain electricity access without the need for grid extension. However, making the upfront investments necessary to set up distributed renewable energy systems to satisfy electricity demand and improve supply reliability remains a difficult undertaking in many areas, particularly rural communities. Also, as of 2017, an estimated 1.7 billion people around the world still do not have access to a conventional bank account or financial network (Mastercard, 2019). The PAYG business model is an innovation that emerged to address the energy access challenge and to provide electricity generated from renewable energy sources at affordable prices, with payments facilitated by technologies available in these areas. Widespread use of mobile payment technologies, rich solar resources and declining solar PV and battery costs, coupled with increased awareness of these technologies, have been key drivers in the implementation of this business model. Also, increasing numbers of companies offer PAYG systems, and high competition in this field pushes prices for consumers even lower.
possibility to power multiple home appliances (Tier 3); see Figure 2. For example, Solar Run, an ESP that operates in Kenya, launched in September 2019 the “MBOX”, which can power several bulbs, a high-definition television and a pedestal fan together for up to ten hours. Besides MBOX, the company is offering other “boxes” for the entire energy access spectrum (Solar Run, 2020). PAYG models could potentially offer services for Tier 4 and Tier 5, possibly combined with appliance finance. However, so far, PAYG packages cover Tiers 1–3.
The payments are usually made via mobile credit, by sending a text message. The systems can feature a remote monitoring system that can be activated via mobile network connection. There are PAYG solar home systems without remote monitoring systems, but they still have a SIM card built in to allow ESPs to shut them down remotely if payments stop. Some ESPs equip their systems with a GPS tracker to be able to locate the system anytime. Systems that do not have connectivity to GSM (Global System for Mobile Communications) are controlled by a simple timer that functions according to the payment code introduced by the consumer after the payment has been made. Figure 3 shows a schematic model of the PAYG usage-based payment concept.
PAYG models can be implemented both at the individual household level and at the broader community or neighbourhood level. PAYG systems can also be implemented as a micro-grid solution, where a solar PV system with battery storage is used to provide electricity supply services to a small community. For example, SharedSolar, a PAYG mini-grids developer in sub-Saharan Africa, uses solar PV panels with a 1.4 kilowatt (kW) generating capacity and a 16.8 kilowatthour (kWh) battery storage system to provide electricity for 20 customers, including households, small schools and businesses within a 100 metre radius via underground cables.
CURRENT STATUS AND EXAMPLES OF ONGOING INITIATIVES The option of PAYG provided affordable solar power to over 8 million people in sub-Saharan Africa between 2013 and 2018 (Sotiriou et al., 2018). PAYG models have been also implemented in off-grid locations in South Asia and Latin America. In 2016, global off-grid solar installations (including PAYG systems and standalone solar devices, such as solar lamps) totalled 34 megawatts (MW), and they grew by over 19% to 40.6 MW by the end of 2017 (GOGLA and Lighting Global, 2018). The entry-level solar home systems, used for providing basic lighting and mobile phone charging, account for nearly 36% of the total volume of systems sold.2 Figure 5 illustrates the global growth in sales of off-grid solar systems, which include PAYG model solar home systems. Overall, sales volumes have been on an upward trajectory since 2010, with annual growth rates of 133% between 2010 and 2015 The industry saw decline in sales leading up to 2017 due to localised shocks in key product markets and companies, as well as adaptations to sector-wide trends. Since then, growth in annual unit sales has stabilised to 10%, showing signs of a maturing market (Lighting Global, GOGLA and ESMAP, 2020). Key indicators related to the PAYG model are listed in Table 2.
ABOUT THIS BRIEF This brief forms part of the IRENA project “Innovation landscape for a renewablepowered future”, which maps the relevant innovations, identifies the synergies and formulates solutions for integrating high shares of variable renewable energy (VRE) into power systems. The synthesis report, Innovation landscape for a renewable-powered future: Solutions to integrate variable renewables (IRENA, 2019), illustrates the need for synergies among different innovations to create actual solutions. Solutions to drive the uptake of solar and wind power span four broad dimensions of innovation: enabling technologies, business models, market design and system operation.
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