Expert review: aggregation as a licensed activity

We proceed to share an expert review by Serhii Kravchuk on the key changes implemented by the Law of Ukraine No. 3220-IX.

Today, we are talking about aggregation as a licensed activity in the electricity market and the functions, roles, and aggregators’ operation rules in the electricity market.

Prior to the legislative changes, the definition of “aggregator” was contained only in the Transmission System Code, where its content was focused on the role of executing commands of the TSO (Transmission System Operator). This did not fully disclose the status of the aggregator as an electricity market participant and reduced everything to one function in the market, namely the provision of ancillary services. Therefore, the newly adopted Law amended part one of Article 1 of the Law of Ukraine “On the Electricity Market” with definitions of the following terms: aggregator, aggregation, aggregated group, aggregation unit, independent aggregator. In addition, the Law also defines the rights and obligations of the aggregator, regulates the coordination mechanism within the aggregated group, etc.

According to the Law, aggregation is a licensed type of activity in the electricity market carried out by a business entity that is related to the association of electrical installations intended for the production and/or consumption and/or storage of electricity for the purpose of purchasing and selling electricity, providing ancillary services and/or balancing services in the electricity market. In turn, the Aggregator is an entity (electricity market participant) that provides capacity management services to producers/consumers/operators of energy storage facilities for the provision of ancillary services and/or balancing services.

In the constantly increasing volume of distributed generation, including the one connected to the consumer’s internal grids, the development of energy storage facilities and the emergence of active consumers, aggregation activities enable the transmission system operator to involve these facilities in balancing the integrated power system of Ukraine on market conditions.

The aggregator is an important component in dispatching, as it manages the capacity of distributed facilities: consumption, production, and energy storage. For market participants, this provides an opportunity to generate additional income, and for the transmission system operator, it means more balancing capacities and simplification of the dispatch management structure.

Aggregator and aggregated group: coordination mechanism

The relations between the aggregator and other members of the aggregated group are regulated by an agreement on participation in the aggregated group. The essential terms of the agreement on participation in the aggregated group are determined by market rules.

An aggregator may aggregate one or more aggregation units. It is the party responsible for the balance of all electrical installations included in its aggregation unit, except for electrical installations intended for consumption by off-takers who purchase electricity from another market participant engaged in electricity supply to the consumer. In addition, in accordance with the provisions of this Law, market rules, day-ahead and intraday market rules, and other regulatory legal acts governing the functioning of the electricity market, the aggregator purchases and sells electricity in the electricity market, as well as provides balancing and/or ancillary services. However, the aggregator is prohibited from carrying out activities related to the transmission and/or distribution of electricity, transportation and distribution of natural gas, and performing the functions of a market operator.

A consumer has the right to join an aggregated group without the consent of the consumer’s electricity supplier.

An electrical installation intended for electricity production and/or consumption and/or an energy storage installation may be part of only one aggregation unit. An aggregation unit may not include an electrical installation intended for the production of electricity with an installed capacity exceeding 20 MW. The requirements for commercial metering of electrical installations included in an aggregation unit are determined by the electricity commercial metering code. The technical requirements for such electrical installations and the procedure for carrying out aggregation activities are determined by market rules, transmission, and distribution system codes.

The aggregation unit operates in the electricity market as a single electrical installation with integrated technical parameters. The aggregator manages and is responsible to the transmission system operator for the implementation of the schedule and the transmission system operator’s commands regarding its aggregation unit. The aggregator shall provide the ability to control the electrical installations that are part of one aggregation unit separately for each area of commercial metering of the grid.

What rights does the aggregator have?

The aggregator has the right to purchase and sell electricity in the electricity market. It also has the right to receive funds in a timely manner and in full for the electricity it sells in accordance with the concluded contracts in the electricity market, for ancillary services and balancing services. It also has access to information on activities in the electricity market in the manner and to the extent determined by the market rules, the rules of the day-ahead and intraday markets, and other regulatory legal acts governing the functioning of the electricity market. The aggregator has other rights provided for by law.

Aggregator’s responsibilities

The aggregator is obliged to:

1) comply with the license conditions for conducting business activities in the field of aggregation, as well as other regulatory legal acts governing the functioning of the electricity market;

2) provide notifications on the contractual volumes of purchase and sale of electricity in accordance with the procedure provided for by the market rules;

3) draw up daily electricity schedules in accordance with the volumes of electricity purchased and sold and provide them to the transmission system operator in accordance with the market rules;

4) fulfill the daily electricity schedules accepted by the transmission system operator;

5) bear financial responsibility for electricity imbalances at prices determined in accordance with the market rules in case of failure to comply with the hourly electricity schedules accepted by the transmission system operator, taking into account the particularities specified in part two of this Article;

6) timely and in full pay for electricity purchased in the electricity market and for services provided in the electricity market;

7) provide the Regulator with the information necessary for the exercise of its functions and powers established by law;

8) provide market participants with the information necessary for them to perform their functions in the electricity market, in the amounts and in the manner determined by the market rules, the day-ahead and intraday market rules, the transmission system code, the distribution system code, the commercial metering code and other regulatory legal acts governing the functioning of the electricity market;

9) conclude contracts that are mandatory for conducting activities in the electricity market and fulfill the terms of these contracts;

10) be a balancing service provider in cases determined by market rules;

11) offer generating capacity in the balancing market in accordance with market rules;

12) offer and provide ancillary services to the transmission system operator in cases and in accordance with the procedure established by the market rules;

13) provide full information on the terms of contracts to entities willing to join the aggregated group;

14) inform the members of the aggregated group at least once per billing period about the results of the aggregated group’s activities (volumes and cost of electricity purchased and/or sold and/or services in the electricity market, etc.)