From an aggregator’s point of view, the pace of the aFRR market opening is generally perceived as slow. At the same time, Elia’s initial hesitation and cautious approach in the opening of the aFRR market is understandable. After all, aFRR was and is their most important tool to keep the Belgian grid balanced. If the light goes out, they bear all the blame. Yet, in view of the energy transition, a closed aFRR market with an oligopoly of gas fired power plants simply does not cut it anymore.
Even though Elia needs to let go of the old paradigm in which their SCADA system has almost direct control over each and every aFRR providing asset, it does not mean that reliability will suffer. A well-developed monitoring and penalty scheme ensures market parties respond accurately to their setpoints, even if it is a pool of decentralized installations. Having a service delivered by more but smaller assets in fact increases reliability, by reducing the bulk loss risk, which we discussed at length in an earlier blog post.
With a unique market opening plan, allowing a gradual increase of decentralized (and renewable) aFRR providers, Elia paves the way for a new market dynamic and the integration with European balancing platforms. Was the new design flawless? Clearly not. The first months have been hectic and have shown large price fluctuations. The market design was not prepared for all possible scenarios and the regulator had to step in when capacity prices soared. That does not mean the whole rulebook needs to go back to the drawing board. Many design elements are good, but some changes are due. We look forward to participating in the discussions with Elia and other market parties to achieve a well-functioning market.
Once the 4-hour auctions prove consistently competitive with the daily auctions reserved for large power plants, the unique aFRR auction design allows the market to ease into a new reality. A reality where participation of decentralized assets is possible and can grow over time, while still ensuring Elia can procure enough aFRR volume to safely run the Belgian grid.
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With the rise of renewables all over the world, we are facing a gigantic transformation of the global energy system. The Virtual Power Plant answers the demands of the decentralized energy world and opens up new business prospects for its participants and, of course, RES aggregators. We help you utilize them in the best possible way.