Impact of Electricity Supplier Compensation Model on Independent Electric Vehicle Aggregator Profits Across Various Demand Response Baseline Designs

In recent European legislation, the independent aggregator is recognized as a distinct participant in the energy market. This paper evaluates the balancing market participation of the independent electric vehicle aggregator and investigates the impact of the electricity supplier compensation model, for energy imbalances stemming from flexibility activations, on the aggregator’s profits. A comprehensive framework is developed to simulate the aggregator’s balancing market participation, evaluated for a year-long rolling simulation with 15-minute intervals, using real-world electric vehicle fleet dataset and actual clearing prices from two European electricity markets. Four demand response baseline designs and three supplier compensation models are evaluated. The results provide novel insights into the substantial impact of electricity supplier compensation on the amount of flexibility provided and the aggregator’s revenues. They also shed light on how this impact depends on baseline design, compensation model, and underlying market dynamics. These findings offer valuable insights for system operators and policymakers, contributing to the efficient integration of demand response into European electricity markets.