Stochastic evaluation of aggregator business models — Optimizing wind power integration in distribution networks

In order to limit the environmental impact of electricity production, renewable energy sources are expected to expand significantly. The current grid and production structure are not designed to absorb such quantities of intermittent power output and smart grids can provide promising solutions, like demand response. This paper presents the technical advantages of managing flexible demand through Aggregators in a centralized fashion. An optimization model is developed to evaluate the economic benefits induced by adapting instantaneous electricity consumption to renewable generation. The model presented can easily be adapted in a more general context, and tested for different scenarios. Further, a use case related to the Smart Grids project on the Swedish island of Gotland is simulated. The simulation results show that the Aggregator solution is technically feasible, but that the current market design is a barrier for a successful implementation.