Aggregator In The Electricity Market: New Opportunities For Producers, Consumers And Energy Storage Facilities Operators

03/ 04/ 2025

Listen to online Stop   The aggregation mechanism was implemented by the Law of Ukraine No. 3220-IX, which came into force in the summer of 2023. Today, we suggest figuring out how the mechanism works in practice and what opportunities the members of the aggregated group can get. To get the whole picture, it’s important to first understand “who is who” and who is responsible for what within this mechanism. So let’s start with the Aggregator and its role. Putting the Pieces Together: Who is Responsible for What?. An Independent Aggregator is a market participant that directly carries out aggregation activities on the basis of a license. By the way, KNESS received such a license at the end of last year. What does the very essence of “aggregation activity” imply? It is the combination of electrical installations with a capacity of up to 20 MW of consumers, including active ones, as well as installations intended for the electricity production and storage, into one aggregation unit. In the electricity market, the aggregation unit functions as a single electrical installation with the appropriate integrated technical parameters to provide ancillary or balancing services and/or energy transfer in time (on market conditions). In this process, the Aggregator acts as the “manager” of the aggregation unit and is responsible to the transmission system operator for the schedule implementation and its commands. In other words, it generates schedules and manages the capacity of a group of power facilities in accordance with market signals, including, for example, time changes in the electricity price, represents the interests of participants in different segments of the electricity market, is responsible for imbalances, and interacts with the system operator, administers operations, etc. So, the Aggregator is an important link in this mechanism, it can be compared to the orchestra conductor. It combines various “instruments” — consumers, producers and energy storage facilities  into a single “orchestra”. And, like a conductor, it manages this “orchestra”, helping it to respond harmoniously to changes in the market’s “’tune” i.e. price and demand fluctuations, market signals, etc. As a result, everyone can benefit: the members of the aggregated group get a significant additional income; and the transmission system operator gets more balancing capacities and simplifies the structure of dispatch control of small-capacity electrical installations. Peculiarities of aggregation activities. Among other things, there are additional points that are worth paying special attention to. The aggregator is the balance responsible party of all electrical installations included in its aggregation unit, except for electrical installations intended for the consumption of electricity purchased from the electricity supplier.  The Law of Ukraine “On the Electricity Market” and the Market Rules do not provide for the possibility of the Aggregator to transfer responsibility for electricity imbalances of the units included in its aggregated group (except for electrical installations, market participants intended for consumption, operating under an electricity supply agreement). This means that under any circumstances, the Aggregator is the balance responsible party to the transmission system operator and cannot delegate its financial responsibility for imbalances to another market participant by joining a balancing or other aggregated group. Aggregated group: who can be a participant?. The aggregated group may include consumer electrical installations (including active ones), generating units and energy storage facilities up to 20 MW. Electricity consumers. The model of working in an aggregated group may be of interest to companies that have the opportunity to reduce or increase their consumption, i.e., are maneuverable. According to the law, such consumers can join the Aggregated Group without the consent of their electricity supplier. If talking about companies that have their own generating capacities or backup power sources (energy storage facilities), the “pass” to work in the electricity market is to obtain active consumer status . This is mandatory to be able to sell surplus electricity on the market. Why is it more profitable for them to work through the Aggregator? Because it opens up more market opportunities, where consumers can earn additional income and significantly save on electricity procurement.  Producers and energy storage system operators. For electricity producers and ESS operators, working within one aggregated unit is more profitable than if each operated separately as an independent market participant. Firstly, it is possible to identify the optimal market segments for the most profitable operation of each electrical installation, based on the specifics of its operation and the nature of its generation. Secondly, by bringing together different types of participants within one group, the costs of settling imbalances are reduced. Thirdly, the Aggregator acts as a link between small-capacity installations and the market. For example, for small market players that do not have the resources or relevant competence to participate, for example, in the ancillary services market, which requires appropriate technical tools and administrative expertise, the Aggregator opens the way for such installations to enter this market segment. In summary, it is worth emphasizing that the aggregation business model and the work of Aggregators can attract new players to the market for balancing the power system. This will have a qualitative impact on the flexibility and resilience of the integrated power system of Ukraine.

The aggregation mechanism was implemented by the Law of Ukraine No. 3220-IX, which came into force in the summer of 2023. Today, we suggest figuring out how the mechanism works in practice and what opportunities the members of the aggregated group can get. To get the whole picture, it’s important to first understand “who is who” and who is responsible for what within this mechanism. So let’s start with the Aggregator and its role.

Putting the Pieces Together: Who is Responsible for What?

An Independent Aggregator is a market participant that directly carries out aggregation activities on the basis of a license. By the way, KNESS received such a license at the end of last year. What does the very essence of “aggregation activity” imply? It is the combination of electrical installations with a capacity of up to 20 MW of consumers, including active ones, as well as installations intended for the electricity production and storage, into one aggregation unit. In the electricity market, the aggregation unit functions as a single electrical installation with the appropriate integrated technical parameters to provide ancillary or balancing services and/or energy transfer in time (on market conditions). In this process, the Aggregator acts as the “manager” of the aggregation unit and is responsible to the transmission system operator for the schedule implementation and its commands. In other words, it generates schedules and manages the capacity of a group of power facilities in accordance with market signals, including, for example, time changes in the electricity price, represents the interests of participants in different segments of the electricity market, is responsible for imbalances, and interacts with the system operator, administers operations, etc.

So, the Aggregator is an important link in this mechanism, it can be compared to the orchestra conductor. It combines various “instruments” — consumers, producers and energy storage facilities  into a single “orchestra”. And, like a conductor, it manages this “orchestra”, helping it to respond harmoniously to changes in the market’s “’tune” i.e. price and demand fluctuations, market signals, etc. As a result, everyone can benefit: the members of the aggregated group get a significant additional income; and the transmission system operator gets more balancing capacities and simplifies the structure of dispatch control of small-capacity electrical installations.

Peculiarities of aggregation activities

Among other things, there are additional points that are worth paying special attention to. The aggregator is the balance responsible party of all electrical installations included in its aggregation unit, except for electrical installations intended for the consumption of electricity purchased from the electricity supplier. 

The Law of Ukraine “On the Electricity Market” and the Market Rules do not provide for the possibility of the Aggregator to transfer responsibility for electricity imbalances of the units included in its aggregated group (except for electrical installations, market participants intended for consumption, operating under an electricity supply agreement). This means that under any circumstances, the Aggregator is the balance responsible party to the transmission system operator and cannot delegate its financial responsibility for imbalances to another market participant by joining a balancing or other aggregated group.

Aggregated group: who can be a participant?

The aggregated group may include consumer electrical installations (including active ones), generating units and energy storage facilities up to 20 MW.

Electricity consumers

The model of working in an aggregated group may be of interest to companies that have the opportunity to reduce or increase their consumption, i.e., are maneuverable. According to the law, such consumers can join the Aggregated Group without the consent of their electricity supplier. If talking about companies that have their own generating capacities or backup power sources (energy storage facilities), the “pass” to work in the electricity market is to obtain active consumer status . This is mandatory to be able to sell surplus electricity on the market. Why is it more profitable for them to work through the Aggregator? Because it opens up more market opportunities, where consumers can earn additional income and significantly save on electricity procurement. 

Producers and energy storage system operators

For electricity producers and ESS operators, working within one aggregated unit is more profitable than if each operated separately as an independent market participant. Firstly, it is possible to identify the optimal market segments for the most profitable operation of each electrical installation, based on the specifics of its operation and the nature of its generation. Secondly, by bringing together different types of participants within one group, the costs of settling imbalances are reduced. Thirdly, the Aggregator acts as a link between small-capacity installations and the market. For example, for small market players that do not have the resources or relevant competence to participate, for example, in the ancillary services market, which requires appropriate technical tools and administrative expertise, the Aggregator opens the way for such installations to enter this market segment.

In summary, it is worth emphasizing that the aggregation business model and the work of Aggregators can attract new players to the market for balancing the power system. This will have a qualitative impact on the flexibility and resilience of the integrated power system of Ukraine.