A Swedish Perspective on Aggregators and Local Flexibility Markets : Considerations and barriers for aggregators and SthlmFlex together with their potential to manage grid congestions in Stockholm

Abstract: Aggregators targeting smaller customers, and their possibility to alleviate grid congestions through local flexibility markets, is a new concept in Sweden. The study’s purpose consisted of four main objectives. Investigate SthlmFlex and compare it to two other European flexibility markets. Explore the institutional, technical, financial and social considerations of an aggregator in Sweden. Identify barriers for the aggregators considerations as well as market barriers for SthlmFlex. Lastly, estimate the potential of aggregated demand side flexibility from heat pumps and electric vehicles in single-family houses to alleviate grid congestions in Stockholm 2021-2030. The study mainly followed an exploratory research approach where literature review was combined with interviews. A quantitative approach was applied for the estimation of the potential. SthlmFlex is an open market that offers trade of flexibility services as well as temporary subscriptions that allows Ellevio and Vattenfall to manage grid congestions through different solutions. The most noticeable difference in the comparison of markets was that SthlmFlex did not offer an integrated rebalancing mechanism. New Swedish regulations that will enable independent aggregation will be enforced in the beginning of 2022 and will facilitate the operation and acquisition of customers for aggregators. The aggregator requires a technical setup of both hardware and software to gain control of the technology and active the flexibility service. The business model is centred on sales of the technical system, which enables implicit and explicit services. Explicit services constitute a small part of the total revenue stream which is due to the low prices offered on flexibility markets. The aggregator has to consider the customers’ view on demand side flexibility and their competence within the electricity system. The study concluded that there is enough demand side flexibility potential in single-family houses to alleviate grid congestions in Stockholm from 2021-2030. However, several barriers were identified that limits the realization of this potential and the development of aggregators in Sweden. These include barriers related to balance responsibility, measurements and low revenue streams. Barriers in terms of market design and market approach were also identified specifically for SthlmFlex.