Evaluation of Economic Benefits of DER Aggregation

The penetration of distributed energy resources (DER), including distributed generators and flexible demand, is increasing worldwide and is expected to increase further encouraged by environmental policies and decreasing costs. Due to their large number and spatial dispersion, DER's effective integration into the operation of electricity markets is a complex and demanding task. Moreover, their relatively small size makes their direct individual participation in the electricity market, although theoretically possible, highly impractical. This paper aims to quantify the benefits of the aggregated participation of DER in the electricity market via a DER Aggregator. The DER Aggregator's interactions with his customers and with the wholesale market are modeled as a bilevel programming problem: the upper level describes the DER Aggregator decision-making; the lower level encompasses the DERs' decision model and the market clearing process. Several scenarios are examined in order to draw general conclusions regarding the conditions under which DER aggregation is beneficial for DER owners and the aggregator.