
Become a balancing manager
Write by Alexis Gléron, may 2024
You are a renewable energy producer with a portfolio of plants under supplementary remuneration or cPPAs. You use the services of an aggregator to balance the production of your portfolio, but one question nags at you:
What if I became my own aggregator/balance responsible party?
Impossible, you might say. Too complicated, too many fixed costs, not enough capacity to aggregate.
This article will explore the ins and outs of this question.
Forecasts
One of the key roles of an aggregator is to forecast the production volume of renewable assets. These forecasts are then used to conduct transactions on the short-term markets (day-ahead, intraday) to balance their balance area. If these forecasts are inaccurate, the volumes of electricity corresponding to the error of the forecasting model used will be valued by RTE at the imbalance price.
This price is different from the day-ahead price and generally penalizes the error. The aggregator is therefore incentivized to have the most accurate forecasts possible.
To generate forecasts each day, the aggregator uses weather data (from Météo-France models or others) and the ex-post production data of the plants (from Enedis or EMS for large plants).
To minimize the error and thus the cost of imbalances, these models need to be updated frequently, sometimes several times a day, to participate in the intraday market.
Creating a model requires a certain level of expertise in Machine Learning, as well as a sufficiently robust technological infrastructure to reliably run models daily that use a large volume of data.
Trading 7/7
Generating forecasts is just the first step; you then need to execute sales transactions for your production on the day-ahead market. A verification process and sending these orders to the exchanges must be established. The day-ahead market occurs every day for the following day, so this process needs to happen 7 days a week to minimize imbalance costs.
If you have updates for your forecasting model after the closure of the day-ahead market (at 12 PM each day for the next day), you can execute transactions on the intraday market, which operates continuously until 30 minutes before the start of delivery. There, you can make transactions 24/7.
What is the benefit of being your own balancing manager?
The main advantage of being your own aggregator lies in the transparency and flexibility it offers. Indeed, you can be certain of paying the actual cost of balancing your assets without any excessive margins or risk premiums. Another important point is that it is simpler to set up external CPPA (with third-party companies) or internal CPPA (between sister companies, etc.) because you eliminate an intermediary.
However, a key consideration is that you need a portfolio of significant size, as otherwise, you risk being affected by the law of large numbers (the error of a model on a single asset will be more significant than on a set of assets, as errors partially offset each other). That said, a portfolio of around one hundred MW, ideally diversified technologically, should be sufficient.
Finally, investing internally in the necessary technology systems and personnel can represent a very high barrier to entry. Indeed, developing models and a system to operate them may require years of software development. Building a team of experts available 24/7 is also costly and can quickly erode your business model. On all these points, Augmented Energy is here to help. We offer a technological platform where you will be able to develop and run your models quickly, thus accelerating your operational launch. We also have all the necessary integrations with Enedis and the markets to conduct transactions 24/7 and retrieve your balancing manager data.
If you need more information, you can contact us at : sales@augmented.energy