Cost-effectiveness of virtual power plants based on residential aggregators

The domestic sector accounts for a third of the UK’s energy consumption and with increasing pressure from net-zero targets, the potential of residential flexibility is more widely recognised by consumers, aggregators and governments. The development in near real-time metering systems and home energy management technologies provide new possibilities for residential demand-side control. Due to the increase in energy prices and government schemes for improving residential energy efficiency and flexibility, domestic consumers are more aware and willing to participate in balancing services. The aggregator business model is previously proven to be successful for commercial-scale markets, due to the adequate amount of flexibility during peak hours and the corresponding financial incentives. Similarly, the domestic aggregation market is expected to grow and there has been a few feasibility studies that demonstrate the benefits to the grid and economy. However, there is a need for a further in-depth study of the cost-effectiveness of residential aggregation to provide virtual power plant (VPP) actions to encourage the development of residential demand response (DR). Here, we model and compare profitable cost-effective VPP methods using residential aggregation through the integration of a novel market entity called the residential aggregator.