The Regulation on Aggregation Activities in the Electricity Market (“Regulation”), long anticipated by the energy sector, was published in the Official Gazette on December 17, 2024 (No. 32755), and came into effect on January 1, 2025. Aggregation activities were first introduced into the legislative framework through a December 22, 2022, amendment to the Electricity Market Law (“Law”) and are now comprehensively regulated under this Regulation, issued pursuant to Article 12/A of the Law. The Regulation aims to optimize portfolio management, facilitate trade and enhance system balance by consolidating small and medium-sized energy generation and consumption facilities.
An aggregator is defined as a legal entity holding either an aggregator license or a supply license and authorized through agreements with network users to manage their electricity production and/or consumption schedules, execute related market transactions, and participate in ancillary service supply processes. The Regulation provides a robust legal framework for aggregation, clearly delineating the aggregator's role in the energy market.
Aggregation is a cornerstone of energy market transformation and sustainable energy management. It integrates renewable energy sources and reduces energy costs. With the digitalization of energy markets and the expansion of distributed energy systems, the importance of aggregation continues to grow. This article examines the Regulation’s impact on existing legislation, the application areas and future prospects of aggregation, and insights from the Energy Market Regulatory Authority’s (“EMRA”) workshop held in May 2024, attended by sector stakeholders.
Trends in Aggregation Activities
In energy management, aggregation is often associated with electric vehicles (“EVs”), leveraging two key technologies: Grid-to-Vehicle (“G2V”) and Vehicle-to-Grid (“V2G”). G2V enables EVs to draw energy from the grid for charging, creating a unidirectional energy flow. V2G, on the other hand, allows EVs to feed stored energy back into the grid, enabling bidirectional energy flow.
Globally, G2V is widely adopted in countries such as China, the United States, and several European nations. In contrast, V2G remains in pilot stages in countries like Denmark, Japan, and the United Kingdom, demonstrating its potential for energy management and grid balancing. Both technologies are expected to play significant roles in Turkey’s energy transition, especially under aggregator management, where EVs can provide energy storage and grid balancing services.
Effective aggregation requires robust technical infrastructure. Aggregators must implement real-time monitoring systems, communication networks, and end-to-end data transmission systems to seamlessly interact with grid operators and ensure operational efficiency.
Key Regulatory Changes Introduced by the Regulation
The Regulation has brought notable amendments to related legislation, particularly the Balancing and Settlement Regulation in the Electricity Market (“DUY”). Key changes include:
1. Balancing Areas
A "balancing area" is a new concept introduced in the DUY. Defined as “a section of the network determined by Turkish Electricity Transmission Company (“TEİAŞ”),” it encompasses production, consumption, and/or storage facilities participating in ancillary services or the balancing power market. While balancing areas do not involve separate pricing, they serve as a labeling method to enhance system flexibility by enabling aggregators to guide consumption and production processes effectively.
2. Opportunities for Small Investors
Aggregation provides small energy investors with a viable revenue model. Rather than establishing costly balancing teams, investors can rely on aggregators to manage their operations. By leveraging storage facilities and flexible business models, aggregators can enhance system efficiency while opening new revenue streams for small-scale producers.
3. Market Participant Code
Aggregation introduces key distinctions from existing portfolio systems like the Balancing Responsible Group (“DSG”). Unlike DSG participants, facilities under an aggregator’s management lose their individual market participant codes, with all transactions conducted under the aggregator’s single code. This streamlines market operations and shifts responsibilities for collateral and imbalance management to the aggregator.
4. Deviation Amount from Finalized Production Plan (KÜPST)
Under the aggregator model, KÜPST penalties for deviations are calculated at the portfolio level rather than per unit, allowing for greater flexibility. Amendments to Article 110/5 of the DUY enable the Board to implement tailored methodologies for energy imbalances and deviations, incentivizing aggregation.
Unlicensed Producers and Aggregation
Aggregation presents significant opportunities for unlicensed producers benefiting from the Renewable Energy Support Scheme (“YEKDEM”). Producers nearing the end of their 10-year YEKDEM incentive period face a choice: join aggregators for potentially better payment terms or remain with supply companies while avoiding imbalance risks.
Unlicensed producers entering aggregation can benefit from full Market Clearing Price (“PTF”) payments, as opposed to the partial payments offered under YEKDEM. This shift could create a competitive environment where portfolio management becomes increasingly critical.
Separation of Supply and Aggregation Activities
The Regulation allows aggregation activities to be conducted under either an aggregator license or a supply license. While these activities may seem complementary, some stakeholders advocate for separating them to avoid conflicts of interest. Aggregators focus on demand-side participation, balancing services, and load optimization, while suppliers aim to maximize sales. Separating these roles could ensure clearer objectives and operational efficiency.
Conclusion
The Regulation on Aggregation Activities in the Electricity Market marks a significant step toward enhancing portfolio management and system balance in Turkey’s energy market. By consolidating small and medium-sized production and consumption facilities, the Regulation paves the way for more efficient, flexible, and sustainable energy management.
Market participants with technical expertise and robust infrastructure are expected to lead the transition to aggregation. While practical challenges will emerge during implementation, the Regulation is a dynamic framework that will continue to evolve with market needs. Aggregation activities are set to play a pivotal role in shaping the future of energy markets in Turkey and beyond.
@Zeynep EMİROĞLU, @Dr. Ömer KESİKLİ
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