Green energy supplier Ecotricity has launched an aggregation business model after striking a deal with German virtual power plant (VPP) platform provider Next Kraftwerke.
The supplier now targets renewables generators, storage owners and business customers to help balance its own position and to use their flexibility within contracted and ‘merchant’ markets.
Ecotricity head of smart grids, Mark Meyrick, said the deal makes Ecotricity “a supplier and an aggregator” and claimed the firm’s trading experience would set it apart from other “hybrid” supplier-aggregators.
“It is one thing having a supply licence, but another to actually be able to trade effectively in the market. We have to manage a 24/7 position,” said Meyrick.
Next Kraftwerke claims it has 4.58GW of networked capacity connected to its VPP across 5,477 decentralised assets, many of which are located in Germany, though the firm also operates in Belgium, Austria, Poland, France, Switzerland and The Netherlands. Dutch utility Eneco owns a 34% stake in the company.
Meyrick, who spent five years with Eneco as head of its carbon desk, said the “quality of the VPP” would be one of Ecotricity’s differentiators in what is becoming a crowded marketplace. But he said its core proposition – renewable energy – also remains key. Combining the two, he suggested, creates less hassle for customers.
“People are talking to us because we are green. For business customers, we can offer them a supply contract as well as a flexibility contract. It means they are not getting calls from an irritated supplier saying ‘Oi, what have you done to my imbalance position?’” Meyrick said.
He added that the VPP also provides further traction in trying to sign power purchase agreements (PPAs) with renewable generators.
“We need renewable PPAs to supply our customers [with renewable power]. But it is a competitive space. Now we offer to both buy their power and optimise their plant – see what flexibility they have and enhance their revenue,” said Meyrick.
“I think that is where we will score over [aggregators], because they are interested in the flexibility rather than the PPA.”
Meyrick said trading and forecasting will become more critical as the market moves from longer duration products and contracts to shorter duration services and merchant opportunities.
“It is no good being great at day ahead forecasting, you need good month ahead forecasting. You have to know when to come off the frequency response contract and [take] market opportunities, which is a different kettle of fish.”
Meyrick claimed Ecotricity now has around 16,000 business customers, up significantly year on year.