VPP Market Study

REPORT

VPP MARKET STUDY

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Table of Contents Introduction | 3 Scope of research | 4 VPP definition and value chain | 5 Market segmentation of VPP-related energy companies | 6 - IPP and Project Developers | 7 - Aggregators | 8 - Commercial and Industrial Segment | 10 - Utilities and Traders | 11 VPP Market Access Across European Countries | 13 - Germany | 15 - Italy | 16 - France | 16 - Netherlands | 17 - Spain | 17 - UK | 17 - South - Eastern Europe | 18 Software Vendors Segmentation | 19 - Hardware and EMS providers | 20 - Aggregator software solutions | 21 - Data Management solutions | 24 - Analytics solutions | 26 - Trading solutions and impact on the ETRM market | 27 - Scheduling, nominations and market communication solutions | 29 Market Sizing | 30 - Appendix | 37

INTRODUCTION The European energy system is undergoing a revolutionary shift from fossil fuels to renewable energy sources known as the energy transition. However, the primary challenge facing energy systems with a significant proportion of distributed and intermittent wind and solar energy is the lack of flexibility needed to offset fluctuations in power production. One of the most effective solutions to this challenge involves aggregating flexibilities from production, demand, and available power storage within a specific grid, and then trading this flexibility.

The concept of a Virtual Power Plant (VPP) - a centrally controlled aggregate of flexibility - is widely regarded as the optimal approach to implement this strategy.

VPP technology needs multiple software tools for its implementation. Distributed energy resources need / data monitoring, / platforms for data aggregation, / analytic tools for optimization of flexibilities and forecasting, / tools for bidding or communication with trading solutions, / as well as redistribution of trading results and settlement.

In this study ComTech Advisory aims to analyze the landscape of Virtual Power Plant (VPP) software vendors, scrutinizing potential European customers, looking at vendor differentiation, and overall market dynamics. This document provides results of this high-level research into industry sentiments around VPP technologies and approaches in order to gauge market interest in technologies and gain insights into which will play a major role in the future energy systems. Additionally, the research provides better understanding what parties bring software solutions around such technologies.

The project is focused on European market starting with countries of interest for the sponsors.

VPP MARKET STUDY

SCOPE OF RESEARCH Traditionally, the power market was dominated by utilities of different tiers, merchant traders, retailers, distributors, and system operators. Now, we see a variety of new companies entering the market, and the roles of the traditional participants are also evolving. This shift is due to the decentralization of power production, which was once concentrated in single nodes but is now distributed across numerous sources. The intermittency of renewable energy necessitates power storage technologies, and the proliferation of small distributed production sites places significant demands on local networks, driving the development of markets for supporting products.

We see that new types of companies as well as new solutions are required. Several key questions arise in this new market environment / What kind of companies become new energy market participants? / What are the solution requirements for these energy companies? / Are new software tools emerging to meet this demand? / Will existing software categories like ETRM, logistics, analytics, and ERP solutions be impacted? / Are new software vendors entering the market with new solutions?

This research intends to investigate these and other questions: / Who are the new types of companies entering energy markets due to VPP development, and what are their software needs? / What are the different VPP types, and which markets can they participate in?

/ What are the differences in VPP market access across European countries? / How are VPPs changing the business of traditional energy market participants? / How are VPPs altering the needs for software solutions? / What categories of software are involved in the VPP value chain? / Which software vendors deliver these solutions? / What is the market size for these solutions, and what growth rate is expected?

The method of the research includes: 1/ B asic research into these technologies and their potential impacts on the industry over the next 12-36 months 2/ W eb-based surveys and questionnaires targeted to software users and other participants 3/ Interviews with key users and influencers

VPP MARKET STUDY

VPP DEFINITION AND VALUE CHAIN The term VPP is not new; it has been previously used to refer to a production facility consisting of various modules independent of production technology. In this research, we focus on VPPs related to renewable energy, energy storage, and demand response.

We identify three main types of VPPs: /P roduction-oriented /C onsumption-oriented /M ixed assets

Production-oriented VPPs typically consist of wind and/ or solar production sites, which may include co-located batteries, as well as hydro, biogas, and other fuel-fired production.

These are usually in-front-of-the-meter VPP. Consumption-oriented VPPs are based on aggregated prosumer production and consumption, including storage, they are usually behind-the-meter VPPs.

Mixed asset VPPs are a combination of both and represent the most complex type of VPP. Battery Energy Storage System (BESS) can be a part of any of the VPP mentioned above.

The main difference between a VPP and a micro-grid, which also collects distributed resources into one grid, is the central control of these resources with the goal of trading and then redistributing the trading results. Therefore, the value chain of a VPP includes multiple steps, which are presented by the following overview.

Figure 1 VPP value chain

Any Battery Energy Storage System (BESS) or renewable energy production project requires technical monitoring, meter data management, and aggregation when multiple distributed assets are involved. This also includes redistributing the required production across the assets and managing dispatch.

When demand response is included, the workflow always involves aggregating distributed sources of demand flexibility and subsequently redistributing trading results across those sources.

The subsequent steps in the value chain involve pre-trade

analytics, which includes forecasting renewable production and optimizing flexibilities. Optimization aims to maximize the profit from using BESS or demand-side flexibility (DSF) while considering technical constraints and available markets for realizing this flexibility. Depending on asset qualifications and market regulations, these markets can include various ancillary services such as different reserves, frequency regulations, capacity markets, and wholesale markets including day-ahead, intraday auctions, and continuous markets. Renewable production typically participates in the wholesale market rather than qualifying for ancillary services, though

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some assets are eligible for both. BESS and DSF projects are primarily used for network stabilization and thus participate in ancillary service markets, though some also access wholesale markets.

For projects with arbitrage possibilities across different markets, trading is a crucial task. Intraday continuous trading is particularly important here due to the additional price volatility, which can be leveraged to maximize profits. The next steps in the value chain involve market interfaces for communication with the system operators and reporting. Position and risk management could also be considered as separate workflow steps, but since the markets in question are short-term markets, the risk is covered by the trading as companies usually rely of their algorithmic tools and experience of the traders to

manage short term risks. According to interviews conducted with many VPP related companies; risk management is not seen as a separate activity in these kinds of markets.

Not every VPP operator is involved in all the steps of the value chain, however. Often, some steps are outsourced to other companies. However, for a VPP to participate in the energy market—and we are interested only in such VPPs—these steps must be performed by some entity.

Before we delve into the details of which companies are active in this market and how they share responsibility for each step of the value chain, let’s first discuss the markets available for VPP participation.

MARKET SEGMENTATION OF VPP-RELATED ENERGY COMPANIES The market changes related to the energy transition are significant and impact all businesses across the industry. New actors are entering the market, and existing actors are taking on new tasks. This chapter gives an overview of new market entrants as well as a corresponding evolution of the existing energy market participants.

The figure below summarizes the segmentation of companies along the VPP value chain. The typical scope for each segment is highlighted in bold, with detailed descriptions of their

Project developers and IPPs (1)

BESS and Renewables projects

Data management (aggregation)

Dispatch (redistribution)

business operations and specific solution requirements provided in the chapter below.

Project developers and IPPs (2)

Optimization and forecasting

Trading (wholesale)

Scheduling and nominations

Settlement

Traders / Utilities / Large C&I

Demand response incl. BESS

Aggregators (1)

Ancillary Services

Project developers and IPPs (3)

Aggregators (2)

Figure 2 Segmentation of the energy companies along VPP value chain

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Aggregators (3)

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IPP and Project Developers Independent Power Producers (IPPs) are investors in renewable production and operators of these production sites.

These companies typically own privately held wind or PV facilities and sell electricity via third-party market access, or through Power Purchase Agreements (PPAs), to utilities.

This segment, together with Project Developers, represents the most rapidly growing group of new energy businesses.

Generally, these companies lack in-house trading skills and are therefore often not involved in trading, but the largest ones may participate directly in the wholesale market. IPPs may also manage co-located batteries as a kind of hedge – instrument for the intermittent production.

Project Developers (PDs) play a similar role, but they are usually investors in industry-scale batteries or other power storage technologies rather than in production sites. Project developers may also invest in demand response-based flexibility.

Like IPPs, most project developers are not trading specialists and usually rely on various third-party services for market access.

Both PDs and IPPs usually invest in in-front-of-the-meter facilities. Some IPPs are spinoffs of large utilities.

IPPs and PDs can be categorized into the following three groups based on their major facilities:

1/ P roduction-Oriented (IPPs): Focus primarily on energy production, managing facilities such as wind, solar, and hydro power plants.

2/ S torage-Oriented (PDs): Invest heavily in energy storage solutions like batteries to complement production or manage energy consumption.

3/ D emand Response-Oriented (PDs): Emphasize flexibility in energy consumption, leveraging technologies and strategies to stabilize local networks and offer ancillary services.

However, another categorization is more useful for understanding the software solutions these companies require.

This categorization follows the VPP value chain.

IPP/PD Type 1: Basic Operations At a minimum, all IPPs and PDs monitor devices, manage the meter data of their facilities, and dispatch the facilities.

They may also provide short-term production forecasts and optimize batteries. This optimization refers to stand-alone or co-located batteries and is usually technical, ensuring safe operation and targeting longer battery lifetimes. Companies often apply AI and ML approaches to analytics due to the large volume of data to process. These companies typically sell power to a utility via PPA or use the services of a trading com-

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VPP MARKET STUDY

pany or aggregator. Their software requirements are usually met with Energy Management Systems (EMS) that include monitoring, failure detection, analytics for forecasting and optimization. They may also need to manage weather data for forecasting in addition to technical data. Their PPA contracts are usually managed in their ERP systems. Most IPPs and PDs fall into this category.

IPP/PD Type 2: Advanced Operations More advanced IPPs and PDs provide ancillary services via platforms or directly to system operators, which is particularly relevant to Battery Energy Storage Systems (BESS) projects. When bidding on flexibility platforms is included, these companies require solutions for the commercial optimization of BESS and bidding interfaces. Commercial optimization includes profitability as an objective, along with lifetime and safe operations objectives. Due to the need for commercial optimization, these companies must collect price information along with meter data and weather data in their data manage-

ment systems and apply some advanced methods for battery optimization.

IPP/PD Type 3: Full-Scale Operations The largest IPPs have their own access to the wholesale market, hire traders, and perform full-scale trading operations.

These companies cover the entire value chain, from monitoring and dispatching facilities to analytics and trading, with a focus on short-term trading, including automation and algorithmic trading, as well as TSO communication, deal management, and settlement. Their software solution requirements are many, from EMS to pre-trade analytics, data management and trading. Requirements for transaction management systems are similar to those of a smaller utility but maybe even “lighter” from an ETRM (Energy Trading and Risk Management) standpoint. This would include basic position and risk management, TSO communication, settlement and basic regulatory reporting.

Aggregators The term “Aggregator” can vary in interpretation, but in our context, we define an aggregator as a company that consolidates multiple distributed resources to trade them on specific

markets. The aggregators are companies which essentially manage Virtual Power Plants (VPPs). Similar to the categorization of VPPs into production-oriented, consumption-orient-

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VPP MARKET STUDY

ed, and mixed asset types, aggregators can also be classified into these categories based on the types of VPPs they manage. However, we would like to classify aggregators into two groups, in-front-of-the-meter and behind-the-meter aggregators - as these two groups have very distinct assets, market access possibilities and software needs. Notably, in-front-ofthe-meter aggregators are usually production- oriented and behind-the-meter aggregators are usually consumption oriented.

In-front-of-the-meter aggregators In-front-of-the-meter aggregators are typically like larger IPPs; they aggregate multiple production sites with possibly co-located batteries under their operations and align closely with business of IPP/PD types 2 or 3, given their primary role of bringing aggregated power to market. Many of these aggregator’s stem from larger utilities or are business units formed by consortia of small utilities aimed at managing distributed production. They have access to various markets ranging from ancillary services to the wholesale market covering the full VPP value chain.

Their software solution needs are extensive, spanning from Energy Management Systems (EMS) to analytics and AI applications, distribution of trading results across their resources, dispatch management, short-term trading, and trading algorithms. Aggregators associated with utilities often leverage the utilities’ existing ETRM (Energy Trading and Risk Management) solutions and scheduling tools. Independent aggregators of this kind may require additional software for deal management, communication interfaces and regulatory reporting.

Companies operating in this area are highly dependent on local market regulations and the hardware components involved in the process. Let us consider some examples. Some aggregators work with commercial and industrial (C&I) companies that aim to reduce their energy expenditure. These companies can gain additional flexibility in their power demand by adding a battery to their assets. Typically, such companies are not proficient in managing their energy demand, especially when complex assets like batteries are involved. Therefore, they outsource not only trading but also the operation of the assets to an aggregator. Most single C&I companies are also too small to have market access with their assets, but for an aggregator working with multiple companies, the combined capacity is sufficient for market participation.

Other aggregators utilize EV batteries as a source of flexibility.

Their business models are diverse, ranging from profit-sharing (e.g., with EV manufacturers) to offering vouchers for drivers.

Additionally, drivers benefit from the optimization of charging times, allowing them to charge during cheaper time slots.

However, challenges arise due to poor interoperability of the software provided by different charging point manufacturers therefore limiting outreach for the aggregators.

Behind-the-meter aggregators

Generally, interfaces for data reading from different hardware devices involved in DSF programs vary significantly depending on the manufacturer, not just related to EV chargers. Due to these issues, the value chain steps of managing meter data, aggregation, distribution of trading results, and dispatch of DSF already present a challenge and require complex software functionality to support these steps. These processes, along with the software tools supporting them, are central to the core business of aggregators. Consequently, all aggregators on the DSF side develop this software in-house.

This is the most innovative and important part of the market for entrants because of their role as aggregators of demand side flexibility providers. The importance of flexibility cannot be overstated. In an energy system dominated by renewable production, flexibility is key to resolving network congestions, and it can be sourced from BESS or demand response.

Usually, the software includes device-related software on the local device, data reading and communication, central data management and aggregation in a cloud platform and dashboards for each flexible resource, such as C&I, EV manufacturers, and prosumer communities, allowing them to view their positions, prices, revenues, etc. These dashboards are

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tailored to different types of flexibility providers. Some aggregators cover only these steps of the value chain and use the services of other companies for trading. Such aggregators are referred to here as Aggregator Type 1: Basic Aggregation Type 2: Advanced Operations Many behind-the-meter aggregators primarily target ancillary services provision, focusing on the benefits of DSF in enhancing network stability. Some work directly with TSOs, while others participate in flexibility platforms that connect multiple DSOs and TSOs. This activity includes extensions along the value chain to support the commercial optimization of flexibility. This optimization means that pricing information needs to be included in data management, and more advanced analytics is required to support multi-objective optimization. This optimization aims to maximize profits while minimizing battery aging, considering all technical and regulatory restrictions. By regulatory restrictions, we mean the eligibility of a DSF asset to provide certain types of services as well as timing of submission the bids for the services in different markets.

Most of the behind-the-meter aggregators fall into this category. These companies are keen to develop their software solutions in-house, as they already have large development teams and view data management and analytics add-ons as natural extensions of their own solutions. However, when these companies consider expanding to other markets (other countries), they quickly realize the difficulty due to the varying

rules and regulations across Europe (see next chapter). Many then conclude that expanding by selling software is easier than expanding the aggregator business. At this point, some aggregators switch their business focus to becoming software vendors, while others maintain both roles but separate them into two more or less independent groups (e.g., Octopus and Kraken).

Aggregation Type 2: Full Scale Operations Larger aggregators have access to the wholesale market and can arbitrage between different markets to maximize profits.

This category is heavily dependent on local market access rules, and even in countries where cross-market trading is possible, only the largest aggregators can overcome all the bureaucratic obstacles and afford the sometimes quite high market access fees. However, companies that successfully navigate this process can accumulate more energy to trade by offering trading as a service to others who do not want to deal with this complexity.

From a software solution standpoint, short-term trading, TSO communication, regulatory reporting, and settlement are additional needs on top of those of other aggregators. Unlike IPPs (Independent Power Producers) of Type 3 or in-front-ofthe-meter aggregators, these larger aggregators still tend to develop solutions in-house for the same reasons mentioned above.

Commercial and Industrial segment These companies are usually net energy consumers - even if the largest have some production capacity. The energy crises of 2022 made it clear to them how large the dependency on the power and gas markets is and, even if the prices are back to pre-crisis levels, companies are looking for possibilities to hedge against potential price increase.

of C&I companies that are relevant for this study. One group consists of the largest companies with high energy consumption, which have their own business unit for purchasing power and gas. Usually, they already have access to the wholesale market. However, their business is still impacted by the energy transition. The other group consists of smaller C&I companies who are trying to hedge their energy expenditures.

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VPP MARKET STUDY

Small and medium C&I consumers Large C&I companies with high energy consumption These are companies which constitute the client base for many behind-the-meter aggregators. While they cannot be considered as new market entrants and they are not buyers of VPP software, they may buy or rent a battery and would like to use it for peak shaving or flexibility trading via a third party.

Willingness to hedge their energy price risk is an essential driver for these companies and providing flexibility to an aggregator to operate in the market is not their only possibility to hedge. A simpler strategy from a C&I company standpoint is to agree with the utility on the index price calculated based on the spot market and shift the consumption toward cheaper hours, e.g. by discharging the battery for the most expensive hours and charging it in the cheapest hours. This strategy however is not very helpful in case of longer-term price volatility, whereas providing flexibility for a 3rd party trading on the profit share basis can payoff in case of high price fluctuations over longer time periods.

Many of these companies already have some market access for the purchase of energy on the wholesale market as well as some trading experience. However, even in this case, trading on the short term and intraday market, and managing such assets as a battery, brings new challenges.

In some markets, such as Spain and Portugal, there are a lot of companies, mainly in Chemistry and Agriculture, who are directly participating in trading ancillary services on the flexibility platforms such as PICLO or eSIOS. These companies have similar activities along the VPP value chain as the IPPs and PDs of type 2 and 3 and they have limited experience on the energy markets. So, their needs and appetite for the software solutions are fully aligned with these advanced IPPs and PDs.

Utilities and Traders In most of the European countries the majority of the investments into renewable energy are done by utilities. Currently utilities are the main driver of the progress in VPP technology and the largest buyer segment for the software solutions related to this technology.

Large Utilities These are companies investing in renewable production, possibly with co-located batteries, and they are operating their own VPPs, which are mostly production oriented. They use standardized software solutions for the aggregation, which supports basic aggregation and dispatch functionalities for production assets and possibly additional analytics for BESS optimization and production forecast. . All further steps of the value chain from pre-trade analytics to trading, market communication and settlement, are usually already in place since

these companies have been on the market a long time already.

Still there can be interest to acquire additional software tools.

One of the challenges for such companies is data management as they are working on different markets, and need to manage a lot of meter data, structural data, prices, etc. Traders would prefer to have all these data in the same cloud-based repository easily accessible in real time for different applications. Such requirements as data reliability, cyber security, ease of integration of different applications and high performance become their main challenge. Many believe that such data management systems do not yet exist on the market.

Also on the analytical solutions, such as battery optimization, algorithms may be of interest. These companies have strong risk management, which is usually supported in their ETRM systems, but with more real time trading, risk management

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VPP MARKET STUDY

becomes real time as well and legacy ETRMs are not always capable to support it. External risk management solutions with strong real time capabilities and valuation models supporting new assets or deal types (e.g. PPAs) can be a solution.

Some of the companies have such a great amount of complex PPA contract, that they are looking for a flexible transaction management system to cover life cycle of PPAs and corresponding certificate only, with standard trading and overall portfolio risk still covered by the ETRM system.

Utilities are increasingly engaging in behind-the-meter aggregation and demand oriented VPPs. Many of their customers are eager to offer their flexibility in exchange for lower energy bills. Both utilities and large retailers recognize the potential of this trend and are keen to involve customers in VPP programs. The additional flexibility provided by customers is combined with the utilities’ own resources and utilized for trading across various markets. To implement and manage these VPPs, utilities often collaborate with aggregators or rely on aggregator software solutions. This means that utilities are operating not only in production-oriented VPP but also in consumption oriented VPPs. Medium and small Utilities Medium and small utilities share a similar interest in VPPs, but they often lack the expertise in intraday trading and analytics, as well as the financial resources to invest in and operate VPPs independently. To overcome these challenges, they typically form consortia to finance and manage VPP operations. The operating business units within these consortia usually decide on the solutions to implement. In most cases, they adopt an ecosystem of tools, combining solutions developed by the utilities themselves with those from commercial vendors.

Trading – as – a – service Trading-as-a-service (TraaS) is a rapidly growing business model aimed primarily at serving IPPs and PDs that lack trading expertise or avoid trading due to high market access costs. However, as market rules evolve to make access easier and cheaper, more PDs and IPPs are expected to start their own trading, potentially impacting the future growth of the TraaS business.

TraaS providers offer various business models for their customers, ranging from profit sharing to selling energy based on PPAs. They cover all steps of the value chain from pre-trade analytics to trading but typically do not handle aggregation or earlier steps. Their competitive advantage lies in their trading and optimization algorithms. Proper data management remains a significant challenge for them. From a software solution standpoint, TraaS providers tend to use an ecosystem of solutions, combining standard commercial tools for tasks like nominations or regulatory reporting with proprietary software for trading algorithms and AI. Scheduling, nomination services and more As new trading companies enter the market and established utilities and traders expand their operations internationally, the demand for efficient market communication is driving the outsourcing of non-core activities. The fastest way to launch trading operations in a new market is often to outsource specific market communication tasks to companies specialized in this area. This trend is fueling the growth of companies that provide services to traders, particularly those offering scheduling, nomination, market communication and regulatory reporting services.

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VPP MARKET ACCESS ACROSS EUROPEAN COUNTRIES Let us investigate how different types of VPPs can access the market and which markets are available for them in different European countries. Production-oriented VPPs based on solar, and wind are ideally suited for the short-term market as their production is very intermittent in the longer term, but the quality of production forecasts improves significantly over shorter time frames. While co-located batteries can mitigate some production fluctuation, generally speaking, such VPPs typically participate in the short-term wholesale market rather than the ancillary services market with few assets qualified for both.

The situation with demand-side flexibility (DSF) related VPPs is quite different. Flexibility in consumption or power storage is primarily needed to help stabilize local networks. Their main advantage lies in offering ancillary services to a Distribution System Operator (DSO) or Transmission System Operator

(TSO). In some countries, it is possible to offer these services via a platform that connects multiple DSOs/TSOs whereas, in other countries, the VPP offers its flexibility directly to a TSO. In some countries, DSOs can resolve distribution network congestion using DSF, while in others, DSOs address

Figure 3 Smart metering deployment in Europe

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these issues by redistributing the service among themselves.

the EU-28 - Publications Office of the EU (europa.eu).

Smart meter rollout is a good indicator for the progress of DSF in the counties, even though they are not considered to be “must have” precondition for DSF usage. However, for households or C&I (Commercial and Industrial) companies to consider participating in DSF programs, understanding their power consumption profile with fine time granularity is essential. In this regard, smart meter data is far more accurate compared, for example, to the use of typical consumption profiles.

Here is the overview of smart meter rollout across Europe published in Benchmarking smart metering deployment in

The most efficient way to trade VPPs would involve participating in both ancillary services markets and wholesale markets, with the potential for arbitrage between the two. However, this development is still in its early stages in many European countries. The reasons for this are many, ranging from insufficient digitalization of DSOs and overly complex bureaucratic procedures for DSF to access markets as well as the limited number of marketplaces affordable for small participants. The following table provides an overview of flexibility trading platforms or similar structures in different European countries.

Platform name

Reference

Countries

Limitation on participants

Details

DA/RE

DA RE – Eine Initiative von Netze BW und TransnetBW (dare-plattform.de)

DE

All units with >100kW

DA/RE is a platform enabling coordination and communication of grid and plant operators across all voltage levels. Is not a marketplace

The Crowd Balancing Platform (Equigy )

https://equigy.com/the-platform/

NL, AT,CH,IT

Registered FSP

Equigy is crowd balancing platform that provides access to TSO markets across many European countries, enabling DSF providers to participate in balancing and redispatch. Not a marketplace

GOPACS

GOPACS Home - GOPACS [EN]

NL

Registered FSP

The intermediary flexibility platform does not perform the essential functions of a marketplace. Congestion management

NODES-EuroFlex

https://nodesmarket.com/ euroflex/

NOR

Any

Euroflex is a local market in the grid areas operated by 8 Norwegian DSOs, open from JAN 2024

Piclo Flex https://picloflex.

https://picloflex.com/

UK, IT, IRL, PRT

Any

Marketplace that supports TSO and DSOs in 6 countries in the end-toend process of procuring and operating flexibility.

eSIOS

Welcome | ESIOS electricity · data · transparency (ree.es)

SP

All licensed units and DSF

Marketplace. Spanish TSO market platform.

The table shows that only a few European countries have trading platforms where companies can submit bids for ancillary services. The most advanced of these marketplaces include PICLO Flex in the UK, eSIOS in Spain, and NODES in Norway. In the UK, six DSOs and the TSO use the PICLO platform to procure services. Similarly, Norwegian DSOs can be serviced via the NODES-NorFlex trading platform. Other markets, such as eSIOS in Spain, provide marketplace functions but only for the TSO, not for DSOs. This year, EPEX Spot announced plans to expand its market coverage from wholesale to ancillary services, starting in the

UK. The UK is considered the easiest market entry point, as UK DSOs are already involved in the PICLO platform and are equipped with the necessary digital tools and standard procedures for market participation. However, over time, other countries will also be included, and EPEX is expected to become the main European marketplace for VPP-related companies.

Another approach to integrating ancillary services markets and wholesale markets for VPPs is suggested by ETPA, an independent Dutch company that provides a trading platform for short-term power trading. ETPA offers a range of products,

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including intraday, ex-post, and congestion management. The company accepts small flexibility providers with a minimum capacity of 0.1 MW and provides the possibility to participate in trading on the XBID common order book, the GOPACS congestion management platform, and after-delivery trading.

Although there are still some legal questions to resolve before expanding to other countries, the platform shows great promise for small consumption-oriented VPPs to participate in the market.

The following paragraphs give a more detailed view on the situation and potential across key European markets.

particularly valuable for primary reserves due to their fast reaction times. However, large BESS projects are expensive, and return on investment is a critical concern for developers.

In Germany, large BESS projects are in their early stages, slowed by market rules and project-specific challenges.

Firstly, BESS project financing is more expensive compared to renewable energy projects because credit organizations consider them riskier. BESS projects cannot rely on EEG provisions since batteries charge from the network and not from renewable plants.

Germany is the largest European energy market with more than 800 utilities operating in the market even without counting new market entrants.

Secondly, while using the price difference between the cheapest and most expensive hours to generate profits, BESS are reducing this price difference, thereby cannibalizing their own profit source. This cannibalization effect is expected to intensify as more projects enter the market, increasing project risk from a credit organization’s standpoint.

Most of the German production oriented VPPs are operated by utilities or by consortium of small municipalities. These VPPs are participating on the short-term market and for some assets on the ancillary service markets - basically just adding a renewable component to the usual power production of the utility. Renewable production shows high growth rate and accounts for around 60% of total power production in Q1 2024 according to Germany’s government sources.

Thirdly, the profitability of standalone BESS depends heavily on the trader’s flexibility in arbitraging between different markets. This includes timing bids for different reserves compared to the intraday continuous market. While current prices for primary reserve provision are most beneficial for batteries, price volatility increases as the delivery time approaches.

Traders must decide in advance whether to use BESS for primary reserves or continuous trading.

According to the EEG (Renewable Energy Sources Act) goal, by 2030 at least 80 percent of gross electricity consumption should be covered by renewable energy sources. Such a share of renewables requires strong growth of power storage technologies. However, the largest share of battery storage in Germany is with home batteries. According to the Fraunhofer Institute, the home segment accounts for 83% of the total storage capacity in Germany. However, most of this capacity is used for household’s needs and is not accessible for the market.

Despite these challenges, the need for BESS in the German energy system is expected to grow significantly. For example, the Fraunhofer Institute forecasts a need for 100-150 GWh of storage annually, nearly 100 times the current capacity.

Other sources (e.g. Bundesnetzagentur) predict more modest growth—around 40 times the current capacity—but this is still a very significant increase.

Germany

Standalone in-front-of-the-meter BESS currently account for 13% of total German power storage capacity and typically participate in both short-term trading and ancillary services,

In Germany, there is no platform specifically designed for behind-the-meter projects to bid their flexibility. Such projects must go through complex procedures to gain network access.

Consequently, only a few companies in Germany have managed to fulfill the requirements for market participation. However, those that have succeeded, like Sonnen - the main Ger-

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man aggregator for DSF, have gained a large market share.

From a software solution market standpoint, Germany is still a huge market for energy transition technologies. Most of the buyers for such solutions are concentrated in the utility segment, especially in case of smaller (tier 3 and tier 4) utilities, which are more likely to enter markets they were not participating in before, such as e.g. intraday continuous market.

Furthermore, BESS related solutions are expected to be the focus of both utilities and project developers, IPPs, traders in the years to come.

Large utilities and trading houses will be searching for better data management and pre-trade analytics solutions.

Demand-oriented VPPs will probably take a longer time to develop in Germany since the challenges for this type of flexibility to participate in the market are currently too high.

They range from too much bureaucracy to very complicated requirements to be eligible for ancillary service provision, and lack of incentives for demand side flexibility to be exposed to the market instead of simple consuming government subsidies. However, if a company overcomes all obstacles and get market access for the behind-the-meter aggregation it has high chances to become absolute market leader in the area, as the story of Sonnen shows.

Italy Italy is the third largest energy market in the EU and has good potential to develop solar power production. However, the growth of renewable energy production in the country is lagging behind the targets. According to the IEA, Italy is far from installing the 4 GW of new renewable capacity annually as required by the plan set for 2030. Italy added 1.6 GW of new solar PV capacity and 0.5 GW of new wind capacity in 2022. The NECP (National Energy and Climate Plan) sees wind power capacity reaching 19 GW in 2030, which would require an accelerated roll-out. 5 GW of new renewable generation capacity must be added annually from 2020 to 2030.

Long and complex permitting procedures on the other hand

continue to plague new investments. As a result, between 2014 and 2022, Italy added only 8.6 GW of new renewable capacity, of which solar PV accounted for 5.6 GW. The delivery gap for new renewable installations is due to the long permitting procedures, high administrative burden, and increasing local opposition.

Due to these obstacles, only large energy market players such as ENEL, ENI, HERA, etc. are investing into renewables. For smaller companies market access is too expensive.

Also, the Italian DSOs are simply not ready to accept DSF. Digitalization is lagging far behind Terra (TSO). Slow development of the competitive electricity retail market is also reflected in the fact that most electricity suppliers do not offer market deals to their consumers, rather keeping regulated tariffs or tariffs calculated based on the averaging of past month market prices in the best case.

Unless Italy implements EU proposals for 2050 carbon neutrality and seriously reconsiders current rules and regulations, there will be not much room for new market entrants.

However, the country will need to push reforms and build up renewable capacity and battery storage. This will most probably be done by the large utilities. Therefore, the need for new software solutions such as data management, forecasting, optimization and intraday trading will fall on the utility segment only in the next 2-3 years.

France The French power capacity mechanism is unique in Europe and a key tool for France’s security of supply encouraging adequate investment in generation and demand-response capacities.

France has been facing the challenge of integrating a higher share of renewables into the grid, while overall energy consumption has slightly declined. Despite this, peak power demand has continued to rise sharply. To address the issue, France implemented a capacity mechanism designed to en-

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courage sufficient investment in both generation and demand response capabilities. This mechanism also aims to modify consumption behavior during peak periods and ensures that peak capacity, which operates only a few hours per year, receives adequate compensation.

Currently France has a well-developed capacity market where aggregators of DSF have access to and the market rules are beneficial for DSF participation. French DSOs are included into this market and can benefit from local DSF offerings.

This market, as well as the completion of the smart meter rollout, gave aggregators of demand response from C&I companies a big push to come to the market. France has probably the largest number of independent aggregators in Europe.

However, the market is still developing. The flexibility portfolio needs to be enlarged, notably by completing the legal framework for energy storage, including hydro, and boosting dynamic pricing and participation of the households in the flexibility markets.

Netherlands The Netherlands is not among the biggest European energy markets; however, the growth rates of renewable production are high and the number of congestions in the distribution network are among the highest in Europe.

In 2022, almost 40 percent of the electricity produced still came from natural gas. Although it is a large share, wind and solar rank second and third in the country’s electricity mix.

Together they account for over 30 percent of electricity generation in the Netherlands - a share that has been increasing rapidly in the last years.

As renewable capacity is still expected to grow, the challenge of network congestions will remain for the coming years. The GOPACS – platform for market mechanism helping to reduce capacity shortage – plays an important role. GOPACS arose from active cooperation between the Dutch national TSO TenneT and regional grid managers.

When a shortage of capacity is expected, grid operators use GOPACS to ask market parties (such as energy suppliers, ag-

gregators and large C&I companies) whether they can shift their consumption or generation. When a market party can do this, it places an order, called a flexbid. A flexbid indicates how much power it can temporarily switch off or on, at what time and what price it wants. If the flex offer is matched the market party receives a remuneration.

With this mechanism available there are many aggregators, large energy consumers, etc. who have intention to participate. With the ETPA efforts to establish markets for smaller participants including BESS projects, IPPs, and DSF related projects, the market is expected to include more and more C&I companies, aggregators, etc. So, the Dutch market for VPPs is not large but well developed and has even more potential to grow further.

Spain Spain is one of the largest markets for renewable energy production and BESS, both standalone and co-located. Many companies are investing in wind and photovoltaic generation, leading to very low power prices when all renewables are producing. With such high volatility, BESS appears to be profitable when trading on the wholesale market. Spain also has the eSIOS – an ancillary service platform for the Spanish TSO – where utilities, large IPPs, and C&I customers can trade their flexibility if they manage to receive the necessary license.

However, the rules for gaining a license for this market are complex and prohibitive for independent aggregators so that most aggregators and C&I companies end up selling their flexibility to utilities. These utilities can access both wholesale and ancillary services markets to trade flexibility.

Spain is fully covered by smart metering, and many energy consumers are ready to offer flexibility. However, due to the complexity of the process, most of them offer their flexibility to utilities. From a software vendor’s standpoint, utilities are the main customers for VPP related software.

UK

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The UK is making significant progress towards its energy transition goals. During certain periods, around 50% of electricity consumption comes from renewable sources- predominantly wind power. However, grid congestion has emerged as a critical issue. In the UK, there is notable congestion between large offshore wind providers in Scotland and major demand centers in the South of England. This congestion leads to the curtailment of low-emission renewable energy and necessitates the use of dispatchable loads, often emissions-intensive, fossil-based sources such as natural gas, closer to demand centers. Therefore, addressing local flexibility is crucial for decarbonizing the energy system.

(e.g. market communication services) are growing their businesses. Some of these companies are focusing on EV chargers as a source of market flexibility. Ofgem estimates that by 2030, V2G deployment could provide about half (~16 GW) of the UK’s peak power capacity. Based on 11 million EVs, with 50% V2G enabled, this would open 22 TWh of flexible EV discharging capacity per year.

In summary, the UK market is at the forefront of VPP technology progress and the leading country with respect to residential flexibility available for the market.

UK regulatory authorities are actively working to resolve this problem. The UK market is likely to be the most developed market for demand-driven VPPs on the European continent.

Legislation allowing Virtual Lead Parties (VLPs) and Asset Metering VLPs (AMVLPs) to participate in wholesale market trading will become effective in 2024. VLPs have already been able to engage in the balancing mechanism, balancing services, and capacity markets. Notably, the first flexibility platform, PICLO, started its activities in the UK and then expanded to other countries. The UK will also be the first country where EPEX Spot will begin ancillary services trading.

One reason for this is the high level of digitalization among British DSOs, who are already trading on the PICLO platform.

Most of the Balkan and Eastern European countries are emerging markets in terms of the energy transition. However, some countries in these regions look very favorable for new technology businesses. The lack of common rules or strict regulations can sometimes make it easier to connect to local TSOs and offer flexibility. Market sizes also vary from country to country.

The opening of the wholesale market to VLPs and AMVLPs marks a significant development for the UK power industry, expected to intensify competition among market participants and increase demand for behind-the-meter software solutions.

Octopus Energy is one of the UK’s most successful behind-the-meter aggregators. Initially, they developed their own software solution but later, as the company sought to expand into other markets, they separated the software development into a new business called KrakenFlex. Today, KrakenFlex provides full-scale aggregator software sold in many countries around the world.

The UK legislation change makes UK market attractive to international companies working along VPP value chain. Internationally acting aggregators, traders and service providers

South – Eastern Europe

Poland is one of the largest markets in Eastern Europe. Polish TSO spending on ancillary services is among the highest in Europe. However, the market for aggregators is still in its early stages, despite their access to capacity markets, which is seen as a good starting point. Poland anticipates rapid growth in demand-side flexibility (DSF) related aggregators and VPPs as the market prepares for the opening of ancillary services and wholesale markets soon. Based on planned renewable generation increase, opening of ancillary services markets to DSF, accession to pan-European markets and growth in low voltage flexible assets Poland is among most rapidly growing countries.

Another important country with considerable future growth for aggregators and VPPs is Greece. The Greek market is opening for IPPs, PDs, and aggregators. With favorable conditions for renewable production and a need for power independence for multiple Greek islands, the country is one of the most interesting for VPP development in the region.

Enthusiasm for renewables is widespread in Eastern Europe with investors looking for opportunities. Participation in the

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market is often not (yet) limited by strict regulations. However, knowledge of local DSO/TSO interfaces and local rules is beneficial for companies looking into these markets. Although

these markets are still in their early stages, now seems to be a good time for companies to enter, understand local conditions, and position themselves for future growth.

SOFTWARE VENDORS SEGMENTATION VPP technology providers can be categorized into multiple groups depending on the origin of their business and steps on the VPP value chain they are covering. The following graphic indicates the basic segmentation of the vendors and solutions we are considering in this chapter. These include, Data Management Hardware and EMS providers Short Term Trading and analytics Scheduling and

Analytics

market communication

BESS and Renewables projects

Data management (aggregation)

Dispatch (redistribution)

Optimization and forecasting

Ancillary Services

Demand response incl. BESS

Aggregators – vendors (1)

Aggregators - vendors (2)

Trading (wholesale)

Scheduling and nominations

Settlement

Aggregators - vendors (3)

Figure 4 Software vendor segmentation along VPP value chain

/H ardware, EMS (energy management system) and SCADA providers – companies manufacturing hardware and providing associated software. EMS systems include monitoring of technical and meter data, asset dispatch. Some of them develop analytics and VPP solutions. More information below. /A ggregator solutions falling into the same three groups as business aggregators (see Figure 2 Segmentation of the energy companies along VPP value chain), as they are covering the needs of different aggregator’s groups /T rading and analytics solutions have some overlapping functions with ETRMs but dedicated first to short-term trading with focus on real time functionality, including algo and automated trading. Analytics included into these types of solutions are supporting trading functionality.

/A nalytics solutions include more advanced analytics related to pre-trade processes, such as optimization of flexibilities, asset valuations including batteries and PPAs, various AI application. /D ata Management solutions are dedicated to managing of all types of data from meter data to prices and volume data, as well as fundamental data and flexible interfacing with surrounding systems. /S olutions covering scheduling and market communication are usually market specific and become important part of the eco-system of VPP supporting tools.

Below we provide more details of these solutions. as well as examples of the vendors offering these solutions.

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Hardware and EMS providers Solutions for production-oriented VPPs and BESS.

forecasting and various types of data analysis.

This group of companies are major hardware suppliers for power production plants and power storage systems. These are typically large companies manufacturing complex equipment along with corresponding software tools. This software is designed to read data from local devices, accumulate this data on cloud platforms, and use it for monitoring, dispatch, and defect detection purposes. Such software is called Energy Management Systems (EMS) or when it comes to management of distributed resources DERMS (Distributed Energy Resource Management System).

The list of companies developing BESS technologies and EMS is extensive and includes ABB, BYD Company, Contemporary Amperex Technology, Fluence, General Electric, and Hitachi Energy, to name a few.

Large companies such as Schneider Electric, ABB, Siemens and Hitachi Energy and more, belong to this group.

They dominate the hardware market in their business segment. On the software side, they provide aggregation solutions for multiple distributed resources to manage micro grids as well as aggregation for production oriented VPPs along with the EMS and other tools. Their software platforms focus on managing and controlling various distributed energy resources in a localized or distribution grid, provide real-time monitoring, control, and coordination capabilities for DERs within a specific geographical area or utility network.

With the development of Battery Energy Storage Systems (BESS) technology, battery providers are also joining this list.

Their BMS (battery management system) for monitoring the battery cell’s conditions and the EMS for coordination of BMS and other components, monitoring of operations as well as aggregation solutions may also include analytics for battery optimization, focusing primarily on technical optimization to prevent early aging and ensure safety of operations.

Recent trends in this type of software solutions show the movement towards more advanced analytics. EMS systems accumulate vast amounts of data, which can be utilized for

Solutions for consumption-oriented VPPs Hardware providers for consumption-oriented VPPs include manufacturers of EV charging points, behind-the-meter batteries, and similar equipment. They also develop basic software for managing the data related to these devices, usually consolidating local data on a cloud platform. They may also develop or integrate analytical applications based on this data. However, the data comes from distributed devices of a particular manufacturer and represents only a subset of the consumption data in a local grid. Even when such EMS systems provide aggregated consumption flexibility, it is difficult to reconcile this data with that of alternative manufacturers.

Low interoperability is one of the biggest challenges for demand response aggregation based on EMS. In summary, hardware and EMS providers are mainly focused on the hardware and some accompanying software tools, where the VPP related software is only a minor part of the solution landscape.

Hardware manufacturers are not in focus of our research; however, their software solutions are basis for all further steps of VPP value chain and many EMS/DERMS are developing in direction of analytics and aggregation solutions. In the area of production oriented VPPs, specifically for large wind and PV production sites, major hardware companies may have certain market share in EMS, data management and aggregation functionality and therefore are mentioned here.

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Aggregator software solutions Solutions for the aggregation of production as well as consumption oriented VPP fall into 3 categories depending on the steps of VPP value chain they cover: /B asic solutions: cover aggregation, redistribution and dispatch /A dvanced solutions: cover pre-trade analytics including market-oriented optimization and bidding process for ancillary services in addition to basic solution functionality. /F ull scale solutions: cover the full value chain from aggregation to pre-trade analytics and trading, including intraday trading, auto and algo trading, communication to system operators, regulatory reporting and settlement.

Basic solutions for production oriented VPPs This segment consists of software companies specializing in production-oriented, in-front-of-the-meter VPPs solutions, without hardware components. They cover the VPP value chain from EMS and data management to aggregation and dispatch, interfacing with SCADA-type systems on the hardware side and trading/scheduling software on the other. Their solutions are standardized because the technical interfaces with SCADA-type systems on the production equipment are rather standard, facilitating easy expansion across different countries and markets and helping to gain considerable market share in the regions of their activity.

integrated into an ecosystem of their other energy management tools. The software vendors for production aggregation solutions such as Emsys VPP, POWERFACTORS, or Fusebox, are focused solely on the software, particularly related to renewable energy sources, provide additional functionality such as forecasting along with EMS and aggregation, but can also integrate with any EMS or SCADA system independent of hardware.

The market for this type of solutions is large since with the energy transition, there are more and more IPPs, project developers and utilities looking for aggregation solution for their solar and wind production sites. Germany alone has around 800 local utilities which either already have these solutions or will need such a solution in the coming years. Relatively standard functionality of such systems makes it easy for just a few companies to dominate the market.

Since the main customer segment for these solutions is utilities, there is no need for the vendors of these solutions to develop functionality toward advanced or full-scale solutions.

Utilities usually have software covering further steps of VPP value chain. Therefore, most of the production oriented VPPs belong to the Basic Aggregation group.

SWOT for Basic Aggregation for production oriented VPPs:

They provide some analytics based on the data they manage, e.g. production forecasts, but in general, sophisticated analytics is not the focus of these companies. They are extending functionality towards in-front-of-the-meter BESS, and this may lead to more focus on analytics. Examples of such companies are: Emsys VPP with a large market share among German energy companies, and Fusebox, active in the Northen and Eastern Europe, Spirae and Autogrid in the US (but targeting European market as well) or POWERFACTORS. As previously mentioned, major hardware producers with their SCADA and EMS systems hold certain share of the production VPP solution market. Their VPP related solutions are © Commodity Technology Advisory, 2024, All Rights Reserved.

/S trength: clearly defined workflow, well defined interfaces (especially production oriented), modern architecture, cloud native platforms for managing the data /W eakness: possibly weak in analytics, the data sets contain mainly technical data, no support for commercialization of the VPPs. /O pportunities: large market because buyers are mainly utilities; renewable energy development plans are pushing utilities to more investments into renewables. / T hreats: 1/ W ith market opening for aggregators, PDs, etc. requirements on the commercial side will grow, sim-

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ple aggregation will be not sufficient for new market entrants 2/ I t is easy for early starters to gain large market share because requirements of well-defined set of requirements from utility side. For companies coming into this market later it is difficult to gain market share.

Basic solutions for demand-oriented and mixed assets VPPs The vendor market for basic aggregation of consumption-oriented and mixed assets in VPPs is dominated by aggregators who develop their own software. Aggregators consider solution provision as their core business for the reasons discussed above. This makes it sometimes difficult to classify a company as either an aggregator or a software vendor for aggregation.

This is true not only for basic solutions but also for more advanced solutions. However, some companies have either exited or significantly reduced their aggregation activities in favor of software development, while others have separated their software and aggregation businesses into different units.

Such companies we consider as vendors even if they still have some aggregator business.

like project developers and aggregators seek more comprehensive functionality to meet their needs.

Examples of basic aggregation solutions are EV Energy, THE MOBILITY HOUSE, HIVE POWER, NUVVE and Tesla VPP with focus on EV charging points and V2G (Vehicle to Grid) technologies, Aurora’s Grid, Bidgely, Heatio, Sunverge, cleanwatts, ampx, Beebop.ai for C&I and residential demand response aggregation as well as IoT platform for the residential assets.

SWOT Analysis for basic solutions for DSF and Mixed assets VPPs

Basic solution functionality generally consists of three parts: / s oftware installed on devices, / a cloud-based platform for data management and other functions such as aggregation and analytics, / and a dashboard for customers (asset owners) where they can view their positions, revenue, etc.

Cloud-based platforms offer analytics and API-based interfaces to surrounding software systems. When importing trading results, the solution redistributes these results to the sources according to certain logical steps.

The primary customer segment for these solutions includes utilities and retailers looking to offer demand response programs to their customers. Utilities are typically satisfied with basic aggregation solutions, as they often already have trading and analytics tools in place. In contrast, market entrants © Commodity Technology Advisory, 2024, All Rights Reserved.

/S trength: near to business (developed by business) and therefore good understanding of requirements. All tools are built from scratch on modern architecture. /W eakness: Limited analytics, many are local tools, designed for local rules in certain market or for a certain type of customers, certain devices. /O pportunities: 1/ M arket for aggregation tools is expected to see strong growth. Currently, the market is still in its early stages, but with easer market access for DSF, PDs and aggregators there will be broader opportunities.

2/ M arket rules and regulations will (hopefully) merge across Europe; this will help companies to expand.

3/ T here are no established companies with large cross European market share, but there are local market leaders. However, with advanced aggregation offering it is easier to compete for market share than in case of basic aggregation. / T hreats: 1/ P resence of more advanced solutions (see below).

Even if utilities are satisfied with basic aggregation new market entrants will look for more comprehensive functionality 2/ P olitical threats (slowdown of market development), slow implementation of the cross European market rules.

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Advanced solutions for demand-oriented and mixed assets VPPs

trend for these companies.

4/ T here are no established companies with large market share, but there are local market leaders.

With advanced aggregation offering it is easier to compete for market share than in case of basic aggregation. / T hreats: political threats (slowdown of market development), slow implementation of the European market rules.

Advanced aggregation solutions cover additional steps in the VPP value chain, such as forecasting demand or production, optimizing flexibility, and bidding for ancillary services to system operators or flexibility platforms. They can also optimize flexibility in a cross-market environment and create trading proposals, though they generally do not include trading functionality.

Like basic solutions, they provide dashboards for customers to view their portfolios, as well as cloud-based platforms for data management, aggregation, and analytics. The platform manages not only technical and meter data but also prices and other market data as well as weather data. In some cases, complex AI-based analytics is included.

Examples of companies providing advanced aggregation solutions are: Navitasoft, Bamboo Energy, Sympower, KrakenFlex, Enevaro, Origami Energy, Swell Energy and others. Advanced solution is the largest group of aggregation solutions for demand response and mixed assets VPPs. SWOT for Advanced Aggregation solutions. /S trength: near to business (developed by business) and therefore good understanding on requirements.

All tools are built from scratch on modern architecture.

More analytics, AI applications, more sophistication in the solutions comparing to basic aggregation solutions. /W eakness: Some are local tools, designed for local rules in certain market or for a certain type of customers, certain devices, interfacing with some local DSOs/ TSOs. /O pportunities:

Full scale aggregation solutions for demand-oriented and mixed assets VPPs Full-scale aggregation solutions encompass trading and all related functionalities, such as scheduling and nomination, settlement, and more. Their functionality overlaps with ETRM systems but only in limited areas. The trading functionality is fully dedicated to short-term trading, with a very limited scope of middle- and back-office functions, but it supports trade automation and algorithmic trading.

Aggregators using these solutions are usually traders as well.

In this space, companies often combine aggregation, trading, and software development, making categorization even more challenging. Here are some examples: Next Kraftwerke, be.storaged, Sonnen, Flower, Voltus, and CyberGrid.

Among these, only CyberGrid focuses primarily on software development, while the others are operators of the assets, traders, and software developers in more or less equal parts.

It is important to mention that these companies are usually not developing all the software tools they need for their business, frequently they use 3rd part commercial software in the areas outside of their core business or outsource non-core activities to 3rd parties.

SWOT Analysis for full scale aggregation solutions

1/ M arket for these tools expected to see strong growth. Currently, the market is still in its early stages, but with easer market access for DSF, PDs and aggregators there will be broader opportunities.

2/ M arket rules and regulations will be merge across Europe; this will help companies to expand.

3/ D igitalization of DSO is most important market © Commodity Technology Advisory, 2024, All Rights Reserved.

/S trength: full functional support of the VPP workflow, experience in all steps from aggregation to trading. /W eakness: Some are not deep in the trading functionality (algos, auto trading), some solutions still designed for local market (same as advanced aggregation). /O pportunities: These solutions will be benefit from

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market development as well as advanced aggregation, but companies will need to decide where to concentrate on – software development or trading as a service. From vendor standpoint market access for IPPs, PDs, etc. is beneficial as it creates new potential users. / T hreats: 1/ T rading as a service will become more competitive as IPPs, PDs, etc. will get easier access to the market and may wish to develop own trading.

2/ P olitical threats same as above

The figure below shows approximate status of the market in

different countries for aggregation solutions standpoint, it shows market size vs. ease of access to this market for aggregators, especially DSF aggregators.

Market size considers not only number of potential customers for aggregation solutions of all types, but also number of DSO/TSO with sufficient digitalization as well as the total installed capacity of renewable production and BESS. Under Ease of access, we understand different types of entry barriers for aggregators including bureaucracy, development of market platforms for ancillary service markets, accessibility of the whole sale market for aggregators.

Figure 5 Market vs. ease of access for aggregators.

Data Management solutions The role of data management is evolving dramatically in response to the growing volume and complexity of data. This shift is driven by the development of distributed energy resources on one hand and real-time trading on the other. With the increase in renewable energy production, the amount of meter data is rapidly expanding. Additionally, the need to forecast production requires the inclusion of supplementary data such as weather and satellite information. Short-term and intraday continuous trading necessitate the management of complex real-time structures, including bid/ask prices, volumes, and indices built in real-time, making real-time decision-making increasingly important.

Various machine learning (ML) and artificial intelligence (AI) applications make data management especially crucial because unreliable data can undermine the entire effort behind these technologies (garbage in, garbage out). Smart grids are generating enormous amounts of data that need to be processed, and the platforms managing this data face very high cybersecurity requirements. For all these reasons, data management has become a new and increasingly important software solution category, even considering that energy businesses have always managed their data and used software tools for this purpose.

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What are the most important requirements for a modern data management system?

Data management requirements can be categorized into several functional requirements: /S upport of Multiple Data Types: Handling various data types, from time series data to metadata. /U ser-Defined Data Structures: Enabling users to create data structures and perform calculations and aggregations based on these structures. / T ime Flexibility: Full flexibility with respect to time steps and time structures. /S upport for Multiple Data Sources: Provision of common data sets for multiple customers. /O ut-of-the-Box Interfacing: Easy integration with multiple useful applications.

er data, etc.).

In addition to these general data management solutions, there are numerous software solutions dedicated to specific areas, such as Distributed Energy Resource Management Systems (DERMS), Energy Management Systems (EMS), and Forecasting. These solutions include data management platforms tailored to their respective domains. Examples include the DERM and EMS providers mentioned at the beginning of the chapter, as well as the various solutions for forecasting wind or solar production available on the market. In this report we are not analyzing EMS and specifically forecasting solutions.

SWOT analysis for Data Management solutions

However, the most important requirements are probably the non-functional ones, such as: /C loud Nativeness: Utilizing all cloud advantages, such as elasticity and scalability /M ultitenancy: Supporting multiple tenants efficiently. /E ase of Interfacing: Facilitating easy integration with other systems. /S upport for Common Languages: Compatibility with common languages for analytic applications (e.g., Python, MATLAB, R). /S trong Cybersecurity: Meeting stringent cybersecurity requirements. /R eal-Time Requirements: Supporting real-time data processing and decision-making. /S upport for Multiple Databases: Compatibility with various database systems. /S aaS Offering: Providing software as a service.

Examples of companies working in this area are HAKOM, Ventriks, FIS Market Data Analyzer – Energy Addition, OpenDataDSL, Robotron. These companies are focusing on providing general data platform functionality with integrated data provision for business areas (e.g. for pricing or weath© Commodity Technology Advisory, 2024, All Rights Reserved.

/S trength: cloud native solutions with easy integration of analytics, multitenancy, data provision from multiple sources, cyber security focused /W eakness: Currently, data management solutions are not able to integrate all the data needed by energy companies (e.g. not only time series data, but also meta data, fundamental data, etc.). Also, the structure of market data for intraday continuous market is not easy to integrate into data structures used for time series data. /O pportunities: 1/ W ith AI and ML development data management functionality becomes most critical part of the solutions 2/ A ll energy market participants need to manage more data nowadays than they did before. Also, traditional businesses are interested in data management solutions. Legacy ETRM systems are not strong in data management (e.g. time series management). Therefore, integration of ETRM systems and data management platforms create opportunity 3/ D ata Management platforms are data agnostic and can be used across multiple industries, markets and geographies. / T hreats: Many companies prefer internal development of data management solutions because of concerns around data security and data coverage. They believe that market solutions are not covering all data types they require.

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Analytics solutions Analytic solutions in the VPP area cover multiple domains, from optimizing power consumption for C&I companies and households to forecasting renewable production and demand and more. These solutions also address technical optimization of BESS, commercial and cross-market optimization, valuation of flexible assets, risk management, and market models for demand and supply in energy systems.

In this section, we will narrow our focus to software solutions that provide pre-trade analytics related to market access for flexibilities. These tools support the commercial optimization of batteries and cross-market optimization of flexibilities, offering trading proposals with focus on the real time or near real time functionality.

One of the most complex among these tasks is battery optimization for different business cases, standalone, co-located or within DSF. As mentioned in earlier chapters, many companies manufacturing batteries and planning standalone or co-located battery installations provide optimization tools.

These tools are designed to prolong battery lifetime and mitigate risks such as overheating and other damage. Generally speaking, the goal of profitability maximization for the battery is a conflicting target. Therefore, when using commercial optimization, it is important to account for battery aging and safety as additional constraints or objectives. Additionally, market price volatility must be considered, making a purely deterministic approach insufficient for battery optimization.

Furthermore, the optimization needs to be as near real-time as possible if the battery is monetized on the intraday continuous market. These considerations impose stringent requirements on battery optimization tools.

There are two basic approaches to optimization in general and battery optimization in particular. One is based on classical optimization methodologies, such as linear or dynamic programming, combined with some method of considering the stochastic nature of market prices. The other approach

uses AI, leveraging massive historical data on battery status, market prices, and trading decisions.

Companies using classical optimization techniques combined with Monte-Carlo methods for stochastic price behavior, or even more advanced stochastic methods, include cQuant, Kyos, and Energy Exemplar. These companies offer more than just battery optimization analytics. cQuant focuses on risk calculations and modeling complex assets, including PPAs and other flexible assets. Kyos and Energy Exemplar also offer market models, allowing the creation of an entire energy system model for a region and calculating long-term development scenarios.

Some companies pursuing an AI-based approach typically start with the technical optimization of batteries and may evolve toward commercial optimization, for example NOVUM. Examples of vendors for AI based commercial optimization include Capalo.ai and Sight-E. They use vast amounts of historical data for model learning and offer ML-based forecasting for prices and other stochastic variables. They provide trading proposals in a multimarket environment based on the optimal behavior of flexible assets. The scope of optimization ranges from standalone and co-located batteries to residential assets such as batteries, heat pumps, and EV charging.

Although AI models for optimization can be somewhat of a black box, they can process very large data sets, making them potentially better suited for optimizing distributed assets and DSF. Since AI and ML models are heavily dependent on the quality of data used, integrating with data management solutions can be beneficial.

With the emergence of new types of assets and sources of flexibility, companies providing analytic solutions tend to react more quickly to market changes than ETRM vendors, who support analytics as one of many functions. This creates more opportunities for analytics vendors in the current market.

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SWOT Analysis for analytic solutions

large data sets combined with high performance requirements.

/S trength:

/O pportunities:

1/ B road offering of different models and techniques from classical optimization methods to AI and ML applications 2/ Q uick time to market for modelling new asset types 3/ C loud native architecture and easy integration 4/ N ear time analytics

1/ G rowth of renewable and emergence of new types of assets and sources of flexibility create great opportunities for the analytics vendors of all kinds 2/ O pportunity to integrate the models with ETRM systems or Data Management systems to offer ready to go eco system to the market

/W eakness:

/ T hreats: Analytics companies compete with modern ETRM vendors on one hand, with in-house solution developed by many trading houses and larger utilities on the other hand.

1/ A I based solutions are seen as black box 2/ S olutions based on classical optimization techniques may experience challenges working with

Trading solutions and impact on the ETRM market When trading DSF, renewable production, and BESS, we typically consider short-term wholesale markets and ancillary service markets. The most significant impact on ETRM systems with respect to short-term trading was the introduction of intraday continuous markets on EPEX Spot in 2011 and Nord Pool in 2017. These events significantly influenced European energy markets and vendors offering trading solutions.

As a result, companies often did not transform their ETRMs to include intraday trading but instead created an ecosystem where additional tools handled short-term trading tasks, with intraday deals flowing into the ETRM by the end of the day or in near time. The current trends follow the same approach.

We observe the following: /M ore diverse components included in the ecosystem: data management, third-party optimization and forecasting models, pre-trade analytics. / I ncreased focus on short-term trading and real time functionality. /E xpansion of markets and marketplaces, including ancillary service platforms.

How will these changes impact existing ETRMs and shortterm trading solutions?

ETRM systems need to manage new types of assets, such as e.g. PPAs and batteries.

Traders need access to more data types, which can be facilitated through external data management solutions (either commercial software or built in-house). Real-time interfacing with data management tools is required. Risk management becomes more real-time. Intensive short-term trading and high volatility in intraday and day-ahead markets demand the attention of risk managers. Short-term trading tools outside of ETRMs usually do not support risk management, which remains a task for ETRMs or external risk applications.

The current market changes differ from the introduction of intraday continuous markets in that new types of market participants are emerging. These are companies that were not previously involved in trading and do not have legacy ETRM systems. What do they need?

For companies covering the full VPP value chain, the required

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VPP MARKET STUDY

tools span from aggregation to forecasting and optimization, trading (including algorithms), scheduling and nomination, reporting, and settlement. Focusing on the trading aspect alone, assuming data management and aggregation are covered by in-house development, the trading requirements include: /D eal and bid management /P re-trade analytics (forecasting and optimization) /M arket interfacing /A lgo-trading and trade automation /C ommunication with TSO /R eporting /S ettlement /P ortfolio management for third parties, if trading services for third parties are offered.

solutions (see full scale coverage solutions) and even some software vendors. Companies entering this market are focused on the core business – trading – and usually outsource further functions like scheduling and TSO communication or regulatory reporting.

This trend towards outsourcing trading and portfolio management allows also C&I companies to focus on their core operations while leveraging the expertise and technology of specialized service providers to maximize their energy market participation and financial benefits.

SWOT Analysis for trading solutions

These requirements align with those of a small ETRM system.

Which vendors are providing such solutions? /T his can be modern ETRM systems offering cloudbased solutions with very basic functionality and strong interfacing support. Such systems combined with inhouse analytics and data management could satisfy requirements, see e.g. Previse Systems, CTRMCubed, DSFlow, Orchestrade, Energy One, Hitachi Energy etc. /T his can be vendors who build an eco-system of a short term (algo) trading and basic ETRM and can offer modular solutions, such as e.g. Volue, Brady (Power Desk) /T his can also other vendors which recognized the need and build new solutions to satisfy this group of customers. Such vendors like ION or KYOS are planning or already built solutions for simple portfolio management.

Outsourcing in the energy market is becoming increasingly popular, especially with the entry of new market participants such as IPPs and PDs who may lack trading expertise. This has led to the growth of “trading as a service” or “portfolio management as a service” offerings. Companies providing these services include independent traders like Enspired and Suena, as well as aggregators with comprehensive VPP

© Commodity Technology Advisory, 2024, All Rights Reserved.

/S trength: Solutions combining intraday continuous trading with algo and automated trading, offering SaaS with modern cloud-based architecture and easy integration of in – house analytics are in the prime position.

This is especially true when companies offer not only software solutions but also trading as a service. /W eakness: Legacy ETRMs, which are typically used by utilities, are underfunded and gradually diminishing in scope as funding shifts toward short-term trading tools and similar technologies. /O pportunities: The growth of new market participants— such as investors in renewable and BESS technologies— who lack trading skills presents a significant opportunity for trading as a service and software solutions for the short-term power market. Interestingly, these opportunities are greater in countries where market access for new entrants is challenging. For example, Germany, with its ambitious plans for building renewable and BESS capacity combined with market access complexities, provides a great opportunity for the trading as a service business. On the other hand, with improving regulatory environment and ease of market access across Europe, more companies will employ trading and need trading and portfolio management solutions. / T hreats: Slowdown of the renewable and BESS growth, reduction in intraday market volatility, political risks.

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VPP MARKET STUDY

Scheduling, nominations and market communication solutions Companies offering these solutions generally fall into two categories: those that provide software (e.g. ENERGEN, EnergyOne, Brady, Volue) and those that offer services for scheduling and communication with TSOs/DSOs (e.g.

Energy One, GMSL). While the core functionality needed for scheduling and market communication remains relatively unchanged despite the energy transition, the growing number of new market participants is driving rapid demand for this type of software.

ality. This applies to both third-party software and third-party services.

SWOT analysis

Services, in particular, are evolving quickly as new market entrants—such as full-scale aggregators, traders, and trading-asa-service companies—focus on their core business and prefer to outsource other activities to third parties.

When expanding into new markets, aggregators and traders often encounter challenges with market-specific interfaces, where each TSO has its own unique requirements. They must decide whether to develop these interfaces in-house for each project or to partner with a third party to cover this function-

© Commodity Technology Advisory, 2024, All Rights Reserved.

/S trength: Clearly, the more TSOs a scheduling and communication solution can cover, the greater its competitive advantage. /W eakness: These solutions are covering a small part of the VPP value chain. /O pportunities: The growth of new market participants—such as trading-as-a-service providers, full-scale aggregators, and IPPs—who do not view market communication as their core business, presents a significant opportunity for these solutions. This is particularly relevant in markets with regulations that support the participation of aggregators, such as the UK and France. / T hreats: Slowdown of the energy transition, delay in the regulatory progress for aggregator participation in different markets.

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VPP MARKET STUDY

MARKET SIZING This chapter presents initial estimates for the market size of Virtual Power Plant (VPP) aggregator solutions.

While market sizing for software tools that cover the VPP value chain from trading to settlement is addressed in the 2023 Market Sizing, Outlook, and Trends Through 2027 - CTRM Center | CTRM Center, there are no comparable estimates for aggregator solutions.

In our market sizing, we focus on solutions that encompass energy data management, aggregation, analytics for forecasting or optimization, and the redistribution of resulting schedules among participating assets, including all relevant interfaces.

The market sizing was conducted for several of the largest European countries with significant potential for vendor markets, specifically the UK, France, Germany, Spain, Italy, and Poland. Other European countries, even those with a large share of renewables in their energy systems, are estimated to contribute an additional 15-20% to the market size of these six largest countries.

Our methodology assumes that aggregator software solutions are priced based on the installed capacity of the assets they manage, measured in megawatts (MW). We acknowledge that this is a simplification, as different business models exist for pricing these solutions. For example, in many cases, trading profits are shared with customers instead of charging for the software, and other models use a tiered pricing approach that does not scale linearly with the MW of installed capacity.

However, to estimate the market’s growth rate, we must link the vendor market size to the share of renewables, accessible Battery Energy Storage Systems (BESS), and demand response capacities.

The methodology for determining the dependency of vendor pricing on installed capacity involved the following steps: /U sing known examples of pricing based on installed capacity as initial estimates /C onducting plausibility checks using publicly reported revenues and the installed capacity handled by some software vendors /C omparing current market size with the estimated aggregated revenues of all known software vendors in this area. These aggregated revenues were calculated based

on the estimated number of employees and the industry-typical revenue per employee ratio. /R ecognizing that the numbers used for plausibility checks can vary significantly from company to company, we employed ranges for the market size estimates.

Most of the software solutions considered are offered as SaaS (Software as a Service) with initial setup costs and monthly fees that we assumed are dependent on the installed capacity in MW. Conversations with vendors revealed that initial implementation projects are relatively short, ranging from a few weeks to 8-9 months, with longer implementation times typically associated with consumption-oriented and mixed-asset VPPs. The total market size for each country was divided into three components: market sizing for renewable production-oriented VPPs, standalone BESS, and demand response-oriented VPPs. The growth rates of the software market for aggregators were linked to official growth projections for these technologies, extending to 2030.

The costs of aggregation solutions vary depending on the scope of functionality provided, categorized as basic, advanced, or full functionality in earlier chapters of this report.

It is important to note that we excluded the costs of trading tools, even though some vendors include trading functionality in their offerings.

For production-oriented VPPs, most aggregation solutions fall into the basic aggregation category, possibly including forecasting. We used a 25% range for the assumed prices to account for potential differences in functionality, tiered pricing, forecasting add-on, and other factors.

© Commodity Technology Advisory, 2024, All Rights Reserved.

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VPP MARKET STUDY

The table below summarized input data used for the market sizing in 2023 and 2030 Renewable production capacity in GW

Demand response (accessible) in GW

BESS capacity in GW

2023

2030

2023

2030

2023

2030

Germany

93.91

231

0.375

15

0.5

4.5

France

54.3

95

0.5

1.5

0.9

3

Italy

35.9

71

0.1

11

0.5

3.6

Spain

76

160

1.8

20

0.2

2.1

UK

44

120

1.6

15

0.9

3

Poland

26.4

43.9

0.9

1

0.9

1.5

Total

330.51

720.9

5.275

63.5

3.9

17.7

Estimating the costs of BESS-related solutions and consumption-oriented VPP solutions is more complex. On one hand, these projects, particularly those related to Demand Side Flexibility (DSF), typically involve smaller capacities and are not usually priced based on capacity. On the other hand, advanced solutions in this category often include significant pre-trade analytics, stopping short of trading functionality.

We derived the dependency between the average pricing of these solutions and the capacity of the assets involved using the methodology described above. Here again, we applied a 25% price range to account for possible differences in functional scope.

The market for aggregation solutions was estimated by directly linking the assumed solution costs to the available and planned asset capacity. We considered only distributed production, as this requires aggregation. Finding a single, consistent source of information on the available and planned capacity of distributed renewable production and BESS for all the countries mentioned proved challenging. Our research relied on various internet sources and public data, some of which were contradictory. All sources used for the estimates are listed at the end of this chapter. In cases of conflicting or imprecise data, we applied assumptions or averaging. Estimating the current market availability of BESS capacity and

PV assets was particularly difficult, as available estimates often provide total power storage and PV capacity but indicate that the majority is held by households and are typically used for self-consumption and not available to the market. Some sources provided approximate ratios of total PV and storage capacity to the capacity accessible to the market, which we used, even though this is only an approximation.

For Demand Response capacity, we essentially used a study summarizing the potential in major European countries (https://dr4eu.org/wp-content/uploads/2021/05/CLDR4EU-DSR-study-06052021_vdef.pdf). This study is done in 2021 and provides three different estimates for full potential of the DSF for each country, and we used the average of the three in our calculations. The study also suggests that the full potential of Demand Response is unlikely to be realized before 2030. For our calculations, we assumed a 20% participation rate of Demand Response in VPPs by 2030, consistent with this study’s assumptions.

As mentioned above, some data may be out of the date, imprecise or even contradicting, especially concerning the plans for 2030. The market sizing will be improved when more recent or more reliable data would be available.

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VPP MARKET STUDY

The resulting total market size estimates are presented in the table below as a range.

Market size low

Market size high

2023

2030

2023

2030

Germany

€ 15 399 000

€ 63 900 000

€ 20 532 000

€ 85 200 000

France

€ 10 245 000

€ 21 000 000

€ 13 660 000

€ 28 000 000

Italy

€ 6 285 000

€ 32 550 000

€ 8 380 000

€ 43 400 000

Spain

€ 10 650 000

€ 52 050 000

€ 14 200 000

€ 69 400 000

UK

€ 10 350 000

€ 45 000 000

€ 13 800 000

€ 60 000 000

Poland

€ 6 660 000

€ 10 335 000

€ 8 880 000

€ 13 780 000

Total (software)

€ 59 589 000

€ 224 835 000

€ 79 452 000

€ 299 780 000

Total (incl. Services)

€ 63 429 000

€ 239 323 688

€ 93 852 000

€ 354 112 578

These numbers per country include the market for software (incl. cloud hosting) for all types of VPPs – production- oriented, BESS standalone and consumption oriented, whereas production VPP constitute large majority of the market. The last line also includes professional services for the system set up.

When comparing the market size of aggregator solutions to the ETRM market sizing provided in the 2023 Market Sizing, Outlook, and Trends Through 2027 - CTRM Center | CTRM Center, we find that the current market for the six largest European countries is near to a half of the size of the ETRM market for European power, valued at approximately $180 million. However, due to anticipated high growth rates, the aggregator market is expected to surge well ahead by 2030.

With the ETRM market for European power projected to grow at around 3% annually, reaching approximately $220 million by 2030, the VPP aggregation market could probably exceed the ETRM market by 2030.

The figure below compares the market size of the six countries in 2023 and according to current plans for 2030.

Figure 6 Comparison of CAGR for the 6 countries

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32

VPP MARKET STUDY

This table and the figure below the provide the Cumulative Annual Growth Rate (CAGR) for asset types (renewable production, BESS and DSF) and for the aggregation solution market size: CAGR

Renewable prod

BESS

DSF (accessible)

Market size

2030

2030

2030

2030

Germany

14%

69%

37%

23%

France

8%

17%

19%

11%

Italy

10%

96%

33%

26%

Spain

11%

41%

40%

25%

UK

15%

38%

19%

23%

Poland

8%

2%

8%

6%

Total

12%

43%

24%

21%

The graph shows clearly that even if the share of BESS and DSF remain low comparing with the renewable production the growth rates for both BESS and DSF are expected to be much higher.

emerging as clear leaders. While the UK currently offers more favorable market rules for market entry of independent project developers compared to Spain and Germany, this landscape could shift by 2030. The table below presents comparison for the BESS market between 2023 and 2030 for software only, excluding professional services.

France has already opened the market to aggregators, but its plans for standalone BESS capacity are less ambitious, reflecting its cautious approach to renewable energy expansion.

Italy currently has the smallest BESS market, but with its ambitious growth rate, it is expected to approach the levels of the UK and Germany after 2030. Overall, the BESS solutions market is poised for robust growth, projected to reach near to 39% of the total VPP market by 2030.

Figure 7 Comparison of CAGR for the 6 countries

The market sizing estimates are clearly dominated by production-oriented aggregation solutions which accounts for 77% of the market in 2023. So, it’s important to consider BESSand demand-oriented solutions separately. The BESS-oriented aggregation market is expected to grow more than tenfold between 2023 and 2030, with Spain, Germany, and the UK

In 2023, demand-side oriented VPPs account for less than 1% of the total market, and this is expected to rise but still stay below 2% by 2030. This modest projection is based on a conservative assumption that only 20% of demand-side flexibility (DSF) will be available for the public network by 2030, with the remaining 80% either remaining unused or being utilized for household self-consumption.

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VPP MARKET STUDY

BESS low

BESS low

BESS high

BESS high

2023

2030

2023

2030

Germany

€ 562 500

€ 22 500 000

€ 750 000

€ 30 000 000

France

€ 750 000

€ 2 250 000

€ 1 000 000

€ 3 000 000

Italy

€ 150 000

€ 16 500 000

€ 200 000

€ 22 000 000

Spain

€ 2 700 000

€ 30 000 000

€ 3 600 000

€ 40 000 000

UK

€ 2 400 000

€ 22 500 000

€ 3 200 000

€ 30 000 000

Poland

€ 1 350 000

€ 1 500 000

€ 1 800 000

€ 2 000 000

Total

€ 7 912 500

€ 95 250 000

€ 10 550 000

€ 127 000 000

The following table presents the market sizing for demand-side flexibility VPP solutions both with and without this 20% assumption.

DSF high

DSF high

Full use of DSF

2023

2030

2030

Germany

€ 1 000 000

€ 9 000 000

€ 45 000 000

France

€ 1 800 000

€ 6 000 000

€ 30 000 000

Italy

€ 1 000 000

€ 7 200 000

€ 36 000 000

Spain

€ 400 000

€ 4 200 000

€ 21 000 000

UK

€ 1 800 000

€ 6 000 000

€ 30 000 000

Poland

€ 1 800 000

€ 3 000 000

€ 15 000 000

Total

€ 7 800 000

€ 35 400 000

€ 177 000 000

If the entire demand-side flexibility (DSF) were available, the consumption-oriented VPP market could surpass the BESS-related market. While the current (and future) accessibility of DSF varies by country, reliable data to capture these differences is lacking, that is why we leave the 20% share for all countries in 2030.

Currently, France, the UK, and Poland lead in DSF availability, but Germany is expected to overtake them if access requirements for consumption-oriented VPPs would ease. The UK and France have supportive regulations for DSF, suggesting that their consumption oriented VPP markets may develop more quickly, potentially exceeding the 20% DSF availability by 2030.

In general, Eastern European countries are currently behind in market size, with Poland being the largest and most promising among them, though still at the lower end of the list. However, these markets may offer easier access for aggregators and project developers, which could offset their smaller size.

All the estimates presented in this chapter are based on the data, which include significant uncertainty, averaging, approximations, etc. The estimates will be adjusted as new and more reliable information emerge. We are planning yearly updates of the market sizing estimates and provision of further market sizing details in a separate report.

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VPP MARKET STUDY

LIST OF DATA SOURCES Demand response availability study: / h ttps://www.iea.org/energy-system/energy-ef ficiency-and-demand/demand-response /S tudy on the quantification of Demand Response benefits to electricity suppliers and consumers in Europe in 2030 on its way to achieve deep decarbonisation (dr4eu.org)

France, renewable production and BESS: /F rance plots wind power build-out for 2030 | WindEurope /F rench battery storage to triple to 1.5 GW by 2030 – Aurora | Montel News - English /F rance: renewable power capacity by source 2023 | Statista /F rance aims to double its renewable capacity by 2035 | The National (thenationalnews.com)

UK Renewable production and BESS: / h ttps://modoenergy.com/research/5023 / h ttps://www.gov.uk/government/publications/uk-battery-strategy/uk-battery-strategy-html-version#annex-iii-demand-modelling / h ttps://environment.inparliament.uk/files/environment/2023-01/onshore_wind_factsheet_1.pdf / h ttps://www.renewableuk.com/news/583055/Industryurges-Government-to-set-new-target-to-double-UK-onshorewind-capacity-by-2030.htm /S olar’s role in addressing the energy crisis – Path to 2023, 2030 & 2050 • Solar Energy UK Offshore wind - great. gov.uk international

Italy, Renewable production and BESS: / h ttps://www.trade.gov/market-intelligence/italy-energy-growth-renewables / I taly 2023 Energy Policy Review (europa.eu) / h ttps://www.trade.gov/market-intelligence/italy-energy-storage

/ h ttps://dr4eu.org/wp-content/uploads/2022/06/Italy_DR-Workshop_16June2022.pdf

Germany, renewable production and BESS /B undesnetzagentur - Press - Growth in renewable energy in 2023 / h ttps://www.reuter s.com/business/energy/germany -publishes-plans-hit-30-gw -of f shore-wind-target-2030-2023-01-20/ /K apazität von Großspeichern wächst bis 2030 um Faktor 40 (energie.de)

Spain, renewable production and BESS / h ttps://www.s tatis ta.com/s tatis tics/870779/onshore-wind-energy-capacity-in-spain/ / h ttps://www.statista.com/statistics/1289761/wind-capacity-goals-spain/ / h ttps://www.pv-magazine.com/2023/06/29/spaintargeting-56-gw-of-new-solar-by-2030-under-new-energystrategy/ / h t t p s : / / w w w . e q u i n o r . c o m / n e w s / a r chive/20220406-naturgy-explore-offshore-wind-development-spain / h ttps://nardac.com/spain-and-italy-a-45-million-euros-bess-premium-opportunity/ Poland, Renewable production and BESS: / h ttps://www.iea.org/articles/poland-electricity-security-policy /E nergy Policy of Poland until 2040 (EPP2040) - Ministry of Climate and Environment - Gov.pl website (www.gov.pl) /C hange is in the Wind | Poland Wind Power Policy | Ember (ember-climate.org) /P oland’s installed solar capacity exceeds 17GW (pv-tech. org) / h ttps://www.gov.pl/web/climate/energy-policy-of-poland-until-2040-epp2040

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VPP MARKET STUDY

/ h ttps://renewablesnow.com/news/poland-could-have285-gw-of-installed-solar-in-2030-ieo-787276/ / h ttps://www.pv-tech.org/polands-installed-solar-capacity-exceeds-17gw/.

/ h ttps://www.gov.pl/web/climate/energy-policy-of-poland-until-2040-epp2040 / h ttps://www.iea.org/articles/poland-electricity-security-policy

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VPP MARKET STUDY

APPENDIX Vendor list with companies mentioned in the report:

Amp X Aurora’s Grid Autogrid Bamboo Energy be.storaged Beebop.ai Bidgely Brady Capalo.ai Cleanwatts cQuant CTRMCubed CyberGrid DSFlow Emsys VPP ENERGEN Energy Exemplar Energy One Enevaro Enspired EV Energy FIS Market Data Analyser Flower Fusebox GMSL HAKOM Heatio

Hitachi Energy HIVE POWER KrakenFlex Kyos Navitasoft Next Kraftwerke NOVUM NUVVE OpenDataDSL Orchestrade Origami Energy POWERFACTORS Previse Systems Robotron Sight-E Sonnen Spirae Suena Sunverge Swell Energy Sympower Tesla VPP THE MOBILITY HOUSE Ventriks Voltus Volue

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37

ABOUT BEACON Beacon Platform provides energy and commodity companies with powerful capabilities to improve their trading and risk management. Beacon’s unique offering combines a trading and risk management system with an all-in-one quantitative development platform. Instead of relying on a black box with fixed functionality, Beacon’s transparent source code license gives clients full visibility of all models and algorithms and the flexibility to modify them or use their own proprietary code. This combination enables clients to buy the infrastructure and foundational components of a cloud-native CTRM, modify those components to suit their own needs, add new products

and assets to their portfolio, and work with existing applications, data, and code libraries.

Developed by a team with unmatched financial markets experience, Beacon’s unified platform includes the apps, tools, and infrastructure firms need to manage risk across all asset classes, automate manual processes, and adapt to changing markets.

For more information visit www.beacon.io

ABOUT ENERGY ONE Energy One is a global vendor of energy trading and risk

Power Plants (VPPs) that aggregates distributed energy

management software products and operational services to

resources (DERs) in a highly flexible manner. Each asset can be

wholesale energy, environmental and carbon trading markets. Its

individually monitored and controlled, as a single manageable

clients span the energy markets and beyond, including energy

view or an aggregated position. This dynamic position engine,

retailers, generators, users, customers and traders, from start-

which runs in real-time with flexible time-series data displayed

ups to multi-national organisations, including large industries.

from multiple sources simultaneously, provides organisations

Its suite of products and services offers proven market solutions

with a holistic view of their positions, exposures and market

for European, UK and Asia-Pacific energy participants, enabling

trends. Aggregation of DERs into a VPP enables organisations

the management of their entire wholesale energy portfolio.

to participate across different regions and countries, including wholesale, balancing and ancillary services markets.

The software offering includes award-winning ETRM, process automation, automated bidding/nominations, asset

Energy One’s one-stop shop of trading and dispatch software,

management, algorithmic trading and support for batteries and

and Global 24/7 Operational Services (including functional

PPAs. In addition to software, Energy One provides services

support for Virtual Lead Party (VLP) and Virtual Trading

to operate its software and manage the operation of assets on

Party (VTP) in the UK Balancing Mechanism and Wholesale

behalf of its customers. It is Australia’s largest supplier of 24/7

market, for example), will allow VPPs to manage and optimise

operational energy services and the second largest in Europe.

the output of their portfolio at an individual asset level (DER) and aggregated level (VPP) in response to market demand.

The Energy One group is committed to supporting the market

Furthermore, with control rooms based in France, Belgium

in achieving the net zero commitment, by providing innovative

and Australia, the Global 24/7 Operations team can also take

solutions to manage complex renewable energy requirements.

care of any task VPPs need around balancing, capacity bidding,

It integrates capabilities such as: forecasting (load and price

curtailment management (including REMIT publication),

forecasting); real-time monitoring and management; energy

activation orders management and much more, across a

storage integration (including battery storage); Power Purchase

plethora of gas and power markets. This in turn will allow VPPs

Agreements (PPAs); demand response, market participation

to maximise the value of their assets, contribute to a more

and trading (intraday/ continuous & day-ahead); grid flexibility

resilient Grid, and play a significant role in the transition to net

and ancillary services; data analytics and reporting, and risk

zero emissions.

management. It maintains connectivity with nearly every TSO, hub, exchange and market operator in Europe. Its solutions offer full interoperability with market tools, adhering to communication standards.

The solution offers comprehensive tooling to support Virtual

www.energyone.com

ABOUT NAVITASOFT Navitasoft specializes in developing and implementing software solutions for the energy sector. A client base of flexibility asset owners and operators, energy traders, and transmission system operators (TSOs) gives the company a rounded, whole-market view.

Key Offerings: 1. The Energy Market of Things (EMoT) VPP Platform: EMoT, developed by Navitasoft, aims to increase the participation of Distributed Energy Resources (DERs) such as solar, wind, batteries, heat pumps, and EV chargers in energy markets. EMoT connects these devices with trading companies and aggregators, allowing device owners to offer flexibility and participate in demand response and flexibility markets. This boosts system flexibility, ensures grid stability, and provides financial benefits to device owners, trading companies, and system operators. The platform accelerates the transition to sustainable energy systems by enabling efficient market participation and revenue generation for small-scale asset owners in wholesale and ancillary service markets.

2. Energy Trading and Risk Management (ETRM): Navitasoft’s ETRM system supports multi-commodity trading, including gas, power, coal, CO2, and financial commodities. It offers real-time position calculation, enabling traders to respond quickly to market changes.

The highly customizable system allows for tailored deal capture templates, user-defined fields, and custom workflows. It ensures regulatory compliance and features extensive audit trail management.

3. Operator Solutions: Navitasoft provides balancing, scheduling, and settlement platforms for transmission and distribution system operators (TSO and DSO). These solutions support the management and merchandising of energy transport and distribution infrastructures. This enables efficient capacity sales, nomination, allocation, and accounting processes, ensuring transparency and market-based compliance.

Methodology and Values: Navitasoft employs an agile software development methodology combined with PRINCE2, allowing for rapid delivery of functional software products and quick adaptation to market or regulatory changes. Their core values include speed, quality, and continuous learning, ensuring they provide innovative and effective solutions tailored to the energy sector’s complex requirements.

Market Impact: Navitasoft provides integrated, real-time solutions to help energy traders and operators improve efficiency, comply with regulations, and optimize their operations in a fastevolving market.

Navitasoft’s comprehensive suite of tools and platforms positions it as a key player in digitalizing the energy market, supporting the transition towards more efficient and transparent energy trading and management systems. www.navitasoft.com

ABOUT Commodity Technology Advisory Commodity Technology Advisory (ComTech Advisory) is the leading analyst organization covering the Energy and Commodity Trading and Risk Management (E/CTRM) and Energy Transition technology markets. Led by Dr. Gary M. Vasey, along with affiliate analysts Dr. Irina Reitgruber and Kevin Mossop, ComTech Advisory provides invaluable insights, backed by primary research and decades of experience, into the issues and trends affecting both the users and providers of the applications and services that are crucial for success in markets constantly roiled by globalization, regulation and innovation.

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www.comtechadvisory.com ComTech Advisory also hosts the CTRMCenter and the ETTCenter your online portal with news and views about commodity / energy markets and technology as well as a comprehensive online directory of software and services providers Please visit the CTRMCenter at:

www.ctrmcenter.com Please visit the ETTCenter at:

www.ettcenter.com

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