Abstract:

European energy policy obliges Member States to achieve full decarbonisation of electricity generation by 2050. Reaching this target requires expanding renewable generation capacity, such as wind and solar, or curbing consumption through better matching of supply and demand. Because weather-dependent generation fluctuates, renewable installations introduce physical imbalances into power grids. To maintain grid balance without costly grid expansion, power systems increasingly rely on a combination of demand response and aggregation. Demand response allows end-users to shift or reduce consumption during peak periods or when market prices spike. The value of flexibility therefore rises sharply in short-term day-ahead and, especially, intraday markets, where price volatility peaks close to real-time delivery. Aggregation is defined as combining electrical load or injected power from multiple grid users for participation in any electricity market. Thus, the aggregator acts as a market intermediary between system operators and distributed end-users, and enables demand response to be operationalised. In Croatia, two organisational models exist: independent aggregators and combined supplier-aggregators. The Croatian power market is highly centralised – the state-owned incumbent supplier, HEP Opskrba, holds an estimated 80% market share among large business customers – yet no electricity supplier in Croatia currently offers an integrated aggregation service. Independent aggregators have already contracted the largest industrial consumers, creating a strategic opportunity for traditional suppliers to introduce aggregation to medium and large commercial clients.