The State Duma of the Russian Federation adopted fundamental changes to legislation to launch a target model for managing electricity demand

The State Duma of the Russian Federation, in the third and final reading, approved changes to the Federal Law “On Electric Power Industry”, which determine the work of electricity demand aggregators. The document creates a regulatory foundation for the launch of a target demand management model and the full integration of this mechanism into the operation of the wholesale electricity and capacity market.

The new version of the law assigns demand management aggregators the status of full-fledged subjects of the Wholesale Electric Energy Market, defines the requirements for their participation in the market, and also provides for the emergence of a new “service for managing changes in the mode of electricity consumption.”

In the first reading, changes to the federal law “On Electric Power Industry”, which determine the work of electricity demand aggregators, were approved by the State Duma of the Russian Federation in December 2022.

During the second reading, held on October 17, amendments were made to the text of the bill, specifying the name and content of the new type of service. They also clarified the concept of “demand management aggregator” and the legal status of these organizations, the procedure for their selection, calculation of the projected volume of services and publication of relevant information. In addition, the amendments concerned clarification of the functions of the System Operator and the Association “NP Market Council”.

It is expected that the bill will be sent to the Federation Council for consideration within five days, and then to the President of the Russian Federation for approval.

“With the adoption of the law, a tool for optimizing the operating modes of the power system by replacing the production of the most expensive generation with consumer services for voluntary unloading was established as an integral mechanism of the wholesale market. The effectiveness of this market mechanism was confirmed during the implementation of a pilot project by the System Operator. The regulatory framework currently being formed will allow increasing the volume of demand management resources and the duration of use of the mechanism while maintaining the economic effect. We predict that with the current capacity structure, the volume of the demand management market could be about 4-6 GW,” noted Fedor Opadchiy, Chairman of the Board of SO UPS JSC.

On demand management of retail electricity consumers

The model of aggregators for managing the demand of retail consumers was developed by the System Operator as part of the roadmap of the National Technology Initiative "Energynet". It gives consumers in the retail electricity market the opportunity to participate in a price-dependent reduction in consumption. Wholesale consumers have the opportunity to use price-dependent consumption tools independently, starting in 2017.

Demand management aggregators are specialized organizations that coordinate the ability of a group of retail consumers to manage their electricity consumption, convert it into electricity demand management services and transfer to consumers a portion of the revenue received from the sale of this service.