Profit-Seeking Aggregators Ease Grid Congestion in Local Energy Markets

A new academic paper from Ioanna Kalospyrou and Solomon Brown, accepted for the 2026 European Energy Market conference, proposes a novel solution to growing congestion in low-voltage distribution networks caused by high penetration of distributed energy resources (DERs). The authors investigate whether a profit-seeking aggregator, embedded within a welfare-optimizing local energy market, can partially internalize network constraints. They develop a post-clearing, price-protected intervention where the aggregator injects additional supply and triggers re-clearing, with network feasibility validated via nonlinear AC power flow under a non-deterioration constraint on maximum line loading. Tested on a real UK LV feeder, the mechanism reduces thermal loading significantly compared to traditional Distribution System Operator (DSO)-only corrective control, while preserving community welfare. However, under severe stress, it does not fully restore compliance. A hybrid regime—aggregator intervention followed by residual DSO action—achieves the strongest technical performance with lower welfare loss.

Crucially, the aggregator intervention remains privately profitable, indicating partial incentive alignment between market participants and network operators. This research directly addresses a key tension in modern energy grids: local markets optimize community welfare but ignore physical constraints, while DSOs manage constraints but can reduce market efficiency. The aggregator acts as a strategic intermediary, using market participation to alleviate congestion without requiring full regulatory overhaul. With 22% of UK low-voltage feeders reported near capacity, this approach offers a practical, market-based tool for grid operators and aggregator platforms. The study's implications extend to real-time energy trading systems, virtual power plants, and DER management software, suggesting that profit motives can be harnessed for grid stability if properly designed.