Aggregator electricity price guarantees for households with flexibility potential utilizing thermal building inertia

This study introduces an approach to mitigate the reluctance of households to adopt dynamic electricity tariffs by proposing individual price contracts tailored to household characteristics. These contracts guarantee individual electricity rates to households with flexibility potential, such as thermal or electrical storage and the thermal mass of buildings, in exchange for granting aggregators operational control. The household-specific contracts are determined and evaluated through a three-step process, combining deterministic and stochastic modeling. First, an optimization problem for the operation of home energy management systems is formulated. The proposed model incorporates the thermal inertia of buildings as a flexibility potential, an aspect frequently overlooked in existing studies. Then, a Monte Carlo simulation of household parameter combinations is run, followed by a quantile regression prediction of household-level low-price guarantees. The simulations of 9404 household configurations in Germany demonstrate that aggregator-managed flexibility consistently lowered electricity costs by an average of 7.36% (2.5 ct/kWh) compared to static tariffs, with 78.4% of households achieving rates below the competitive retail benchmark. Aggregators also realized higher profitability on a per-household basis across all three analyzed years compared to scenarios without flexibility control. Our results demonstrate that building parameters, particularly thermal inertia, substantially influence the available flexibility potential and should be considered a key factor in the design of household-level guarantee contracts. The study contributes to understanding and quantifying uncertainty in dynamic tariffs for households, aiming to advance the utilization of household demand response potential in modern power markets. • Developed a three-stage method to calculate price guarantees under uncertainty. • Aggregators guarantee individual fixed tariffs for constrained control of flexibility. • Monte Carlo simulation of 9404 households with varying endowments and preferences. • Aggregator-control reduced electricity costs by an average of 7.36% (2.5 ct/kWh). • Building characteristics strongly shape flexibility potential and guarantee values.