A virtual power plant (VPP) is a

cloud-based Cloud computing is the on-demand availability of computer system resources, especially data storage (cloud storage) and computing power, without direct active management by the user. Large clouds often have functions distributed over mult ...

distributed power plant that aggregates the capacities of heterogeneous

distributed energy resources Distributed generation, also distributed energy, on-site generation (OSG), or district/decentralized energy, is electrical generation and storage performed by a variety of small, grid-connected or distribution system-connected devices referred to ...

(DER) for the purposes of enhancing power generation, trading or selling power on the electricity market, and demand side options for load reduction. DER assets in a VPP can include photovoltaic solar, energy storage, electric vehicle chargers, and demand-responsive devices (such as water heaters, thermostats, and appliances) with examples of virtual power plants existing in the United States, Europe, and Australia.

Power generation

A virtual power plant is a system that integrates several types of power sources to give a reliable overall power supply. The sources often form a cluster of different types of dispatchable and non-dispatchable, controllable or flexible load (CL or FL)

distributed generation Distributed generation, also distributed energy, on-site generation (OSG), or district/decentralized energy, is electrical generation and storage performed by a variety of small, grid-connected or distribution system-connected devices referred to ...

(DG) systems that are controlled by a central authority and can include

microCHP Micro combined heat and power, micro-CHP, µCHP or mCHP is an extension of the idea of cogeneration to the single/multi family home or small office building in the range of up to 50 Kilowatt, kW. Usual technologies for the production of heat and ...

s, natural gas-fired

reciprocating engine A reciprocating engine, also often known as a piston engine, is typically a heat engine that uses one or more reciprocating pistons to convert high temperature and high pressure into a rotating motion. This article describes the common fea ...

s, small-scale

wind power Wind power or wind energy is mostly the use of wind turbines to generate electricity. Wind power is a popular, sustainable, renewable energy source that has a much smaller impact on the environment than burning fossil fuels. Historically ...

plants (WPP),

photovoltaics Photovoltaics (PV) is the conversion of light into electricity using semiconducting materials that exhibit the photovoltaic effect, a phenomenon studied in physics, photochemistry, and electrochemistry. The photovoltaic effect is commercially ...

(PV), run-of-river hydroelectricity plants,

small hydro Small hydro is the development of hydroelectric power on a scale suitable for local community and industry, or to contribute to distributed generation in a regional electricity grid. Exact definitions vary, but a "small hydro" project is less ...

, biomass,

backup generator An emergency power system is an independent source of electrical power that supports important electrical systems on loss of normal power supply. A standby power system may include a standby generator, batteries and other apparatus. Emergency p ...

s, and

energy storage system Energy storage is the capture of energy produced at one time for use at a later time to reduce imbalances between energy demand and energy production. A device that stores energy is generally called an accumulator or battery. Energy comes in ...

s (ESS). This system has benefits such as the ability to deliver

peak load In electrical engineering, a load profile is a graph of the variation in the electrical load versus time. A load profile will vary according to customer type (typical examples include residential, commercial and industrial), temperature and hol ...

electricity or load-following power generation on short notice. Such a VPP can replace a conventional power plant while providing higher efficiency and more flexibility, which allows the system to react better to load fluctuations. The drawback is a higher complexity of the system, which requires complicated optimization, control, and secure communications. An interactive simulation on the website of the VPP operator Next Kraftwerke illustrates how the technology works. According to a 2012 report by Pike Research, VPP capacity would, from 2011 to 2017, increase by 65%, from 55.6 gigawatts (GW) to 91.7 GW worldwide, generating from $5.3 billion to $6.5 billion in worldwide revenue in 2017. In a more aggressive forecast scenario, the clean-tech market intelligence firm forecasts that global VPP revenues could reach as high as $12.7 billion during the same period.

"Virtual power plants represent an 'Internet of Energy, said senior analyst Peter Asmus of Pike Research. "These systems tap existing grid networks to tailor electricity supply and demand services for a customer. VPPs maximize value for both the end user and the distribution utility using a sophisticated set of software-based systems. They are dynamic, deliver value in real time, and can react quickly to changing customer load conditions."

Ancillary services

Virtual power plants can also be used to provide

ancillary services Ancillary services are the services necessary to support the transmission of electric power from generators to consumers given the obligations of control areas and transmission utilities within those control areas to maintain reliable operations of ...

to grid operators in order to help maintain grid stability. Ancillary services include

frequency regulation Ancillary services are the services necessary to support the transmission of electric power from generators to consumers given the obligations of control areas and transmission utilities within those control areas to maintain reliable operations of ...

load following A load-following power plant, regarded as producing mid-merit or mid-priced electricity, is a power plant that adjusts its power output as demand for electricity fluctuates throughout the day. Load-following plants are typically in between base l ...

, and providing operating reserve. These services are primarily used to maintain the instantaneous balance of electrical supply and demand. Power plants providing ancillary services must respond to signals from grid operators to increase or decrease load on the order of seconds to minutes in response to varying levels of consumer demand. Since ancillary services are typically provided by controllable fossil-fuel generators, future carbon-free electrical grids that contain high percentages of solar and wind must rely on other forms of controllable power generation or consumption. One of the most well-known examples of this is Vehicle to Grid technology. In this case, distributed electrical vehicles connected to the grid can be controlled together to act as a single virtual power plant. By selectively controlling the rate at which each individual vehicle charges, the grid sees a net injection or consumption of energy as if a large scale battery was providing this service. Similarly, flexible demand in the form of

heat pump A heat pump is a device that can heat a building (or part of a building) by transferring thermal energy from the outside using a refrigeration cycle. Many heat pumps can also operate in the opposite direction, cooling the building by removing ...

s or air conditioners has also been explored to provide ancillary services to the grid. As long as indoor thermal comfort is maintained, an aggregation of distributed heat pumps can be selectively turned off and on in order to vary their aggregate power consumption and follow an ancillary service signal. Again, the effect on the grid is the same as if a large scale power plant was providing the service. Since they operate in parallel, virtual power plants can have the advantage of higher ramp rates than thermal generators, which is especially important in grids that experience a

duck curve The duck curve is a graph of power production over the course of a day that shows the timing imbalance between peak demand and renewable energy production. Used in utility-scale electricity generation, the term was coined in 2012 by the Cali ...

and have high ramping requirements in the morning and evening. However, the distributed nature generates communication and latency issues, which could be problematic for providing fast services like frequency regulation.

Energy trading

A virtual power plant is also a cloud-based central or distributed control center that takes advantage of information and communication technologies (ICTs) and Internet of things (IoT) devices to aggregate the capacities of heterogeneous Distributed Energy Resources (DERs) to form "a coalition of heterogeneous DERs" for the purpose of energy trading on the wholesale

electricity market In a broad sense, an electricity market is a system that facilitates the exchange of electricity-related goods and services. During more than a century of evolution of the electric power industry, the economics of the electricity markets had un ...

s or providing

for system operators on behalf of non-eligible individual DERs. A VPP acts as an intermediary between DERs and the wholesale electricity market and trades energy on behalf of DER owners who by themselves are unable to participate in that market. The VPP behaves as a conventional dispatchable power plant from the point of view of other market participants, although it is indeed a cluster of many diverse DERs. Also, in the competitive electricity markets, a virtual power plant acts as an arbitrageur between diverse energy trading floors (i.e., bilateral and PPA contracts, forward and futures markets, and the pool). So far, for risk management purposes, five different risk-hedging strategies (i.e., IGDT, RO, CVaR, FSD, and SSD) have been applied to the decision-making problems of VPPs in the research articles to measure the level of conservatism of VPPs' decisions in diverse energy trading floors (e.g., day-ahead electricity market, derivatives exchange market, and bilateral contracts): # IGDT : Information Gap Decision Theory # RO :

Robust optimization Robust optimization is a field of mathematical optimization theory that deals with optimization problems in which a certain measure of robustness is sought against uncertainty that can be represented as deterministic variability in the value of the ...

# CVaR : Conditional

Value at Risk Value at risk (VaR) is a measure of the risk of loss for investments. It estimates how much a set of investments might lose (with a given probability), given normal market conditions, in a set time period such as a day. VaR is typically used by ...

# FSD : First-order Stochastic Dominance # SSD : Second-order Stochastic Dominance

United States

Energy markets are those

commodity market A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investin ...

s that deal specifically with the trade and supply of energy. In the United States, virtual power plants not only deal with the supply side, but also help manage demand, and ensure reliability of grid functions through demand response (DR) and other load-shifting approaches, in real time. An often-reported energy crisis in America has opened the door for government-subsidized companies to enter an arena that has only been available to utilities and multinational billion-dollar companies until now. With the deregulation of markets around the United States, the wholesale market pricing became the exclusive domain of large retail suppliers; however local and federal legislation along with large end-users are beginning to recognize the advantages of wholesale activities. Texas is in the stage of developing pilot VPP projects to evaluate the impact on service and reliability. They have had several meetings of their ADER (Aggregated Distributed Energy Resources) task force to develop the criteria for pilot projects to operate. In California there are two electrical markets: private retail and wholesale. California Senate Bill 2X—which passed the California legislature on March 30, 2011—mandates 33% renewables by 2020 without mandating any particular method to reach that goal.

PG&E The Pacific Gas and Electric Company (PG&E) is an American investor-owned utility (IOU). The company is headquartered in the Pacific Gas & Electric Building, in San Francisco, California. PG&E provides natural gas and electricity to 5.2 millio ...

pays VPP providers $2/kWh during peak times. As of August/September 2022, SunRun VPP inputs 80 MW at peak times, and Tesla VPP inputs 68 MW.

Europe

The Institute for Solar Energy Supply Technology of the

University of Kassel The University of Kassel (german: link=no, Universität Kassel) is a university founded in 1971 located in Kassel, Hessen, in central Germany. As of February 2022 it had about 25,000 students and about 3300 staff, including more than 300 profe ...

in Germany pilot-tested a combined power plant that linked solar, wind,

biogas Biogas is a mixture of gases, primarily consisting of methane, carbon dioxide and hydrogen sulphide, produced from raw materials such as agricultural waste, manure, municipal waste, plant material, sewage, green waste and food waste. It is a ...

, and pumped-storage hydroelectricity to provide load-following power around the clock, completely from renewable sources. Virtual power station operators are also commonly referred to as aggregators. To test the effects of

micro combined heat and power Micro combined heat and power, micro-CHP, µCHP or mCHP is an extension of the idea of cogeneration to the single/multi family home or small office building in the range of up to 50 kW. Usual technologies for the production of heat and power in ...

on a smart grid, 45

natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...

SOFC A solid oxide fuel cell (or SOFC) is an electrochemical conversion device that produces electricity directly from oxidizing a fuel. Fuel cells are characterized by their electrolyte material; the SOFC has a solid oxide or ceramic electrolyte. A ...

units (each generating 1.5kW) from Republiq Power (

Ceramic Fuel Cells Ceramic Fuel Cells Ltd () was an Australian fuel cell technology company, based in Melbourne. The company produced the "BlueGen" gas-to-electricity generators. CFCL's developed solid oxide fuel cell (SOFC) technology to provide reliable, energ ...

) will be placed in 2013 on

Ameland Ameland (; West Frisian: It Amelân) is a municipality and one of the West Frisian Islands off the north coast of the Netherlands. It consists mostly of sand dunes. It is the third major island of the West Frisians. It neighbours islands Ter ...

to function as a virtual power plant. An example of a real-world virtual power plant can be found on the Scottish Inner Hebrides island of

Eigg Eigg (; gd, Eige; sco, Eigg) is one of the Small Isles in the Scottish Inner Hebrides. It lies to the south of the Isle of Skye and to the north of the Ardnamurchan peninsula. Eigg is long from north to south, and east to west. With an ar ...

. Next Kraftwerke from Cologne, Germany operates a virtual power plant in seven European countries providing peak-load operation, power trading and grid balancing services. The company aggregates distributed energy resources from biogas, solar and wind as well as large-scale power consumers. Distribution network operator,

UK Power Networks UK Power Networks is a distribution network operator for electricity covering South East England, the East of England and London. It manages three licensed distribution networks (Eastern Power Networks, South Eastern Power Networks and London Pow ...

, and Powervault, a battery manufacturer and power aggregator, created London's first virtual power plant in 2018, installing a trial fleet of battery systems on over 40 homes across the London Borough of Barnet, providing a combined capacity of 0.32 MWh. This scheme was further expanded through a second contract in

St Helier, London St Helier () is a residential cottage estate in the London boroughs of Merton and Sutton. The portion of the estate north of Green Lane and Bishopsford Road is in Merton, the remainder is in Sutton. History The site of the St Helier estate ...

in 2020. In September 2019, SMS plc entered the virtual power plant sector in the United Kingdom following the acquisition of Irish energy tech start-up, Solo Energy. In October 2020, Tesla launched its Tesla Energy Plan in the UK in partnership with Octopus Energy, allowing households to join its UK Tesla Virtual Power Plant. Homes under the scheme are powered with 100% renewable energy from either solar panels on the roof or from Octopus Energy.

Australia

Commencing in August 2020, Tesla will install a 5 kW rooftop solar system and 13.5 kWh Powerwall battery at each Housing SA premises, at no upfront cost to the tenant. As South Australia's largest virtual power plant, the battery and solar systems can be centrally managed, collectively delivering 20 MW of generation capacity and 54 MWh of energy storage. In August 2016, AGL Energy announced a 5MW virtual-power-plant scheme for

Adelaide Adelaide ( ) is the capital city of South Australia, the state's largest city and the fifth-most populous city in Australia. "Adelaide" may refer to either Greater Adelaide (including the Adelaide Hills) or the Adelaide city centre. The dem ...

, Australia. The company will supply battery and photovoltaic systems from Sunverge Energy, of San Francisco, to 1000 households and businesses. The systems will cost consumers

AUD The Australian dollar (sign: $; code: AUD) is the currency of Australia, including its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is officially used as currency by three independent Pacific Island s ...

$3500 and are expected to recoup the expense in savings in 7years under current distribution network tariffs. The scheme is worth AUD $20million and is being billed as the largest in the world.

References

External links

AGL Virtual Power Plant VPP project
{{Electricity generation Distributed generation