By: Brian Lips, Senior Policy Project Manager
Recent Notable Virtual Power Plant Actions
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The basis of a virtual power plant is that an electricity grid virtually connects hundreds, even thousands, of homes. These homes may already have solar and energy storage facilities installed. A virtual power plant can help use them collectively to act as a backup. It can be used when demand soars or to take excess power off the grid when needed.
A Virtual Power Plant (VPP) is a network of decentralized, medium-scale power-generating units such as wind farms, solar parks, and combined-heat-and-power units, as well as flexible power consumers and storage systems. VPPs can perform a wide range of activities depending on the market context.
The goal is to connect dispersed energy resources such as wind farms, solar parks, and Combined Heat and Power (CHP) units so companies may observe, forecast, optimize, sell, and trade them. A virtual power plant (VPP) aggregates the capability of various distributed energy resources (DERs) dispersed throughout the network.
Virtual power plants can also provide ancillary services to grid operators. So they can assist in the maintenance of grid stability. Frequency regulation, load following, and providing operating reserve are examples of ancillary services. The primary use of these services is to keep the instantaneous balance of electrical supply and demand in place. In response to varying levels of consumer demand, power plants providing ancillary services must respond to grid operator signals to increase or decrease the load on the order of seconds to minutes.
Furthermore, it also establishes the requirements for incorporating renewable energy sources into markets. Individual small plants are typically unable to offer their flexibility on the power exchanges or balance services. This is due to either their generation profile’s excessive variation or the fact that they fall below the marketplaces’ minimum bid size.
In 2021, the global virtual power plant market was valued at $0.88 billion and is expected to increase and reach $6.47 billion by 2028. Analysts anticipate the market to grow at an approximate CAGR of 32.8% during the forecast period 2022-2028. Factors such as the widespread adoption of novel technologies like cloud platforms and IoT applications in the power sector will have a significant effect on market growth.
Tesla’s VPP in South Australia, maybe the biggest, exemplifies how these virtual power plants can benefit society. Australia was once known for its exorbitant electricity costs and shaky grid. That’s when Elon Musk and The South Australian government made a deal to install Powerwalls and solar panels in 50,000 homes, many of which belonged to low-income families.
Virtual power plants have other advantages, but they also have some challenges, which the article discusses in detail.
Contributing to the Creation of a More Stable Grid — To operate safely and efficiently, all power networks require energy generation and electricity to be balanced. If either side of this equation changes or varies, it can result in power outages and blackouts. Along with the major power plants, there are smaller, more agile, and flexible power plants (often gas) that can ramp up and down quickly. These plants operate in the Frequency Control Ancillary Services (FCAS) markets.
Plants in this market are sometimes paid to stand-by’ and be ready to turn on at a moment’s notice. VPPs can function in this sector since they can quickly discharge or charge power from the grid.
Reducing Emissions and Load Shifting — VPPs enable real-time movement of residential, commercial, and industrial loads based on price signals to provide demand-side management services to grid operators. When done correctly, this will minimize the demand for high-emitting power plants while lowering carbon emissions.
Inadequate Infrastructure and Huge Costs — Advanced communication technologies, such as an energy management system (EMS), which enables the observation, management, and control of different energy devices, must be included in the high-quality infrastructure required for the building of VPP. Integrating current technologies and processes into a VPP requires significant investment and a highly qualified workforce. As a result, inadequate infrastructure and the increased costs associated with new technologies are projected to limit market growth over the forecasted period.
Stabilizing Virtual Power Plants — Some countries have already detected a negative impact on grid stability and electrical quality. The grid is gradually becoming an active distribution network as various alternative energy sources, particularly renewable ones, are developed. In this situation, procuring the stability provided by ancillary services becomes highly significant. The providers of virtual power plants (VPPs) encounter a challenging situation because they want to gain from the shift to renewable energy while retaining their capacity to provide the service accurately and cost-effectively.
Now, let''s look at the major companies that are tackling these challenges and making virtual power plants a success.
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ABB is a leading worldwide technology firm that energizes social and industrial transformation to achieve a sustainable future.
The firm''s virtual power plant (VPP) is not a traditional physical power plant but a network of sustainable energy generation systems and energy storage devices – an integrated virtual platform that manages power generation through a distributed power-management system.
ABB''s Energy Management suite, AbilityTM OPTIMAX®, enables power players to thrive in the face of new opportunities provided by the bidirectional flow of energy and information. This management suit for Virtual Power Plants combines and optimizes decentralized energy resources to create a virtual power plant. Users can then profitably buy or sell energy in wholesale markets or deliver energy as a subscription service.
The e-meshTM PowerStoreTM battery energy storage system (BESS) from Hitachi ABB Power Grids is a vital component of the VPP infrastructure. It enables grid stability by balancing intermittent generation with smart and dynamic loads.
Next Kraftwerke, headquartered in Germany, operates a large-scale Virtual Power Plant (VPP). The VPP of the corporation combines around 13,000 medium- and small-scale power-producing and consuming units. It includes, for example, biogas, wind, and solar generators.
The company’s VPP NEMOCS is a modularly designed software-as-a-service (SaaS) solution.
The software allows users to connect, monitor, and operate distributed power producers, consumers, and storage systems. As a result, it provides a diverse set of commercial opportunities to RES portfolio operators, aggregators, utilities, grid operators, and energy traders.
Next Kraftwerke and Toshiba Energy Systems & Solutions Corporation announced the formation of a joint venture in 2020. “Next Kraftwerke Toshiba Corporation” is a Virtual Power Plant (VPP) service provider in Japan that allows third parties to put up their VPP.
Using VPP technology, the new company intends to enable others to provide balancing services for owners of renewable energy assets and aggregators.
Flexitricity, based in Edinburgh, currently manages a 500MW fully flexible virtual power plant. The VPP assists National Grid ESO and Distribution Network Operators in balancing changes in renewable energy and managing supply security.
The 500MW virtual power plant is made up of flexibility from various assets owned by customers around the United Kingdom. This includes NHS hospitals, universities, local governments, district heating schemes, supermarkets, commercial farmers, and manufacturers.
In Jun 2022, Flexitricity and Gore Street Capital, London’s first listed energy storage fund, partnered to optimize an initial 155MW of battery energy storage systems (BESS). The agreement covers six sites and builds on the recent collaboration between Flexitricity and Gore Street Capital.
In Aug 2022, Flexitricity and Thrive Renewables, a Bristol-based renewable energy investment firm, entered into an agreement for a 20MW battery energy storage system (BESS).
Flexitricity’s 24/7 control room in Edinburgh will monitor and dynamically optimize the lithium-ion BESS site. The asset will be able to operate in various markets, including frequency response, wholesale traded power, the Balancing Mechanism, and emerging flexibility services.
Moving on to the startups competing with these companies in the Virtual Power Plant market.
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