Virtual power plant

Cloud based distributed power plant"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. "A virtual power plant (VPP) is a system that integrates multiple, possibly heterogeneous, power sources to provide grid power. A VPP typically sells its output to an electric utility. VPPs allow energy resources that are individually too small to be of interest to a utility to aggregate and market their power.

VPPs typically aggregate large numbers of distributed energy resources (DER). Resources can be dispatchable or non dispatchable, controllable or flexible load (CL or FL). Resources can include microCHPs, natural gas fired reciprocating engines, small scale wind power plants (WPP), photovoltaics (PV), run of river hydroelectricity plants, small hydro, biomass, backup generators, and energy storage systems such as home or vehicle batteries (ESS), and devices whose consumption is adjustable (such as water heaters, and appliances). The numbers and heterogeneity mean that system output is not dependent on any single resource, offering the potential for stable output even if the output of any single resource is not predictable. Vehicle to Grid technology allows electric vehicles that are connected to the grid to participate in VPPs. The VPP then controls the rate at which each vehicle charges/discharges (accepts/delivers power). The VPP can slow or reverse the rate at which vehicles charge. Conversely, when the grid has surplus power, vehicles can charge freely. The same principle applies to other systems, such as heat pumps or air conditioners that can lower their power demands to reduce demand. VPPs based on storage can ramp at higher rates than thermal generators (such as fossil fuel plants), which is especially valuable in grids that experience a duck curve and must satisfy high ramping requirements in the morning and evening.

Power delivery is controlled by a management system. The distributed nature of VPPs requires software to respond appropriately and securely to power requests, utility billing, payments to resource owners, etc.

Typically, the VPP provides power (only) when requested by the utility.

With the appropriate resources, a VPP can deliver incremental power on short notice, allowing it to help utilities manage peak loads that would otherwise require purchasing expensive power from a peaker plant (typically operating a simple cycle or combined cycle natural gas turbine).

Given sufficient scale, a VPP can operate as a load following generator, supplying output dynamically as demand changes throughout the day/night cycle.

Virtual power plants can provide ancillary services that help maintain grid stability such as frequency regulation and providing operating reserve. These services are primarily used to maintain the instantaneous balance of electrical supply and demand. These services must respond to signals to increase or decrease load on the order of seconds to minutes.

A VPP generates revenue that is distributed among the resources that supply the power, encouraging resource owners to join the enterprise. Energy markets are wholesale commodity markets that deal specifically with electrical energy.

The global Virtual Power Plant (VPP) market is projected to grow from US$ 1333 million in 2024 to US$ 4885 million by 2030, at a Compound Annual Growth Rate (CAGR) of 24.2% during the forecast period. Europe is the largest market, with a share over 50%, followed by Asia Pacific and North America with shares of about 25% and 20% respectively.

In the United States, virtual power plants deal with the supply side and help manage demand, and ensure reliability of grid functions through demand response (DR) and other load shifting approaches, in real time. In 2023 the Department of Energy estimated VPP capacity at around 30 to 60 gW, some 4% to 8% of peak electricity demand. California has two electric markets: private retail and wholesale. As of 2022 PG&E paid VPP providers $2/kWh during peak demand. As of August/September 2022, SunRun VPP often delivered 80 MW at peak times, and Tesla VPP supplied 68 MW. Vermont’s Green Mountain Power, works with Tesla to offer a Powerwall to participating customers at a discounted rate. VPPs are commonly referred to as aggregators. One VPP operated on the Scottish Inner Hebrides island of Eigg. Next Kraftwerke from Cologne, Germany operates a VPP in seven European countries providing peak load resources, power trading and grid balancing services. The company aggregates energy from biogas, solar and wind as well as large scale power consumers. Distribution network operator, UK Power Networks, and Powervault, a battery manufacturer and power aggregator, created London's first VPP in 2018, installing a fleet of battery systems at 40+ homes across the London Borough of Barnet, offering capacity of 0.32 MWh. This scheme was expanded through a second contract in St Helier, London in 2020. In September 2019, SMS plc entered the VPP 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 VPP. Participant homes are powered with renewable energy either from solar panels or from Octopus Energy.

In August 2020, Tesla began installing a 5 kW rooftop solar system and 13.5 kWh Powerwall battery at each Housing SA premises, at no cost to the tenant. As South Australia's largest virtual power plant, the battery and solar systems were 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, Australia. The company planned to supply battery and photovoltaic systems from Sunverge Energy, of San Francisco, to 1000 households and businesses. The systems cost consumers AUD $3500 and was expected to recoup the expense in 7years under current distribution network tariffs. The scheme is worth AUD $20million and is billed as the largest in the world.