Wind and solar power

A guide to virtual power plants

Jun 20, 2019 - 5min read

What is a virtual power plant (VPP)?

Virtual power plants (VPPs) are groups of decentralised power generating units, wind farms and solar parks that are wirelessly connected to businesses, energy generators and energy storage systems. The cutting-edge technology helps manage electricity use more efficiently, allowing them to drive down carbon emissions, maximise the consumption of clean, green electricity and make savings on energy bills at the same time. VPPs can also trade and sell power to the electricity market.

Their objective is to take over the role of conventional power plants, i.e. to alleviate stresses on the energy network and their shifts in demand. The digital control system within a VPP oversees the energy grid and reacts better to fluctuations to supply and demand. This results in a more balanced grid and increased energy efficiency.

How does a virtual power plant work?

A virtual power plant involves:

  • A central IT control system
  • Distributed renewable energy sources (such as solar, wind, hydropower and biomass units) and energy storage
  • Large power users with an uninterruptible power supply (such as water pumps, refrigeration, air conditioning and electric heating in bitumen production plants)

The central IT control system transfers data between renewable energy sources and flexible power consumers to monitor and forecast energy usage. VPPs are agile systems that can quickly respond and make small adjustments to accommodate fluctuating energy demands throughout the day. For example, the central control system could slow down a manufacturing process, delay a large water pump, or lower air conditioning for just a few seconds during peak times. When thousands of connected and intelligent technologies are part of the virtual power plant, they contribute to a more balanced and stable grid, whilst delivering savings to energy bills by making small, unnoticeable adjustments throughout the day.

What is the aim of a virtual power plant?

Virtual Power Plants aim to seamlessly integrate multiple renewable energy units into power for businesses, energy generators and energy storage systems.

Power traders within a VPP can then use live data to enhance forecasting and the trade of renewable energy or can be harnessed to provide a valuable or on-demand service to an energy network. The outcome of this means that VPPs take over the role of traditional power plants and can sell their output to wholesale markets. As a result, VPPs can help create a decentralised and democratised grid.

What are the problems with a virtual power plant?

As with most emerging technologies with bespoke-use cases, there is slow adoption of Virtual Power Plants. Some might argue that the incremental changes that VPPs implement during peak times, such as lowering the air conditioning slightly, present health & safety challenges for energy users. However, most VPP users would have implemented such stringent service level agreements (SLAs) that would require any changes to not affect their operations. Or the changes would be only deployed in a place where health & safety wasn’t an issue, such as the aircon units in the front of retailers which have their doors open.

Process efficiency and the economic balance between the VPP and end-users are more legitimate considerations than the latter. For example, getting a refrigerator back to optimal coolness versus the value that VPP gives. As the margins are so fine, VPP operators might find that their profits are not as substantial compared to traditional energy suppliers as a stand-alone business case.

Some critics argue that VPPs cannot use all of their energy sources within their network optimally. As VPPs are still in their early stages, their ability to account for real-time network losses or individual customers’ specific energy needs are also debated. For example, if a domestic end-user was hosting a party in their home, perhaps they would not want to skimp on air conditioning. However, as mentioned above, most VPP end-users will have rigid SLAs that avoid their energy use from being compromised.

There are other significant issues that need to be considered before VPPs are rolled out on a larger scale. These include their ability to consider the technical constraints of their energy sources, like their voltage or current limits. Some also worry about VPPs’ vulnerability to cyber attacks, too, due to their reliance on the cloud and the infancy of their development.

What are the benefits of a virtual power plant?

As the name suggests, the biggest possible benefit of them is that in an age where geographies are required to start switching off conventional generating plants (such as coal), it provides a legitimate alternative to using gas.

VPPs also allows for the optimisation and central management of technology, that can react faster than a human in most cases. This allows homeowners to become an active contributor to energy and carbon savings beyond their homes - which is, in turn, great for the grid and environment too.

Another main benefit of a virtual power plant is that they allow for different energy sources to be grouped. This means that residential, commercial and industrial energy supplies can be managed within their energy strategies and price ranges.

By segmenting variables such as cost, type, needs and location, VPPs can provide customers with greater flexibility. Why? Because the central IT system can forecast more efficiently and refine their operative decision making. In short, VPPs can lessen the load on the grid and address potential network failures by efficiently distributing power during peak times.

Though virtual power plants are still in their infancy, the benefits that they provide are undeniable. Other than their ability to provide customers with more flexibility and reduce stress on the network during peaks, VPPs can produce energy more affordably in localised areas thus decrease its environmental impact.


Contact us today to find out more about Virtual Power Plants

Get in touch

More related blogs

Ask a question?