Virtual Power Plant
The concept of Virtual Power Plants (VPPs) overturns the more traditional idea of relying on centralised (often CO2-emitting) power plants for predictable and reliable power output. As more and more small and large independent power producers enter the scene, solar, wind, and other renewable energy sources (RES) have penetrated the electricity grid all across Europe, opening the transition to a clean and sustainable energy infrastructure. However, the integration of these Distributed Energy Resources (DERs) into the grid is posing a number of challenges related to transmission congestion and/or voltage and frequency stabilities; renewables, in particular, are creating reliability issues due to their uncertain and intermittent nature. This clean power has disrupted the energy grid and created the need for new models and solutions for their integration. A VPP aggregates many dispersed and independent DERs into a single operating agent that acts like a traditional power plant, with a similar sizable generation capacity, allowing it to participate in power system markets (both wholesale and retail) or sell services to the operator. A VPP thus represents a flexible portfolio of DERs with the aim of enabling smaller power system agents (i.e., consumers, producers, prosumers, or any mix thereof) to engage in electricity markets and provide services to the grid. VPPs can help the integration of RES by providing both demand- and supply-side flexibility services to the main grid. VPPs can aggregate demand-response resources or energy storage units responding to grid requirements (demand-side flexibility), as well as incorporate fast-response units such as capacitors and batteries, along with CHP and biogas power plants to optimise power generation (supply-side flexibility). Through these two types of core services, VPPs can provide tangible benefits such as (IRENA, 2019): Supporting grid operation through various ancillary services Demand-side management and real-time load shifting based on price signals to reduce peak demand – making a business case for deferred investments in transmission and distribution grid infrastructure Balancing services and providing ramping requirements via optimisation platforms to compensate for fluctuations of any variable generation output from RES Increasing local flexibility at distribution system level, if there is a regional local market for flexibility in place Decreasing the marginal cost of power By reducing or shifting load during peak demand to avoid the use of large (fossil-fuelled) power plants to meet a small amount of electricity demand at an elevated cost, or By completely replacing the peak power plant with the dispatch of the aggregated DERs and charged batteries Optimising investment in power system infrastructure By saving on the costs of new capacity additions and/or grid reinforcement with the provision of real-time operational reserve capacity from already connected DERs, while providing them with additional revenues through their participation in ancillary markets when needed. Problems to be solved Raising grid stability and reliability issues due to integration of distributed energy sources Increasing demand for integration of variable renewable sources into the grid Restricted market participation of small independent DER operators Increasing & changing energy demand Increasing costs & emissions from current energy supply Demand for greater grid resilience and flexibility
