In a market based on renewable energy, the traditional merit order dispatch faces new challenges. Solar and wind energy, the backbone of future electricity markets, are intermittent in nature – and therefore must be utilized when they are available, otherwise they are wasted. The reverse side of this attribute: Plant and grid operators cannot order wind or solar plants to produce energy when it is needed as they were used to do so in the traditional merit order approach. This clearly demonstrates: When more and more countries rely on intermittent renewable energies, we need new concepts to balance load and generation to keep a stable grid.
One fundamental way of thinking about this challenge is to define supply and demand as flexible variables. Rather than forcing generation to follow the load, both could be adjusted in relation to each other. This is the basic idea of Next Kraftwerke’s Virtual Power Plant (VPP): Today, we already network more than 3,500 electricity producing and consuming units with a combined capacity of more than 2,000 megawatts – thereby replacing the equivalent of two large coal-fired power plants. The objective is to smartly distribute supply and demand and to profitably trade the generated and consumed power. In effect the idea is to produce electricity when it is scarce and consume electricity when it is plentiful. Our system’s flexibility stems from the diversity of our clients. Besides solar and wind generators, the Virtual Power Plant includes generators with flexible output such as biomass and hydro, customers with flexible onsite CHP generation as well as large-scale commercial and industrial customers with flexible demand.