Renewable power producers such as biogas, cogeneration units (CHP), hydro, and emergency power generators are flexible and therefore have one additional advantage: They cannot only reduce or cease power production when there is a surplus on the grid (i.e. negative balancing reserve), but also feed-in additional power to the grid when there are electricity shortfalls (i.e. positive balancing reserve).
In order to provide balancing reserve, an asset must have a capacity of at least one megawatt. Several assets can be linked together in a Virtual Power Plant to reach this threshold. Thus, the cluster of assets responds to balancing reserve controls by the Transmission System Operator (TSO) collectively, sharing the profits among all asset operators. Power consumers can furthermore provide negative balancing reserve: For instance, an industrial plant that is part of a VPP can receive the command to increase production and thereby remove surplus power from the grid.
Industrial and commercial power consumers can profit from price signals coming from the power exchanges thanks to the data collected in the Virtual Power Plant. They can limit their power consumption to times when electricity is readily-available on the market and therefore cheap – in total, companies can thus reduce their power costs by up to a third.
This consumption optimization can be fully automated by the Virtual Power Plant, if desired. The VPP’s control system then sends commands to the company’s machine control room, complying with the individual restrictions, of course, and only intervening as much as needed. A power meter with consumption metering is required for this, though, and they are only available to consumers with an expected power consumption that exceeds 100,000 kWh annually.
Private households in Germany and other countries are far from reaching this level of power consumption. Their integration into Virtual Power Plants therefore will have to wait until smart meters are a standard part of every home. Smart meters will hopefully soon replace the old three-phase meters of the 1920s – roughly a hundred years after those were introduced. When the usage of appliances such as ovens, heaters, refrigerators, washing machines, and hot water heaters can be optimized intelligently in order to align with low electricity prices, power consumption can become more cost-efficient at home, too.
The energy sector is no exception when it comes to the fact that the future is digital. The supply of electricity is – like many areas of our society – undergoing a fundamental shift, not only on a national, but also on a global scale. We are finally moving away from large and fossil-fueled power plants towards smaller and decentralized units that are linked together through the opportunities of digitalization – and those are constantly expanding.
Similar to car sharing services without a car fleet and hotel booking platforms that do not own hotels, Virtual Power Plants are agents of a democratic shift in power supply: Responsibility is shifted back to society. VPP operators don’t own power plants; they just optimize the way in which every linked asset – still owned by a third party – is used. In doing so, today’s largest Virtual Power Plants have already exceeded the aggregated capacity of the largest nuclear power plants by far, and in the process, they produce climate-neutral power from the networked assets and address challenges that the power markets will face soon.
These challenges include the rising numbers of electric vehicles in the transportation sector and the number of network hubs and computer centers in response to digitalization, which is growing exponentially – and they all require huge amounts of electricity. With conventional power supplies and/or a single source of power, these demands cannot be met in accordance with climate protection goals. The hybrid and decentralized approach of a Virtual Power Plant, which utilizes a wide range of technology and energy sources, is a vital tool that will shape the energy landscape of the future.
Disclaimer: Next Kraftwerke does not take any responsibility for the completeness, accuracy and actuality of the information provided. This article is for information purposes only and does not replace individual legal advice.
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With the rise of renewables all over the world, we are facing a gigantic transformation of the global energy system. The Virtual Power Plant answers the demands of the decentralized energy world and opens up new business prospects for its participants and, of course, RES aggregators. We help you utilize them in the best possible way.