Virtual Power Plant

How to network distributed energy resources

A Virtual Power Plant is a network of decentralized, medium-scale power generating units such as wind farms, solar parks, and Combined Heat and Power (CHP) units, as well as flexible power consumers and storage systems. The interconnected units are dispatched through the central control room of the Virtual Power Plant but nonetheless remain independent in their operation and ownership.
The objective of a Virtual Power Plant is to relieve the load on the grid by smartly distributing the power generated by the individual units during periods of peak load. Additionally, the combined power generation and power consumption of the networked units in the Virtual Power Plant is traded on the energy exchange.

Illustration of a Virtual Power Plant (VPP)

How does a Virtual Power Plant work?

The participants of the Virtual Power Plant (VPP) are connected to the VPP’s central control system via a remote control unit. This way, all assets can be efficiently monitored, coordinated and controlled by the central control system. Control commands and data are transmitted via secured data connections which are shielded from other data traffic due to encryption protocols.
In addition to operating every individual asset in the Virtual Power Plant along an optimized schedule, the central control system uses a special algorithm to adjust to balancing reserve commands from transmission system operators, just as larger conventional power plants do.
The bidirectional data exchange between the individual plants and the VPP not only enables the transmission of control commands. It also provides real-time data on the capacity utilization of the networked units. For example, the feed-in of wind energy and solar plants, as well as consumption data and electricity storage charge levels, can be used to generate precise forecasts for electricity trading and scheduling of the controllable power plants.

What is the objective of a Virtual Power Plant?

The objectives of a VPP depend on the market environment in which it is operated. In general, the aim is to network distributed energy resources (often renewable energy resources like solar, wind, hydropower, and biomass units) as well as flexible power consumers (also called demand response or demand side management) and storage systems in order to monitor, forecast, optimize, and dispatch their generation or consumption. By being aggregated in a VPP, the assets can be forecasted, optimized, and traded like one single power plant. That way, fluctuations in the generation of renewables can be balanced by ramping up and down power generation and power consumption of controllable units.
Integrating renewable energy sources into existing markets is another primary objective of a VPP. Individual small plants can in general not provide balancing services or offer their flexibility on the power exchanges. This is because their generation profile varies too strongly or they simply do not meet the minimum bid size of the markets. In addition, there are strict requirements regarding the availability and reliability of the flexibility offered in the market. By aggregating the power of several units, a VPP can deliver the same service and redundancy and subsequently trade on the same markets as large central power plants or industrial consumers.

How to turn data into actual use cases

The central control system of the Virtual Power Plant processes a wide range of information. This includes data of all networked plants, current prices at the power exchange, weather and price forecasts as well as grid information of the system operators. By using weather data and static system data as location or inclination angle of PV modules, the feed-in of the networked assets can be forecasted. On the day of the actual feed-in, live data continuously improve the forecast and enable the adjustment of deviations.
Using intelligent algorithms, the control system can create individual schedules for steerable plants. This enables production to meet demand – with higher revenues for the plant operators. Based on price signals, flexible power generators such as CHPs can be ramped up and down precisely to the quarter of an hour. Flexible power consumers such as industrial pumps can also be operated on optimized price schedules by consuming their electricity when it is cheap and demand is low. Thus, the central control system helps stabilizing the power grid even before the use of balancing services become necessary.
If an imbalance of the grid is already imminent, the signals from the system operators are also processed in the central control system and directly converted into control instructions for the pre-qualified units. This way, the VPP effectively helps to keep the grid in balance by delivering frequency control reserves, for example. In the event of an unexpectedly high feed-in, it is also possible to shut down assets within seconds and thus avert critical grid situations.