Virtual Power Plants utilizing IoT and distributed energy resources enabling the future of Energy

Energy infrastructure and energy ecosystems will look substantially different in the future.

The distribution system as we know it contains millions of miles of lower-voltage electrical conductors that receive power from the grid at distribution substations. The power is then delivered to 131 million customers via the distribution system. In contrast to the transmission system, the distribution system usually is radial, meaning that there is only one path from the distribution substation to a given consumer.

Problems with the Current System:
Most U.S. transmission lines and substations were constructed more than 40 years ago and are based on old technology, but demands on the electric power system have increased significantly over the years.

For variable renewable electricity sources to make up 20 percent or more of the total generating capacity of the interconnection, increased flexibility will be needed in the electric T&D systems.

The solution to this problem could be virtual power plants (VPP’s) which already exist in Europe and some places in the United States and Australia.

One of the world’s first Virtual Power Plants operated in Germany around 10 years ago. The utility company RWE had nine small hydroelectric power plants that it wanted to operate as a group so that it could bid their combined output into the wholesale market. Today, Germany remains a leader in the implementation of Virtual Power Plants. Next Kraftwerke a German start-up networks around 4,800 medium- and small-scale power-producing and power-consuming units in central Europe.

A virtual power plant aggregates a portfolio of smaller energy generators and operates them as a unified and flexible resource on the energy market or sells their power as a system reserve.

The Internet of Things (IoT): smart meters, smart thermostats, and sophisticated management software —are the underlying hardware components enabling a virtual power plant (VPP).

Virtual Power Plants are designed to maximize asset owners profits while also balancing the grid. They can match load fluctuations through forecasting, advance metering and computerized control, and can perform real-time optimization of energy resources.

Additionally, the combined power generation and power consumption of the networked units in the Virtual Power Plant is traded on the energy exchange.

The participants of the Virtual Power Plant (VPP) are connected to the VPP’s central control system via a remote control unit. All assets are efficiently monitored, coordinated and controlled by the central control system. Control commands and data are transmitted via secured data connections with encryption protocols.
The Virtual Power Plant uses a special algorithm to adjust to balancing reserve commands from transmission system operators in the way larger conventional power plants do.
The bidirectional data exchange between the individual plants and the Virtual Power Plant provides real-time data on the capacity utilization of the networked units. The feed-in of wind and solar energy, the consumption data and electricity storage charge levels, can be used to generate precise forecasts for electricity trading and scheduling of the power plants.

By being aggregated in a VPP, the energy assets (solar, wind, battery, biomass, thermal energy)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.

Individual small plants such as individual solar roofs cannot provide balancing services or offer their flexibility on the power exchanges. Their generation profile varies too strong and they do not meet the minimum bid size requirements of the markets. By aggregating the power of several units, a Virtual Power Plant can deliver the same service and redundancy and subsequently they can trade on the same markets as large central power plants or industrial consumers.