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What’s Next for Virtual Power Plants?

image credit: ID 147448797 © Elxeneize | Dreamstime.com

A virtual power plant (VPP) is one that connects a network of distributed energy resources (DERs) together using cloud-based control software to enable effective power generation and distribution. The generated power can be distributed to participants within the network or to utilities. VPPs have been in use for several years and, like the rest of the power utility industry, are evolving to become even more useful and efficient.  

A Brief History of VPPs

The traditional electric grid was built in the 1800s and designed for one-way power transmission — from utilities to business and residential customers. With photovoltaic (PV) panels and other DERs, customers have developed the capacity to provide some of their own power, share it with neighbors, and even sell it back to utilities, creating a multi-way generation and distribution system.

However, DER power generation has been limited by a lack of storage capacity. Power generated this way could only be accessed when the weather cooperated (for example when PV panels were actively collecting sunlight).

As the use of DERs becomes more prevalent, battery technology is rapidly improving and providing the capacity to store DER-generated energy for later use. With this development, DERs have become a more consistent power source, making them a viable foundation for the next evolution in power generation and distribution in the form of VPPs.

Benefits and Challenges of VPPs

The biggest benefit of VPPs is that, as with a traditional power plant, they can collect data about customers’ energy needs and the available power supply and analyze it to efficiently match supply with demand. “By pooling [disparate sources of renewable production], engineers can make them behave like a conventional power plant,” states CNN Business.

VPPs provide additional benefits as well. They offer a cost-effective and cleaner alternative to traditional electrical power sources and enable customers to take a more active role in addressing the climate crisis.

This technology is still new and, as such, entails challenges as well. One of the most significant is the threat of cyberattacks. Another is finding the right place for VPPs within the current energy market.

The Future of VPPs

As the threat of extreme weather and wildfires becomes intensifies, the ability for customers to transition to a more active role in generating energy is becoming not just a luxury but a necessity. The ability for utilities to gain flexibility in power generation is a strong motivator as well.

Recent projects include South Australia and Tesla working together to build a VPP consisting of 50,000 residences capable of providing 250 MW of power and 650 MWh of storage to that region’s grid; an AutoGrid teaming up with a Japanese energy services company adding over 10,000 DER solar assets to an existing VPP; and a US$5 million DoE grant for a project to link homes with solar arrays to store electricity in a large storage battery in Austin, Texas.

Developers are also starting to build residential complexes with VPPs in mind. For example, Soleil Lofts in Herriman, Utah is a 600 unit all-electric apartment community with 5 MW solar, 12.6 MWh energy storage, and more than 150 electric vehicle (EV) chargers.

Sunrun has become the first company to be awarded a contract to supply capacity to a wholesale power market from a VPP. According to Microgrid Knowledge, “The contract is significant because it demonstrates how local energy resources can compete with centralized power in highly price-sensitive wholesale power markets.”

VPPs are clearly a positive and exciting development for the power industry and it will be interesting to watch how this powerful technology continues to evolve.

What do you know about VPPs? Please share in the comments.

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Karen Marcus's picture

Thank Karen for the Post!

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