The value of virtual power plants to distributed renewables providers


According to Navigant Research, the aggregation of distributed renewables assets into mixed-asset Virtual Power Plants (VPPs) can help provide value to distributed renewables providers.

The research company adds that VPPs provide self-consumption optimisation and can participate in all electricity markets.

Roberto Rodriguez Labastida, senior research analyst with Navigant Research, said: “The aggregation of distributed intermittent renewables is still relatively new—currently, only commercial and industrial installations are targeted, which are aggregated mostly through fee-based trading services solutions and are only sparsely used to provide ancillary services.

“In the residential market, aggregation is used mostly as a marketing tool and offered alongside other services like system sales and installations.”

Navigant Research says the decline of feed-in-tariffs and net metering is pushing providers of distributed renewables to explore new ways to offer VPP services.

Energy storage systems have the ability to help in VPP offerings, however, the high costs of storage technologies is restraining use of VPP services. A software-based platform such as blockchain, used to match supply and demand, is a likely alternative.

Better resource forecasting, cheaper communications, and larger project portfolios are expected to help reduce the risk of participating in VPP markets.

Increase in participation in VPPs amongst residential customers will be driven by the ability of virtual power plant technologies to integrate, control and manage distributed assets including batteries, electric vehicle charging, and connected HVAC systems.

The above findings are included in Navigant Research’s Distributed Renewables Aggregation Strategies in VPPs, a study analysing the potential revenue streams and values available to distributed renewables generation assets in front of the meter using VPPs.

The report focuses on deregulated energy markets.


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