The value of virtual power plants


As the energy sector transitions to renewable energy to meet local, regional and global sustainability goals, the fluctuating nature of renewables is one big challenge that is hindering or slowing down the transition. Utilities are facing difficulties to provide baseload power and secure energy supply using renewable energy. This is due to changes in weather patterns which in turn would also directly impact the amount of energy generated by renewables assets. For instance, an increase in cloud cover would mean a decrease in solar energy generation at a time consumer energy demand might be high. Such scenarios are driving utilities to employ mechanisms such as virtual power plants to ensure the reliability of their energy supply whilst expanding renewable energy portfolios and maintaining customer services. In addition, virtual power plants enable the participation of consumers in stabilising the grid network they rely on and in the energy transition.

Germany’s Next Kraftwerke defines a virtual power plant as a decentralised, medium-scale power generating unit such as wind farms, solar parks, and Combined Heat and Power (CHP) units, as well as flexible power consumers and storage systems. In general, distributed energy resources are connected together and remotely operated in near real-time from a single platform. This enables a utility or operator to respond to energy demand changes on the main grid and direct energy generated or stored across the distributed resources towards the grid through ancillary services such as load aggregation, demand response, and voltage regulation. Energy storage systems and the optimal management and utilisation of data regarding energy generation and usage are key to enabling the full maximization of virtual power plants.

Commenting on trends within the global virtual power plants (VPP) market, Peter Asmus, principal research analyst with market intelligence firm Navigant Research, said: “The mixed asset VPP has achieved dramatic growth in the last couple of years and is the preferred platform in today’s market, particularly as the role of energy storage grows.”

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Guidehouse Insights predicts energy storage as an enabling technology that will dominate overall investment in the total VPP market with spending anticipated to reach $12.4 billion annually by 2025.

However, despite the advantage VPPs offer to grid stability, the concept is still in its infancy stages with the majority of the projects being pilots and concentrated in developed economies and regions that are prone to natural disasters. Both technology and utility companies embarging in VPP projects are aiming to ensure wider acceptance and adoption of the concept. One example is a partnership between technology company Sunverge and Delmarva Power, a US utility and energy provider to 10 million customers in Delaware, to implement Elk Neck Battery Storage Pilot Programme following securing approval from regulator Maryland Public Service Commission.

Under the programme, Sunverge will be recruiting consumers with or willing to install onsite energy generation and battery storage systems to create a virtual power plant that will be integrated with Delmarva Power’s grid network.

Martin Milani, CEO of Sunverge, said: “This programme will be an important proof point in demonstrating the value of multi-service VPPs and aggregated residential battery systems, both for the benefit of consumers and the grid. The lessons learned from this programme will help guide the power industry’s efforts to fully integrate distribution energy resources and decarbonise the grid, improve local system reliability and enable participation of aggregated DERs in wholesale markets.”

Once complete, in the first quarter of 2022, the 0.55 MW / 2.2 MWh  VPP will participate in the PJM wholesale electricity market for ancillary services in addition to ensuring the reliability of Delmarva Power’s grid.

Gary Stockbridge, Delmarva Power region president, adds: “We are committed to providing the best possible service for our customers.

“That means using innovative technologies to solve difficult challenges. In Elk Neck, the area’s unique geography makes our customers more vulnerable to power outages. By partnering with Sunverge to deploy Sunverge’s DER control, orchestration and aggregation platform with battery storage systems, we can increase the grid’s reliability, enhance resiliency during powerful storms and demonstrate how state-of-the-art technology can improve service for both our customers and the grid.”