POWER PLANTS Virtual power plants: When distributed energy resources choose the cloud

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MERSEN France SB

DOWA HD Europe GmbH

Virtual power plants (VPPs) can replace traditional power plants by offering similar functionalities in the cloud. VPPs help renewable-heavy grid operations bypass coordination constraints. On a wider note, virtual power plants support electrification and decarbonization initiatives.

Distributed energy resources (DERs) are customer-owned installations, including rooftop solar panels, battery energy storage systems, wind turbines, fuel cells, EV chargers, smart home appliances, and many more, that need effective aggregation, coordination, and management. This is something a power plant does.

Ever since coal, gas, and nuclear plants were decommissioned, renewables were built fast and deployed in huge numbers. But they are variable: Bright sun is a lucky day, but a few hours of rain spoils it. That’s the real gap virtual power plants fill.

Virtual power plants coordinate these DERs to store surplus energy on good days and use it when generation is low. The grid doesn’t need the same amount of electricity all the time, every day. Electricity demand increases only during peak hours.

Besides base power plants, utility and power-producing companies would build peaking power plants to meet the increased demand. Peaking power plants, or peaker power plants, don’t run like traditional power plants. They supply power only occasionally during high demand.

Peaking power plants are constructed similarly to base power plants. Building a peaking power plant requires a significant CapEx and even more OpEx. This is because peaking power plants sit idle for most of the time, during non-peak hours. They become operational only when the demand is high, making power costlier than base plants.

To save on CapEx, OpEx, and power bills, companies have chosen virtual power plants at negligible cost. Virtual power plants are not physically constructed like base and peaking power plants; they’re cloud-based. Virtual power plants use and manage already-existing renewable DERs, such as batteries, solar panels, wind power systems, and flexible loads.

Virtual power plants don’t need companies to build and deploy new systems. The fuel cost in running virtual power plants is only the compute cost. Simply put, virtual power plants are run through software. Similar to software-defined power electronics.

Virtual power plants store excess power generated during sunny days, afternoons, or windy days. So when the generation stops- let the reason be a non-cloudy day or a non-windy stretch- virtual power plants supply stored energy back to the grid. As a result, the renewable-heavy grid remains stable.