Virtual power plant

A virtual power plant (VPP) is a cloud-based distributed power plant that aggregates the capacities of heterogeneous distributed energy resources (DER) for the purposes of enhancing power generation, as well as trading or selling power on the electricity market. Examples of virtual power plants exist in the United States, Europe, and Australia.Virtual power plants represent an 'Internet of Energy'', said senior analyst Peter Asmus of Pike Research. 'These systems tap existing grid networks to tailor electricity supply and demand services for a customer. VPPs maximize value for both the end user and the distribution utility using a sophisticated set of software-based systems. They are dynamic, deliver value in real time, and can react quickly to changing customer load conditions. A virtual power plant (VPP) is a cloud-based distributed power plant that aggregates the capacities of heterogeneous distributed energy resources (DER) for the purposes of enhancing power generation, as well as trading or selling power on the electricity market. Examples of virtual power plants exist in the United States, Europe, and Australia. A virtual power plant is a system that integrates several types of power sources to give a reliable overall power supply. The sources often form a cluster of different types of dispatchable and non-dispatchable, controllable or flexible load (CL or FL) distributed generation (DG) systems that are controlled by a central authority and can include microCHPs, natural gas-fired reciprocating engines, small-scale wind power plants (WPP)s, photovoltaics (PVs), run-of-river hydroelectricity plants, small hydro, biomass, backup generators, and energy storage systems (ESS). This system has benefits such as the ability to deliver peak load electricity or load-following power generation on short notice. Such a VPP can replace a conventional power plant while providing higher efficiency and more flexibility. More flexibility allows the system to react better to fluctuations, but whose complexity requires complicated optimization, control, and secure communications. An interactive simulation on the website of the VPP operator Next Kraftwerke illustrates how the technology works. According to a 2012 report by Pike Research, VPP capacity would, from 2011 to 2017, increase by 65%, from 55.6 gigawatts (GW) to 91.7 GW worldwide, generating from $5.3 billion to $6.5 billion in worldwide revenue in 2017. In a more aggressive forecast scenario, the clean-tech market intelligence firm forecasts that global VPP revenues could reach as high as $12.7 billion during the same period. A virtual power plant is also a cloud-based central or distributed control center that takes advantage of information and communication technologies (ICTs) and Internet of things (IoT) devices to aggregate the capacities of heterogeneous Distributed Energy Resources (DERs) to form 'a coalition of heterogeneous DERs' for the purpose of energy trading on the wholesale electricity markets or providing ancillary services for system operators on behalf of non-eligible individual DERs. A VPP acts as an intermediary between DERs and the wholesale electricity market and trades energy on behalf of DER owners who by themselves are unable to participate in that market. The VPP behaves as a conventional dispatchable power plant from the point of view of other market participants, although it is indeed a cluster of many diverse DERs. Also, in the competitive electricity markets, a virtual power plant acts as an arbitrageur between diverse energy trading floors (i.e., bilateral and PPA contracts, forward and futures markets, and the pool).