Virtual Power Plants
Figure 1: Aggregations of Demand Response & Distributed Generation
is monitored and epitomised. Include new distributed generation that is increasing in use from residential and commercial customers due to rebates and incentivised pricing structures, and the grid has become a lot smarter and volatile than it used to be. While this volatility can be a challenge, there are major benefits and challenges to a smart grid – and especially in concert with DR and distributed generation (DG). Adding large quantities of DR or DG to the grid can result in deficiencies that include a potential decrease in power quality, decrease in reliability, unbalanced power flow and potential risk to public and worker safety. While there is no question about the challenges of increased DR & DG, there are also significant benefits.
the ISO/wholesale market, it creates a significant challenge for the utility once they are awarded the bid. They have to call upon these participating customers not on the ISO model, but the actual physical topology of the customers in the utility distribution model. This mismatch of relationships can be a challenge in everything from forecasting available DR to customer selection once awarded and physical/financial settlements. With forecasting, utilities need a way to ensure that they achieve the optimal benefits and avoid leaving money on the table where they under forecast their ability due to risk avoidance from unsure accuracy in their forecast. Likewise, when unravelling the award from the ISO, utilities need a quick way to translate the financial award to an action that physically will not only select the appropriate customers, but will do so with minimal impact to their generation and distribution environments. Finally, during settlement, utilities need to reconcile payments between the ISO and the utility’s customer. This meeting of the financial and physical markets, especially as the physical market becomes ‘smarter’, creates a new complexity that must be managed.
Distribution Systems & Demand Response The smart grid is revolutionising how utilities think about
their existing distribution systems. Everything from smart reclosures down to smart transformers is changing how the grid
worldPower 2010
This includes carbon reduction, which PECO expects to bring a reduction of 1M metric tons of CO2 through their Smart Grid project, a reduction of outages (resulting in improved customer satisfaction), and the avoidance of regulatory penalties and extension of distribution assets.4 In order to address both the challenges and benefits, utilities
The smart grid is revolutionising how utilities think about their existing distribution systems
will need to improve the way in which they monitor, forecast and match DR & DG against their distribution topology. Imagine if utilities could action DR at a distribution level to take advantage of addressing power flow issues, or outage avoidance. Likewise, if utilities could utilise localised DG to address grid challenges, or even produce power more cheaply in a localised communal area, this could save on the procurement of peak power. These concepts could be possible, but utilities need to be able to forecast, execute and respond in a much more granular way than most
operate today. Utilities struggle with being able to accurately and continually identify the amount of DR or DG available at any given point of time and location. Overcoming these two barriers would allow utilities to take full advantage of their smart grid and DR &DG solutions.
Virtual Power Plant Value So, how does a utility manage the complexities identified
earlier in the paper concerning rollout of pricing, demand response and distributed energy resources for load reduction,
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