Virtual Power Plants
those defined parameters utilities can optimise their entire portfolio and determine how to leverage DR or DG to reduce/ shift peak loads, reduce generation costs, and reduce emissions. The concept of a plant like DR or DG can become extremely valuable as intermittent renewable resources continue to grow requiring utilities to provide spinning reserves to address their intermittency (Figure 2). Leveraging these new VPP’s, utilities would no longer have to run typical generation plants and instead could action reliable VPP’s/customers to either curb load or produce clean localised generation. For distributors and retailers, utilising VPPs can modify the
... utilities can define VPPs that relate directly to the distribution model
entire business model. No longer do generation companies own plants, now retailers own entire sets of virtual plants that they can leverage against the ISO/wholesale market to avoid high power procurement costs or utilise customers to bid into the ISO/wholesale market.
VPP & ISO/Wholesale Markets The VPP concept can overcome the chasm of the financial
and physical models for ISOs. As discussed previously, VPPs can allow for the flexibility to define these at whatever topological level desired. This flexibility allows the utility to play in both the physical and financial markets. This concept is important as a utility bidding into an ISO/wholesale market is interested in how its bid equates to the other potential bids within the market. The ISO/wholesale market also wants to understand how the utilities’ bid fits the overall pricing structure offered. However, the utility – once it solidifies an award – wants to know how to select the right customers based on DR program business rules and their availability. The utility also needs a way to perform an appropriate analysis of customer participation; and payout and balance its distribution system based on its participation in the ISO/wholesale market. These varying goals can be accomplished by tying these components together into one Virtual Power Plant. So how do utilities do this? Let’s say, for example, that the utility has a current A/C
Load Control program that covers the entire utility area. With this program, it is getting DR results, but realises this does not translate very easily to the ISO market due to inconsistent response or forecasting. To initially deal with this issue, the utility may first define a VPP that equates to a distribution topology. The utility has now taken one program and dissected it into multiple groupings of the same program. Doing so provides the utility with a more accurate forecast of available resources and perhaps due
worldPower 2010 105
to specific conditions in the area, a more consistent participation when the Load Control program is called upon. Knowing which areas/customers that participate more consistently will help the utility decide which physical VPPs (or in reality groups) of customers within the distribution topology the utility would feel confident about bidding into the market. Now that the utility has some confidence in its programs and groups of customers participating, it needs to translate this into a bid that fits the ISO/wholesale market topology, while ensuring that it has enough available
DR from these physical VPPs to bid into the market. To do that, the utility would create a separate VPP that has been defined by the ISO/wholesale financial topology. This financial VPP can have one or multiple physical topology VPPs tied to it. As already discussed, by having physical VPPs that aggregate
within a financial topology the utility is only forecasting and bidding those customers into the market that it feels can consistently participate when called upon. The utility, in submitting the bid, has met the rules of engagement from an ISO topology perspective, but has also translated for itself the actual customers and distribution channels that will physically participate if selected by the ISO. Once the award has been granted, the utility will have an easy time disaggregating the request down to the customer and distribution level, as it has already created the physical and financial relationship that ties the ISO topology to the physical customers within the utility. The flexibility of the VPP for ISO/wholesale bidding means
Figure 3: Physical & Financial Topology
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