Transmission & distribution |
Transforming electricity distribution with virtual power plants
As the power and utility sector undergoes rapid transformation to embrace sustainable and resilient energy systems, virtual power plants (VPPs) are emerging as a pivotal technology. VPPs offer a revolutionary approach by integrating decentralised energy resources into a unit of power that is large enough to enhance grid stability through flexible load management. This article delves into the mechanics of VPPs, their benefits for utilities, the challenges of implementation, and the future prospects driven by technological advancements
Sally Jacquemin VP, Industry Business Unit General Manager, AspenTech
The power and utility sector is undergoing a significant transformation to meet the demands of sustainable and resilient energy systems. One key development at the forefront of this shift is the rise of virtual power plants. Figures from analyst, Grand View Research indicate that the global market size for VPPs was valued at $3.42 billion in 2022, with an anticipated compound annual growth rate (CAGR) of 22.0% from 2023 to 2030.
This rapid growth can be attributed to the numerous benefits VPPs offer, including enhanced grid stability, improved energy efficiency, and facilitating the transition to a zero-carbon grid. By leveraging decentralised energy resources and small-scale renewables, VPPs are poised to revolutionise how we manage energy distribution.
Understanding virtual power plants
VPPs work by integrating various distributed energy resources, both renewable and conventional, into a single, controlled entity. This aggregation allows more effective management of energy resources, providing utilities with the flexibility needed to respond to changes in energy demand and supply. By utilising advanced software and algorithms, VPPs can forecast energy demand, optimise energy production, and even participate in energy markets, offering services such as frequency regulation and voltage support. For utilities, VPPs represent a shift from traditional, costly power production methods to more economic and environmentally- friendly alternatives. This shift not only reduces dependence on fossil fuels but also minimises the need for extensive infrastructure investments. By balancing supply and demand dynamically, VPPs can prevent blackouts and ensure a steady power supply. During peak demand periods, VPPs can dispatch stored energy from batteries or reduce consumption through demand response programmes, easing the burden on the grid. Leveraging advanced algorithms and real-time data analytics, VPPs can predict and address potential imbalances before they escalate, providing a proactive approach to grid management.
Virtual power plants, or VPPs, are logical groupings or aggregations of distributed energy resources (DERs) that can provide traditional grid services similar to a traditional power plant – including energy market participation. Managing these groups of selectable DERs allows for multiple objective functions to meet the various use cases of VPPs in both grid operations and energy market participation.
Energy storage Residential demand response
Commercial/industrial demand response
Renewable power generation
Electric vehicle Microgrid
Energy, capacity and ancillary markets
Virtual power plants aggregate all types of DERs (Source: AspenTech)
Additionally, VPPs facilitate the integration of renewable energy sources, managing their intermittent nature by storing excess energy during high production periods and dispatching it when needed. This capability reduces reliance on fossil-fuel-based power plants and supports decarbonisation goals. The decentralisation of energy production through VPPs also enhances grid resilience. In case of localised failures, decentralised systems can continue operating independently, preventing widespread blackouts and reducing transmission losses, thereby improving overall energy efficiency. By enabling a more flexible and responsive power grid, VPPs also contribute to reducing greenhouse gas emissions. This is crucial for utilities and countries aiming to meet their climate targets and reduce their carbon footprint. VPPs can integrate a diverse array of energy sources, including wind, solar, hydro, and biomass, allowing for a more balanced and sustainable energy mix. This diversity not only
34 | March 2025|
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enhances energy security but also reduces the environmental impact of energy production. Moreover, VPPs offer significant economic advantages. Utilities can participate in energy markets, generating revenue by selling excess energy or providing ancillary services such as frequency regulation and voltage support. This economic incentive further drives the adoption of VPPs, making them a financially viable solution for modern grid management.
Overcoming implementation challenges
Despite their multiple benefits, implementing VPPs presents a range of challenges. Integrating VPPs with existing grid infrastructure requires significant coordination and investment. Utilities must ensure seamless communication and interoperability between DERs (distributed energy resources) and central control systems. This involves upgrading legacy systems, investing in advanced communication technologies and
VPP
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Electricity provider’s control centre
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