Why Virtual Power Plants are the way forward

Why Virtual Power Plants are the way forward

They have been called ‘The future of energy in Britain’, yet energy providers have been slow to harness the power of Virtual Power Plants (VPPs).

In today’s connected world, Virtual Power Plants (VPPs) are the logical conclusion when it comes to energy production and supply. They bring benefits to consumers, energy companies, as well as our planet. However, while some energy firms are dipping their toes in the water of VPPs, critical mass seems a long way away.

What are VPPs?

Virtual Power Plants are networks of medium and small-scale power generating assets, aggregated together in one central, digital control room through connected technology.

The generating units could be wind farms, solar panels, or any other way of generating and storing power. They could even be large storage batteries in residential homes. The main thing is that in the VPP control room, you can control the storage and distribution of the power generated by all of them. Through this remote software, you are then able to balance supply and demand, coping with peaks and improving efficiency.

How do Virtual Power Plants work?

All the assets within the Virtual Power Plant have a remote control system that connects them to the central control room, allowing them to be monitored and controlled. Using encrypted data protocols, VPPs collect and analyse data on power generation and consumption in real-time.

In the control room, smart software uses algorithms to operate each generating unit. Crucially, algorithms also balance supply and demand to the grid. For example, if there is a peak in consumption and an area is running low on power, they can use the VPP to access power from another source.

Benefits of VPPs

VPPs can bring numerous benefits to energy companies, consumers and also the planet at large.

Firstly, for energy suppliers, VPPs help balance their loads. They reduce the risk of surges, which can be dangerous to the power supply. Power cuts can also damage an energy company’s reputation and customer base, so anything that minimises them can only be a good thing.

VPPs allow energy producers to lower the cost of production. Because they aggregate power from several different sources, monitoring production data in real-time, they can allocate resources to where it is cheaper to produce.

VPPs also bring improvements when it comes to trading electricity on the open market. The data generated by VPPs gives suppliers more information than ever. This information enables them to produce better forecasts for scheduling electricity production, as well as trading.

Consumers should be able to benefit from the introduction of VPPs through lower bills. They also get to participate in the generation and distribution of electricity, where they may be able to benefits from feed-in payments. Examples of this could be installing solar panels and storage batteries in their houses, with connections to the VPP network.

Environmental benefits

VPPs also bring massive benefits to the planet. Power generated by VPPs will usually come from renewable sources such as solar or wind power. While this does not have to be the case, conventional fossil fuel power plants are able to be part of VPPs too; renewables make up the vast majority of VPP assets.

The idea of creating and sharing power is also good for the planet. It allocates resources to where they are most needed, reducing waste.

Finally, through the nature of VPPs and the drive for efficiency, points of consumption are closer than ever to the places where power is generated. This reduces the need to transport electricity, lowering costs and decreasing the loss of energy during conveyance.

Challenges with Virtual Power Plants

While the benefits of VPPs are many, there are also some challenges attached to them.

To truly achieve critical mass for VPPs, there needs to be an industry standard protocol for all power-producing and storing assets to communicate with each other. At the moment, this hasn’t happened, so fitting devices that work together is harder than it needs to be. Different VPPs are using different protocols. This is one of the reasons that utility companies are reluctant to invest in VPPs, with so many different protocols out there; they do not want to back the wrong horse.

As with many things that involve the collection and transfer of data, there are concerns over security within VPPs. Many consumers will not want information about how they use energy, flowing between utility companies. They may not also want to take part in electricity storage initiatives, as it means giving up part of your home to energy firms.

There are also doubts over whether the flexible sharing of power is as efficient as it should be. Some believe you can’t account for the spikes and troughs of individuals’ power consumption, as well as the technical constraints of the network at the same time.

Finally, and this is a minor problem, but still a problem nonetheless. Some experts in this area believe that the industry using the term Virtual Power Plants to describe these services is a mistake. They are not virtual, as the generators, storage devices and control centres actually exist. Also, they are not power plants, not in the traditional sense anyway. Using these inaccurate and outdated terms could be discouraging to investors. In today’s world, is investing in any type of power plant going to bring good publicity?

Are you ready for VPPs?

While it’s clear there are some drawbacks to Virtual Power Plants, or at least things that need to be clarified, the level of benefits they bring make VPPs the way forward for the energy industry.

In the UK, established energy companies are beginning to invest in VPPs. For example, Statkraft announced plans for a 2-gigawatt VPP in the UK, ready to go live later this year. Australia is another world centre for VPPs. However, we are a long way from VPPs becoming commonplace. Much more investment from the energy industry is required.

VPPs provide an excellent opportunity for energy providers to meet growing demand sustainably. Who will be the ones to take it?