Over the last few years we have seen a proliferation of technology players that have extracted greater value from existing assets. From Uber to AirBnB we have seen players transform the B2C space. Is it time for the electric grid to face the same storm?
Why not? All of the elements needed for the perfect storm are already in place. The growth of renewables, addition of behind the meter generation and improved energy storage technologies have rendered existing operators in a state of flux. The bidirectional nature of end points is a significant change that the grid is still trying to come to terms with. A range of new challenges / jargons have flooded the sector – Virutal Power Plants (VPPs), Distributed Energy Resources (DERs), Demand Response (DR), Direct Load Control (DLC) etc. If we were to look for one central theme that helps us understand the changes taking place, the Virutal Power Plant, would be that starting point.
During the course of this post, let us delve deeper into a VPP and see how it works. Let begin with addressing the following
Virtual Power Plant (VPP) is a system to balance
VPP is a system that integrates several types of power sources, (such as small hydro, photovoltaics, back-up gensets and batteries) so as to give a reliable overall power supply. VPP is a cloud-based central or distributed or hybrid system that takes advantage of information and communication technologies (ICTs) and Internet of things (IoT).
VPP forms a coalition of heterogeneous Distributed Energy Resources (DERs) for the purpose of energy trading and energy optimization while leveraging existing grid and wholesale electricity markets.
VPP can also be a system operator on behalf of non-eligible individual Distributed Energy Resources (DERs). In such cases the sources are often a cluster of distributed generation systems that are orchestrated by a central authority.
Wow, all of the above makes the VPP look like a grid operator? Ok, a mini grid operator. Well, yes!!! We are seeing the merger of energy sources and energy markets into this platform called VPP.
Why call it a power plant if its a mini grid operator – Well a VPP acts as an intermediary between DERs and the market and trades energy on behalf of DER owners who are not able to participate in the electricity market alone. The VPP behaves as a conventional dispatchable power plant in the viewpoint 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 by exercising arbitrage between diverse energy trading ﬂoors (i.e., bilateral and PPA contracts, forward and futures markets, and the pool).
The laundry list of services that a VPP offers include
The bulk of VPP services are software elements and therefore the VPPs primary driver is software. Artificial intelligence and machine learning are key drivers to the whole range of predictions involved in the activities of a VPP. Platform components include
Demand side services
At Algo Engines, we started with the supply side models to better predict generation from distributed energy sources. In the next stage, we worked with energy generators to fine tune models that predict demand to maximize their revenue. As VPPs grows with the deployment of storage capabilities, we aim to build further models to optimize their performance and maximize revenue for operators.