Virtual Power Plants create flexibility in power markets
The quick and versatile ability to balance the grid, also known as flexibility, is one of the Virtual Power Plant’s greatest strengths and the most significant difference compared to conventional power plants. By quickly adapting to the existing supply of power on the grid, Virtual Power Plants can utilize the aggregated power to react to changes in the electricity price on the exchange and execute trades. After all, the price of electricity fluctuates: Every day, the price changes 96 times in intra-day trading on power exchanges in Europe. A price spread of two and even three digits per megawatt hour is not unusual.
The price of electricity fluctuates - and the amount of available power is not always the same
Large power plants, which have a consistent output of several hundred megawatts, come up against their technical limitations relatively quickly. Picture a lignite power plant like a large container ship: there is a considerable “braking distance” before the plant’s turbines could be slowed enough to accommodate an increase in wind power availability during a storm. To prevent the grid from overloading, the climate-neutral wind power would be taken off the grid instead.
A Virtual Power Plant, however, would react to surplus of wind power by executing a simple command to reduce the output of, for instance, connected biogas and hydro plants. In the opposite case – a power shortage on the grid – the control system can increase biogas and hydro power plant power production or lower consumption by its connected consumers. The Virtual Power Plant directly balances fluctuation in power production and consumption in real time without straining the public grid. Commands that raise or lower feed-in amounts are executed by the control system using an API or remote-control units installed on each asset.
Virtual Power Plant interface and network connection
Within the Virtual Power Plant, transmitting commands and data between the highly-secure and redundantly-designed control system and the individual assets is conducted over a secure, tunneled data connection. These tunneled connections use the public communication infrastructure, but protocols are in place to separate information pertaining to the Virtual Power Plant from the public flow of data. This calls to mind buzzwords such as “the internet of things,” “industry 4.0,” and “M2M,” but it really refers to a specially secured and shielded mobile and hard-wired data connection.
The bidirectional connection between each asset and the Virtual Power Plant does more than simply facilitate the execution of commands. It also enables a permanent, real-time exchange of data pertaining to the capacity of the networked assets, and therefore the Virtual Power Plant as a whole. The data – which includes the reported feed-in capacity of wind and solar assets, consumption data, and storage capacity indicators – contributes to precise forecasting for power trading and operational scheduling of flexible power assets. Processing and evaluation of the data is mostly automated within the software architecture of the Virtual Power Plant. The software also takes on many of the tasks associated with initiating and executing trades on the power exchanges.
Control reserve from Virtual Power Plants
Flexible, renewable power producers such as biogas, hydro, cogeneration unit (CHP), and emergency power generators have an additional advantage: Not only are they able to reduce or cease power production when there is power surplus on the grid (negative control reserve), but they can feed-in additional power to the grid during electricity shortfalls (positive control reserve). For an asset to provide control reserve, it must have a capacity of at least one megawatt in most European markets (the minimum was previously five megawatts). To reach this threshold, several assets can be linked together in a Virtual Power Plant.
The cluster of assets collectively responds to control reserve orders by the Transmission System Operator, with profits shared among all asset operators. Power consumers can also provide negative control reserve: For example, an industrial plant connected to the Virtual Power Plant can receive a command to increase production and remove surplus power from the grid.
Power consumers in Virtual Power Plants
Thanks to the data collected in the Virtual Power Plant, commercial and industrial power consumers can profit from price signals coming from the power exchanges. Power consumption can be limited to times when electricity is readily-available on the market at a low price. If production operations are limited to low-price periods, a company can reduce power costs by up to a third.
If desired, the Virtual Power Plant can fully automate this optimization. The Virtual Power Plant’s control system sends commands to the company’s machine control room, but only to the extent that is possible and needed. In this case, however, a power meter with consumption metering must be installed. These are only available when annual consumption is expected to exceed 100,000 kWh.
Private homes will have to wait for smart meters
Private households do not reach this level of power consumption. Therefore, the integration of private homes into the Virtual Power Plant will have to wait until smart meters become the norm. Hopefully, smart meters will soon replace the old three-phase meters of the 1920s - a hundred years after they were introduced. With appliances such as heaters, ovens, washing machines, refrigerators, and hot water heaters intelligently-optimized to align with electricity prices, power consumption at home can become more cost-efficient.