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Virtual Power Plant

Virtual power plants (VPPs) are among the promising ways that
variable generation and flexible demand may be optimally balanced
in the future, the topic of this chapter, which is organized as follows:
From: Behind and Beyond the Meter, 2020

Related terms:

Energy Engineering, Energy Storage, Smart Grid, Distributed Energy Resource,

Micro-Grids, Transmission System Operator

Aggregation of front- and behind-the-meter: the

evolving VPP business model
Lotte Lehmbruck, ... Fereidoon Sioshansi, in Behind and Beyond the Meter, 2020

10.1 Introduction
The increased penetration of renewables in the energy mix means that balancing
supply and demand in real time is becoming more of a challenge for grid operators
as they more frequently face periods when there is too much generation and too
little load or vice versa. With the rapid growth of distributed generation, most
commonly from rooftop solar PVs and on- and offshore wind turbines, the
problem of balancing supply and demand is becoming even more problematic. At
times of excess renewable generation, prices in the wholesale market plunge or
occasionally go negative. In an increasing number of places, some of the excess
solar and/or wind generation must be curtailed—simply because there is no easy
way to use it, not enough transmission capacity is available to transport and/or not
enough capacity is available to store it for use at later time. These issues are
extensively covered in the literature and need not be further amplified here.
Moreover, the traditional means of balancing supply and demand—where
dispatchable generation was adjusted up or down to follow the load are not
practical when the bulk of generation is no longer dispatchable, nor even fully
predictable. This growing challenge, in a nutshell, is what has resulted in the rising
interest to better manage inherent flexibilities in demand to better follow variable
renewable generation—whether from utility-scale sources or small-scale
distributed generation or storage.
Virtual power plants (VPPs) are among the promising ways that variable generation
and flexible demand may be optimally balanced in the future, the topic of this
chapter, which is organized as follows:
• Section 10.2 outlines the historical VPP business model referring to Next
Kraftwerke, among the oldest and most successful of European VPPs;
•

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Section 10.3 explains how the original business model has changed and is
evolving in response to technological innovations, changes in regulations and
the changing demands of the grid operators;
• Section 10.4 speculates how the VPP business model is likely to mature as
customers become more proactive and more inclined to participate in VPPs
because the rising variable energy generation increases the revenue stream
embedded in the behind-the-meter assets followed by the chapter’s
conclusions

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Virtual power plant communication system

architecture
Matej Zajc, ... Nermin Suljanović, in Smart Power Distribution Systems, 2019

11.4.1 The VPP message exchange

During VPP operation, continuous information exchange is needed between TSO
(or DSO), VPP, and aggregated DERs. The VPP receives commands and set points
from the top-level entities, but otherwise acts autonomously. The VPP is closely
connected to the electricity market and market-related data is exchanged between
the VPP and market actors (retailors and aggregators).
The VPP is receiving power measurements, curtailment capacity, and availability
information from DERs. Information is periodically reported with the selected cycle
time interval defined by a particular grid service type (Table 11.1). Simultaneously,
VPP transmits aggregated pool measurements and calculated baseline values to
the upstream entities.
Fig. 11.7 collects a protocol-agnostic message exchange between the TSO, VPP,
and DER (Kolenc et al., 2018). Based on monthly, weekly, or daily tenders on the
electricity market, the TSO sends a BID activation signal to the VPP. In the case of a
valid bid, the VPP returns a BID confirmation back to the TSO. At the same time, the
VPP dispatches a START activation signal with the required set-point value to the
selected DER. The activation event starts when the DER sends an acknowledgment
signal back to the VPP.

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Fig. 11.7. The VPP message exchange during the activation process (Kolenc et al.,
2018).

During the activation, the DER continuously sends measurements to the VPP to
adjust production capacity to the selected set-point value. The VPP constantly
sends reports to the TSO to monitor the provided capacity. If needed, the VPP can
also adjust the set-point value during the activation event for the selected DER by
sending the CHANGE set-point value signal. The activation event terminates with an
Activation END signal sent to the DER. The VPP receives confirmation from the
DER and terminates the activation event by sending the report to the TSO.
When the VPP acts as a TVPP to provide grid services on the distribution level, it
needs to communicate with the DSO. In addition to the message exchange in Fig.
11.7, a VPP needs to receive operational data (power flows, voltage levels, network
status, power quality measurements, etc.) from the DSO's SCADA or EMS systems.
The exchange of operational data between the VPP and the DERs is similar to Fig.
11.7 as the VPP needs to continuously receive: power measurements, availability
status, and available capacity in the monitoring direction; and dispatch set-point
signals in the control direction. TVPP can also require services from CVPPs to
exchange status, financial settlement, operational, and other relevant data and
signals.

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Energy Internet in China

Guanwei Liu, ... Feng Gao, in The Energy Internet, 2019
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12.2.3.6 Virtual power plant

Virtual power plant (VPP) technology can assemble all controllable distributed
energy sources of the energy network to collaborate, integrating their scattered
capabilities to serve certain needs of EI. It uses key technologies such as
communication, smart metering, data processing, and so forth and could be a
framework technology for incorporating various scattered energy sources, such as
renewable energy, on a large scale into one powerful source contributing to system
operation. The participation of VPP can be a main contribution to various energy
service markets, such as ancillary services, carbon trade, and so on. It can also
dramatically improve the utilization rate of distributed energy resources, making
the whole system work in a more efficient, economically profitable way.

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The impact of the institutional context on the potential

contribution of new business models to democratising
the energy system
Ruth M. Mourik, ... Anna J. Wieczorek, in Energy and Behaviour, 2020

5.6 Channels
When cVPP projects change their proposition to be able to arrive at feasible
business model, the customer interactions and relations change as well, as
explained earlier. There is consequently the risk that the direct, personal, face-to-
face channels of interaction within the community become much less important as
the cVPP initiators need to turn towards a variety of other stakeholders that they
depend on for realising the cVPP initiative. This implies that the Dutch and Irish
channels run the risk of becoming much more professional and traditional,
resembling the current mass-market type of interactions between energy suppliers
and their customers. The community-focused type of channels would fade into the
background.

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Customer participation in P2P trading: a German

energy community case study
Sabine Löbbe, ... Gregor Rohbogner, in Behind and Beyond the Meter, 2020

4.5.2 Community with focus on virtual power plants

A virtual power plant is designated to optimize the generation portfolio and
consumption of community members as a whole so that the community’s degree
of autarchy or the overall revenue is maximized or the environmental impact
minimized, as presented in Chapter 10 by Lehmbruck et al.
The main target group mainly consist of “cooperators”, that is, prosum(ag)ers and
consumers attracted by engaging in an energy community and interested in the

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self-sufficiency of the community, the codetermination, and the possibility to
exchange with community members.
Possible benefits for customers comprise the support of self-sufficiency within the
community, independence from large, faceless companies, as well as the chance
for participation and codetermination in an energy community offering a strong
community feeling. This might also include an investment of jointly generated
revenues in assets for the community. Environmental awareness, regionalism, and
community-related topics play a greater role compared to the first product aiming
at individual self-sufficiency. However, optimization goals targeting at either
autarchy, cost reduction, or environmental impact can serve to attract different
target groups.
Chances for further differentiation include flexible production and storage units as
well as load management for optimizing balancing costs or offering ancillary
services to the power grid. So far, the TSOs manage these ancillary services
exclusively. Should comparable market places appear on the distribution grid level,
this would open up additional revenue streams and corresponding possibilities for
customer differentiation of local energy communities.
Such earnings can either ameliorate the profitability of the service or serve for
investments within the community. The latter option would stimulate the
installation of new community-owned renewable generation assets and could
increase the bond of participants with their community.
Furthermore, this opens up cross-selling potential regarding behind the meter
products, such as sale and contracting offers of distributed energy generation and
storage units with or without operation and maintenance services. As for today, the
margins in these asset-based products and services seem to be more promising
than margins in energy sales.
Moreover, the sharing of other goods and services in the neighborhood might be
interesting for the target group of local energy communities as well—ranging from
sharing of drilling machines to dog sitting or advice regarding energy
management to consulting concerning income tax statement procedures.

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Smart grid digitalization in Germany by standardized

advanced metering infrastructure and green button
Jürgen Meister, ... Mathias Uslar, in Application of Smart Grid Technologies, 2018

2.2.7 Use case “virtual power plant”

Name Virtual power plant

Scope For direct marketing of electricity from a renewable DER, the DER
owners usually have to mandate an independent aggregator with
reselling. The aggregator integrates DERs in pools of his virtual
power plants and sells the aggregated produced energy or the
aggregated flexibilities in energy production to different markets.

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Name Virtual power plant

Objective
• Reducing subsidies for renewable DERs by increasing direct
marketing of renewables by aggregators.

Narrative The aggregator opens a communication channel in order to send

schedules to a DER or a signal for starting or stopping energy
delivery. Aggregators usually choose automation protocols. They
also define data models and communication procedures for CLS
because CLS devices must align with the virtual power plant
solution of the aggregator.

Actors Aggregator, CLS, SMGW, SMGWA

Prioritization Nonregulated, optional

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Assessment of Revenue Potentials of Ancillary Service

Provision by Flexible Unit Portfolios
Stephan Koch, in Energy Storage for Smart Grids, 2015

1 Introduction and Literature Review

A key application of virtual power plants (VPPs) in power systems is the provision of
frequency control reserves. A crucial question for this use case is the revenue that
can be achieved with a certain amount of control capacity provision on ancillary
service markets. Previous work on the value of controllable demand has been done
mainly for the cases of load shifting and the exploitation of price differences, such
as in [1]. The value of energy-storage devices for short-term dispatch and balancing
was also assessed in the literature, e.g., in [2]. Frequency control ancillary service
provision by plug-in hybrid electric vehicles (PHEVs) was described and
economically evaluated in [3], demonstrating substantial revenue potentials.
In this chapter, we examine a market-based approach to ancillary service provision
by flexible unit portfolios consisting of storage, controllable load, and generation
units. In this setup, individual market players, called aggregators, control unit
populations in a suitable way for delivering control reserves. The aggregators can
both be separated from or integrated in established electricity utilities. The main
point of investigation is the contribution that a certain type of unit can make to a
control product. This requires a consideration of the inherent energy constraints
that any kind of storage unit exhibits (acceptable internal temperature range in the
case of thermal loads). This question is approached similarly to [4] by a time-
simulation setup using benchmark portfolios. Here, we use the power nodes
modeling framework (PNMF) first presented in [5] and [6]. The results of the time-
domain simulations are merged with an analysis of historical price data, in this
case of the Swiss frequency control reserves market, in order to estimate the
financial revenue potential of a certain unit-portfolio bidding into the market.
The results of this chapter are partly based on [7] and have also been reported in
[8], Chapter 7. This chapter is structured as follows: Section 2 discusses properties
of liberalized electricity markets and the role of aggregators. In Section 3, the

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modeling of the revenue from ancillary service provision by flexible unit portfolios
is presented. Section 4 presents a case study using the benchmark portfolios 3 and
4 from [8], Chapter 6. Section 5 presents the modeling of a method for profit
sharing between the various actors. Section 6 presents concluding remarks. The
used notation is summarized in Table 2.1.

Table 2.1. Notation for this chapter

Var. Unit Meaning Var. Unit Meaning

C [EUR] Cost α [-] Storage share

E [MWh] Energy β [-] Admin-fee coeff.

K [-] No. of time steps γ [-] Control resp-fee coeff.

k [-] Time step δ [-] Storage-fee coeff.

M [-] Mapping Δ [-] Change

n [-] Number Π [EUR] Profit

R [EUR] Revenue π Price

T [-] Time span

Subscript Meaning Subscript Meaning

act Actors/activities ICT Inf. and. Comm. Tech.

activ Activities MTU Market Time Unit

actor Market actor net Net value

bat Battery opp Opportunity

capa Capacity prov Provision

en Energy ramp Ramping

exch Exchanges s Sampling

fuel Generator fuel spot Spot market

gen Generator strg Storage

Superscript Meaning Superscript Meaning

base Base case value feed-in Feed-in of energy

bat Battery fixed Fixed one-time fee

capped Value with upper bound floored Value with lower bound

CL Controllable loads gen Generation

cons Consumption max Maximum

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Distribution Generation Optimization and Energy

Management
Barry Hayes, in Distributed Generation Systems, 2017

9.2.5.2 Virtual Power Plants

Another concept often discussed in the context of DG is the virtual power plant
(VPP) shown in Fig. 9.4. The idea behind a VPP is to link together a large number
of distributed resources (for example DG units and flexible user loads) in such a
way that these can be scheduled or dispatched from a central control room in the
same way as a traditional large power plant. This approach can, in principle, replace
conventional power plants with aggregations of local resources. However,
designing and implementing the necessary communications and control
infrastructure to effectively manage large numbers of distributed resources is a
complex task.

Fig. 9.4. The virtual power plant concept.

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Infrastructures for Green, Smart and Healthy

Communities
Xing Li, ... Melody Rong, in Climate Preservation in Urban Communities Case
Studies, 2019

Overview: Virtual Power Plant

Transferring from a central grid to on-site power, virtual power plants are literally
distributed energy sources. They are designed to cut down cumulative power
demand during peak hours, supply renewable energy, and prevent intervention on
the grid. Due to the problems and concerns with nuclear power, China is working
with the United Kingdom on what to do to make the ones that they have safe and
secure. However, the nation is moving away from nuclear power and into
renewable green energy systems for both on-site and central grid power. The graph
below shows how these systems need to and will be interacting.

A graph of the virtual power plant. Graphics: Statkraft.

China has been advancing in distributed power and will increase renewable energy
usage. The 12th Five-Year Plan in 2012 planned to produce distributed power from
solar energy with a capacity of 10 GW.
China's largest energy utility, the State Grid Corporation has encouraged
households and companies to utilize distributed power by providing credit for extra
power they deliver to the grid since March 2013. The grid is connected to on-site
power at less or equal to 10 kV, with capacity of each on-site power being less than
6 MW.
Moreover, distributed power technologies solve issues from natural gas flaring and
can stimulate transformation from oil and gas industry.
China has been leading in investment on renewable energies with $89.5 billion in
2014. 19.81 FW and 10.61 GW have been installed in wind and solar energy,
respectively, from both central plant and distributed power. China is aimed at
installing 100 and 200 GW for solar and wind, respectively, by 2020.

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The role of various market participants in blockchain

business model
Saber Talari, ... João P.S. Catalão, in Blockchain-based Smart Grids, 2020

2.3 Virtual power plants

To coordinate a vast number of DERs with different owners, the concept of VPP can
be a solution while transacting among all self-organizing prosumers. Indeed, VPP
collects several numbers of coordinated DERs to have controllability, visibility, and
impact at transmission grid. The concept aims to achieve upstream generation and
transmission capacity reduction, network efficiency, and energy increment and
pollution reduction. VPP operator is also in charge of providing upstream services
to wholesale market and grid operators by aggregation of large number of
prosumers and DERs [12].
The strategy to make a VPP varies based on the type of the incorporated DERs, the
way of operation, and provided services. Accordingly, VPP can control the DERs
directly, or this control can establish indirectly through sending incentive price
signals to effect on prosumers’ consumption and generation. In direct control,
DERs can be dispatched according to their operating parameters and owners’
preference [13]. In this case VPP has certainty over the facilities that DERs can
provide like capacity and response. DERs in this control can provide fast timescale
services such as frequency regulation [7]. To this end, distributed optimization
methods are suggested such as Lagrangian relaxation run by VPP operator. It
means that the communication and processing are carried out in distributed way,
yet all require design and operation by a single entity. Through indirect control,
prosumers decide about the local consumption and generation based on
considering the incentives and their preferences. Time-of-use (ToU) pricing is one
of the incentive pricing methods that encourage prosumers to shift the loads to
reduce the upstream capacity. Day-ahead hourly pricing and location-based pricing
in distribution network to coordinate DERs are some other examples of incentives.
The benefits of this method are independence of prosumer over the scheduling of
their flexible loads and reduction of communication requirement and privacy
concern due to using unidirectional signals. On the other hand the method may
cause new peak hour due to risk of shifting all loads to the special off-peak time. All
in all, direct control does not provide enough flexibility for prosumers, and indirect
control makes difficult for operator to predict the prosumers’ behavior. Therefore
an intermediate solution between direct and indirect method can be a solution to
overcome all obstacles for VPP.
In Fig. 5.5 the possible interaction among VPP and the players in the market is
depicted. As mentioned, prosumers in this structure have two ways of controlling,
direct and indirect. An approach containing both of these controlling methods can
be applied for a blockchain platform. Within this platform the location of DERs in
distribution network is important, in the sense that the relative DSO would be able
to run an accurate power flow. One of the advantages of this strategy is that VPP
can participate in wholesale market and procure some ancillary services such as
frequency regulation and reserve. Blockchain platform provides detailed
information for VPP to be participated in the market more effectively.

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Fig. 5.5. Possible VPP architecture in blockchain platform.

VPPs with controlling large number of DERs are able to provide some grid services
including ancillary services such as reserve and frequency regulation through some
transactions in wholesale market organized by TSOs [14]. The interaction among
DSO and VPP is also vital to reduce the loss and improve voltage regulation. Since
VPPs have knowledge about the location of their DERs, they can provide some grid
services for DSO for management of distribution network [15]. In this case DSOs
will be able to efficiently integrate DERs by managing the power flow of the
distribution network, actively.
It is noteworthy that microgrids can be also operated as VPP [16]. They include
DERs and loads that can operate as a part of network or autonomously in an island
mode. The communication architecture for VPP can be centralized, distributed, or
unidirectional. Centralized communication is for the situation that prosumers
communicate with a central VPP coordination, although distributed
communication uses P2P prosumer-to-prosumer connection. In addition, in
unidirectional communication, prosumers only receive information from
coordinator. According to Fig. 5.6 the most suitable communication infrastructure
in VPP for blockchain implementation is distributed one.

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Fig. 5.6. VPP communication infrastructure.

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