Pentti Bruun and Aleksanteri Nummi explain how advanced power electronics help to keep batteries alive for longer and enable operators to control their system through an innovative cloud-based solution
The energy industry is at a turning point. Traditionally, energy production has been centralised into huge power plants, but the industry is changing towards decentralised and smarter production. Global trends to decrease CO2 emissions and make cities smarter have driven the development and implementation of renewable energy sources worldwide. Conventional energy systems have relied on massive-scale power plants to deliver the needed power for the consumers, however, new novel solutions in the energy distribution sector are able to change the centralised generation into decentralised with possibility to utilise more renewables than currently.
Virtual Power Plant (VPP) is a system that integrates several types of power sources to give a reliable power supply for the electricity distribution grid. A central cloud-based IT system controls the VPP functions and aggregates together multiple different distributed energy resources (DERs) almost in real time. The aggregated units can be traditional wind or solar plants, hydropower or other conventional power sources, but emerging new solutions, such as electric vehicle batteries, telecom stations battery back-ups, industrial loads (e.g. heating and flexible power consumers) can also be used. When the IT system manages all these different sources together, the VPP functions like a traditional power plant, but with a lower latency time and higher response for occasional demands.
Virtual Power Plant has built-in flexibility
VPP gives flexible power for the grid that helps to manage the electric load more efficiently. During the peak demand times VPP can participate into peak clipping, valley filling or load shifting activities to smoothen the demand peaks and lows. This decreases the need for fossil-based backup power sources, for example, coal plants and diesel generators. When the electricity consumption is low, VPP can charge battery-based reserve units with renewable energy and use the reserve capacity during high peak demand times. The essential difference compared to current operation is that battery back-up changes from passive back-up power to active energy storage, which is discharged and recharged according to the situation. As a result, the used energy is green – which decreases emissions and means electricity distributors can avoid the start of fossil-based power plants and generators, therefore generating cost savings.
A key benefit that VPP brings is more efficient electricity markets. Currently, the energy producers have huge-scale power plants and it is difficult to participate into the markets as a small-scale player. VPP makes it possible to aggregate different smaller scale energy sources together, that enables new producers and prosumers to take part into the markets. Emerging 5G technology and faster broadband have made it possible for electricity grid operators to monitor and adjust the grids in millisecond times. The latency of control is one of the cornerstones of VPP, in which way even more than 100,000 small energy recourses can be commanded with a delay of less than a second. The lower response times mean faster demand response and up-to-date information of the grid. Consequently, there are fewer blackouts and outages in the distribution, which affects the grid stability, reliability and congestion bottlenecks. In other words, the markets are more responsible for changes, opened up for new participants, able to generate new income sources and offer stability for the consumers.
The Internet of Things (IoT) is one of the key solutions that enables the use of VPP. By connecting different devices and energy sources into the same system cities, consumers and producers can monitor and control their energy usage from individual devices up to large scale facilities. When multiple devices are connected into the grid, for example via 5G connection or broadband, everyday devices such as building air-conditioners or EV batteries can be managed to be used as part of VPP. This creates huge business potential for cities, industries and other players that have not had possibility to participate into the markets before. The global VPP markets were valued at US$1.3 billion in 2019 and it is estimated that the markets will be US$5.9 billion in 2027 with annual growth CAGR of 21.3%.
What’s in store for Virtual Power Plant
Future possibilities for VPP usage are vast, from individual consumers to large cities, the plausible use cases are numerous and constantly growing. Internet of Energy (IoE) refers to the technical term for when different energy sources and electrical devices are implemented with IoT connectivity and connected into the same infrastructure. IoE allows the energy producers and consumers to create smarter services and business opportunities around the current infrastructure. Metropolises, countries and businesses are able to use their current infrastructure more efficiently; for example, cities can connect their shopping malls, office blocks and other buildings into VPP to acquire cost-savings, better services for citizens and decrease CO2 emissions. This will also attract new tax-payers into the cities, thus generating more income.
In conclusion, VPP offers numerous benefits that impact many fields – from individual consumers to businesses and cities. Risk management becomes easier, because everything in the electricity grid is connected into the cloud and can be monitored with low latency. Grid load management can be handled with lower costs and emissions. Individual consumers will have more reliable electricity input with fewer blackouts and outages, and it allows the consumers to become prosumers. Building heating and cooling, EV batteries and solar panels can be connected effortlessly into the regional grid. Businesses can gain income from the VPP markets with current and future solutions – for example, connecting existing facilities into VPP or by creating new business models around it. Cities start to move towards smart cities where higher grid stability and better service for citizens will become everyday life.