It’s been almost a decade since German utility RWE piloted one of the first virtual power plants, made up of nine small hydro facilities networked to deliver power to the transmission grid.
The world of virtual power plants (VPPs) has evolved considerably since then.
To provide VPP services to the transmission grid, aggregators now draw on a diverse mix of distributed energy resources — storage, demand response, renewables, microgrids — from various commercial and residential services. And utilities are warming to the idea of monetizing distributed resources by aggregating them into some kind of virtual plant and selling into the wholesale market.
VPPs are even expanding to include the distribution grid.
Still, most VPPs are “driven by wholesale market value, trading opportunity or systemwide benefits,” said Bud Vos, president and CEO of Enbala, a company using distributed resources to balance the grid.
Vos was joined by Adam Todorski, senior director of product technology at AutoGrid Systems, and Sandra Trittin, head of business development at Swisscom Energy Solutions, at the 2017 Grid Edge World Forum, where they talked about the rise of virtual power plants.
AutoGrid, Enbala and Swisscom all make their money by selling VPP platforms. AutoGrid specializes in supporting utility aggregation where scale is critical and customer load management is “beefed up to be more real-time.” Enbala focuses on C&I customers, which are the usual targets of aggregators or utilities. Swisscom is fairly unique in addressing the residential market, providing utilities with a white-labeled platform.
Panelists agreed that market rules and regulations are not a barrier to the adoption of typical VPPs. There are already well-defined rules for service monetization in the ISO or European transmission markets, unlike “still-to-be-developed” distribution markets.
Aggregating resources is not easy, though. The VPP must meet the same requirements as central station generation. Todorski knows that “velocity matters. Telemetry is important to 2 to 4 seconds, and the resource must perform optimization at that time scale.”
For Europe, frequency response requires less than a half-second reaction time, according to Trittin. For most resources, standalone will not do. Resources need to be aggregated and move fast to provide enough value to the grid.
In the early days, lack of technology maturity was a barrier to the growth of the VPP market. Now there are tools that can perform close to the scale and speed required.
According to Vos, companies “can roll up 200 commercial and industrial sites and get metering and telemetry on them, bring in energy storage and bid into the market.”
Markets in the United States and Europe vary widely in their definition of services, so it’s important to assess whether platforms can accommodate a specific market or handle the complexity of resources.
The vendors all talked about resource size — which they agreed doesn’t matter if there are enough customers to put together.
For markets in Europe, the threshold is typically from 500 kilowatts to 1 megawatt, according to Trittin. Her company has an aggregation group called Tiko in Switzerland. The company started by aggregating customers’ heating and hot water load, and then moved later to PV.
The technology starts by optimizing the resources in the home according to customer preferences, and after that, extracting services to the grid. Tiko believes that customer satisfaction depends on apps providing dashboards for comparing consumption against neighbors, remotely controlling appliances, and monitoring potential problems.
Just like solar and other distributed resource markets, the cost of customer acquisition is high in the VPP sector. As a result, utilities will have a leg up over smaller vendors — if they can figure out the best way to engage with customers behind the meter.
Aggregators are hoping that markets for distribution grid services will develop, such as the one under construction in New York. In the meantime, in some areas of Europe, aggregators can contract with utilities directly to provide distribution grid support. But those contracts are rare.
Still, platform providers are anticipating the need to support flexible resources at all levels. It’s just a matter of time before more utilities wake up to the need for aggregating distributed resources as more centralized power plants retire — and these emerging vendors plan to be there to serve the market.
Source: Greentech Media.