What is a Virtual Power Plant?

It seems that “Virtual Power Plant” is a flavor of the month this year, whatever that is.  I know what a power plant is, and these days a “virtual” something usually means a software thing that emulates another software thing.  So, what could a VPP even mean?  (I’m not the only one who wonders this [1].)

“Every problem in computer science can be solved by adding another layer of indirection.”

(attributed by Butler Lampson to David J. Wheeler)

Wikipedia gives a concise definition: a VPP is a software thingy that aggregates distributed energy resources (think roof top solar) into a single logical “power plant”.  The idea is for the VPP to be able to participate in the Grid via electricity markets [2].

So, in one sense, this is a way of bundling lots of small sources into a form that fits into the industrial scale electricity grid.  And, like any “virtual” entity, this software façade can stand in front of lots of different implementations, so long as they can produce electricity when demanded.  So, this certainly is one way to aggregate lots of different stuff, to give the utility a simple source to work with.  A VPP hides the nasty details of the distributed resources from the utility and market place.

I’ll note that it’s not just technical complexity that is “hidden”.  A VPP is a legal entity that handles the contractual relations between many small producers and industrial markets and utilities.  You might sign up with the VPP to provide power from your home system, and the VPP contracts with a utility to deliver power from all its sources.  So, the VPP hides the ugly details of these contracts from everybody.

But there is more going on with VPPs than just aggregation, and that’s where they get interesting.

The main role of VPPs is to sell peaking power, power that utilities contract for at peak loads.  Conventionally, this comes from unused power plants which come on line when demanded, or from far away power plants not experiencing the same peak.  So, VPPs get into this game, pulling in power from home batteries and roof tops to meet peak needs and prevent brownouts. 

Of course, this means that your home system will have less power right at peak times. Maybe this won’t matter, e.g., solar power is abundant in mid-summer so you may have lots to spare.  But you may need to throttle back consumption to meet this contract.  And VPPs can make that happen if you have “smart” devices, e.g., turning back the AC at peak times.  Which you probably want to do anyway.

So that’s moderately cool.  You get paid to dispatch some of your power to the grid and to reduce consumption at peak times. And the VPP takes care of the coordination with markets and utilities.

It’s even cooler, though.  Apparently, VPPs can also sell electricity in the form of reduced demand [2]. (!)  Even if you don’t have enough home generating to supply the grid, you could still be part of a VPP by contracting to reduce consumption upon demand.  The VPP might enable the utility to turn back thermostats, reduce lighting, slow vehicle recharging, and so on to save power at peak load.  And you get paid to be efficient.

OK, that’s pretty cool.  (It’s also the first use case I’ve seen that even remotely tempted me to want “smart home” technology.)

I’ll note that the VPP concept has another very fundamental virtue.  Like “virtual” anything, the software can sit in front of lots of things, and the things behind the façade can change.  So, not only new sources, but new kinds of distributed resource can come on line very smoothly, by plugging in to existing VPPs.  The utilities don’t need to change to get these new resources on line.

At the same time, if VPPs are common enough, distributed resources can be designed specifically to work with them.  I.e., a VPP offers a useful design standard that makes technology deployment easier.  How will I deliver my new renewable energy?  I’ll put in the hardware and software to connect with VPPs—problem solved.  (And, by the way, there will be a market for “plug into a VPP” kits.)

So, yeah.  I’m starting to see what all the hooplah is about.

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1. Andrew Blok, What’s a Virtual Power Plant? Should You Join One?, in CNet, March 18, 2022. https://www.cnet.com/home/energy-and-utilities/whats-a-virtual-power-plant-should-you-join-one/
2. Jigar Shah, Achieving a zero-carbon grid: opportunities in virtual power plants, in PV Magazine, May 31, 2022. https://pv-magazine-usa.com/2022/05/31/achieving-a-zero-carbon-grid-opportunities-in-virtual-power-plants/