Virtual power plants offer flexibility

With the energy transition, more and more conventional power plants such as coal-fired or nuclear power plants are being phased out of the market. They are being replaced by decentralized, fluctuating feed-in plants that generate electricity from wind or solar radiation. For the energy system (e.g., frequency) to remain stable, these renewable energy plants must be intelligently interconnected.

So-called virtual power plants (VPPs) can perform this task: They combine many renewable energy plants into a larger virtual power plant. This step makes it easier to market their decentrally distributed flexibility potential. Virtual power plants are thus the link between the decentralized grid and centrally organized electricity markets.

The EWI analyzes the flexibility potential of virtual power plants on a regional level and in the overall system.

  • Influence of regulation on the economic feasibility of VPPs
  • Incentive structures for the regulation of local system services
  • Economic importance of VPPs
  • How can VPPs reduce the need for guaranteed capacity?
  • Different business models for VPPs

However, there are not only more distributed power-generating plants but also more distributed power-consuming installations, such as electric vehicles or heat pumps. These developments combined pose significant challenges for distribution network operators in particular.

Regional VPPs help coordinate the growing potential for flexibility and the increasing demand for flexibility from generation, storage, and consumption. Regional VPPs integrate (household) generators and controllable consumers into the distribution grids. They control and market these on the electricity markets.

The EWI offers a comprehensive model portfolio to map grids, markets, energy system developments, and the diffusion of individual technologies.

Virtual power plants in the overall energy system

In the course of the QUIRINUS project, the EWI quantitatively/economically assesses the importance of VPPs in the future power supply at a system-wide level: How can the flexibility of regional VPPs contribute to the integration of renewable generation? And how can regional VKWs reduce the need for guaranteed capacity? The detailed mapping of the transmission grid in EWI’s proprietary model SPIDER allows determining the added value of VKWs on the market- and transport-level on a high regional resolution.

Business models of regional VPPs

The EWI also sheds light on the individual business management perspective for regional VPPs. By coupling a distribution grid model and EASE, an asset valuation tool, the institute has identified possible business models of these virtual power plants in the Virtual Institute Smart Energy (VISE), for example, and analyzed them concerning their business potential. Overall, three possible business models are distinguished:

  • Regional virtual power plants that directly market surplus distributed generation,
  • aggregators, which control the entire asset deployment of several households, and
  • Neighborhood power plants, in which households bundle to market themselves.

The EWI is also investigating how the different business models are feasible in the context of current and future regulation. The configuration of households with flexibility marketed in regional VPPs is based on EWI’s model COMODO analyses. COMODO simulates the diffusion process of decentralized generation technologies. The simulation model DIMENSION determines the required future price time series.

Local market mechanisms

Local market mechanisms are another approach to meet flexibility needs through the local aggregation of supply and demand. There are no virtual power plants that serve as intermediaries between central markets and decentralized grids in this approach. The EWI is developing a machine-learning-based simulation model to map complete decentralized decision-making. This model can then be used to investigate the economic viability compared to VPPs.

 

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