Ask the Expert: What is a Virtual Power Plant, or VPP? (Part 1)

Written by Jeff Perkins, ERS

In this two-part series, Zondits will explore virtual power plants as an emerging technology that serves as a dynamic and boundless collection of resources. Part 1 will focus on defining what exactly a VPP is and how it is unique from the common microgrid concept. Part 2, brought to us by our friends at Next Kraftwere, will focus on the business model of VPPs and how their adoption can make money.

Part 1: What is a VPP?

Zondits has posted a lot of articles about microgrids over the years, and now we are hearing more and more about VPPs. What are VPPs, and how do they differ from a microgrid?

Microgrids have fixed boundaries and a static set of resources that can be “islanded” from the grid, meaning those resources can remain operating independent from the grid for some given period of time.

A virtual power plant (VPP) is indeed a collection of resources like a microgrid, but it is much more dynamic, never islanded, and can have variable boundaries. A VPP should be thought of as an orchestration of a collection of grid resources responding in real time to real-time grid conditions. Basically, it is a dynamic aggregation of grid resources with no boundaries at all – hence, virtual.

A VPP can be an aggregation of supply resources, dispatching and curtailing generating assets. Or it can be an aggregation of demand resources delivering demand response services. Or it can be mixed and have an aggregation of supply, demand, and even storage.

The evolution of the electric grid that we are currently living through – with more distributed generation resources, greater electrification, more dynamic dispatch, and daily curtailments – requires that the grid find highly flexible ways to find and deliver resources to meet loads. VPPs are a manifestation of this growing need.

To achieve success, a VPP needs to do at least three things well:

  1. Have a distinct and scalable means to aggregate assets of various types and from disparate locations
  2. Have the ability to either forecast or receive forecasts and then be able to react to changes in near real-time
  3. Generate revenue and add value through optimizing those assets to the real-time needs of the grid

To learn even more about VVPs, check out these two informative articles: