Adoption of Virtual Power Plants Market Models in making Power Grid Balanced and Smarter key to their Popularity

Energy management is witnessing several paradigmatic shifts globally riding on the back of rising share of renewables in the overall energy mix world over. Virtual power plants (VPPs) portray one such concepts in distributed energy resources that seeks to make grids smarter. These plants can be considered as an integrated network of several distributed energy resources and flexible power consumers sitting atop of a centralized IT control system. The variety of sources often feature renewable energy resources such as solar, wind, and hydropower; numerous combined heat and power (CHP) units; and various battery systems such as backup generator sets.

How does Virtual Power Plants bring Flexibility to Power Grid System?

Key Purpose is to make Grid Smarter

The main purpose of adopting VPP model is finding an eco-friendly means for distributing power across a grid or grids smartly. It potentially reduces the chances of outages, especially caused by demand-based blackouts, during the times of peak load. The single VPP entity that aggregates energy can act as modest power station wherein consumers, typically households and buildings, using the model can store and share the power. The energy generated can be traded on the energy exchange with an aim of establishing a balanced grid system. The existing energy system adds marked flexibility to intertwined energy units managed by the central control system.

Some Attractive Propositions

One of the key benefits VPP brings to the fore for households is vast savings on their utility bills. Advancements in VPP models brought about by service providers have added real-time network losses to the functionality and further taken equity between consumers seriously. In addition, VPP models have the potential of meeting specific energy needs of individual households. It also facilitates a fair trading of numerous renewable energies. With the demand for innovative business models for a balanced and smarter grid rising, the global market for virtual power plants is expected to rise at an attractive pace over the forecast period of 2017–2025, according to Transparency Market Research

What sets the pace for the rise in demand for virtual power plants in the coming years?

Technology Advancements in Management of Distributed Energy Resources fortifying Adoption

The growing number of smaller power plant installations supported by new business models together with the rising need to bring flexibility in grids is making the adoption of VPP attractive at large. The rising popularity of distributed energy resources in the overall energy mix, especially in developed countries, is imparting a potential impetus to the uptake of VPP models by energy aggregators. Constant technological advances in the power grid infrastructure are supporting a rapidly expanding demand for VPP.

The promising prospect of VPP model to be able to optimize the profits of producers and distributors of power, such as that of transmission system operators is enhancing the commercial viability of these plants.

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Governmental Support Vital

Homes in numerous developed nations are participating in the trail run of VPP, with the rising support of energy storage companies. One such recent developments is being observed in Australia, which would set the pace for the demand in other countries. Tesla Inc., an American multinational corporation, announced in May 2018 that it plans to build one the largest virtual power plants in the country.

The project estimated at around US$ 634 million to build the massive plant had dragged for quite some time awaiting the Government nod, but finally it secured the go-ahead by the state government. The VPP being installed across the state free of charge will encompass benefitting as many as 50,000 low-income and social housing units over the next four years.

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