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Understanding Virtual Power Plants

The way the UK generates, distributes, and uses its energy is changing more rapidly than at almost any other time in recorded history. At the same time as transitioning away from centralised generation via fossil fuels, National Grid faces the prospect of incorporating millions of electric vehicles and electrified heating.

One area of rapid growth in answer to this growing challenge is through the use of Virtual Power Plants (VPPs). Comprising a varied mix of batteries, on-site generation, electric vehicles, smart appliances and other grid-responsive assets, VPPs allows decentralised power generation to be managed centrally. As a result, both low-carbon, small-scale energy generators and large energy end users can become more active participants in the energy system, using their assets to balance grid demand or unlock additional revenue. In this way, they are able to effectively replicate the baseload capacity offered by outgoing gas and coal generation, responding to rapid changes in demand.

The intermittent nature of renewable generation means that the risk of power disruption is steadily growing for UK organisations. It is here that VPPs can deliver one of their most important benefits, by providing more stable energy supply nationwide. As shifting renewable energy generation changes alongside what can be sudden and unpredicted changes in weather, fast acting balancing assets are required to prevent system imbalances. The size of a VPP’s collective generation and Demand Side Response assets allow it to provide significant balancing services to the grid and to respond quickly to meet the system’s needs.

VPPs also offer the potential to balance supply and demand more effectively at a local level, providing a way for end-users, either with a supply or demand requirement, to more effectively interact with the energy market.

While microgrids have seen similar rapid growth, and superficially resemble VPPs given they are generally a mix of distributed renewables, storage and flexible demand, their role in the energy mix is very different. Microgrids are designed primarily to operate off-grid, or on-grid but with the capability to operate in islanded mode independently of grid supply. VPPs are fully integrated into the grid, utilising assets connected to any part rather than those limited to a particular location. VPPs are managed by aggregation software, while microgrids generally rely on inverters and switches for islanding and power management.

VPPs have also been branded a key technology in terms of the UK meeting its ambitious carbon reduction targets. An article published by SSE in February stated that ‘cloud-based power plants’ could play a vital role in achieving 2050 net-zero objectives.

By allowing power to be used more intelligently and for supply and demand to be balanced much more accurately, VPPs look set to continue their growth and establish themselves as a key part of the UK’s future energy strategy.

Battery storage represents one key aspect of many VPPs, allowing greater flexibility in terms of both supply and demand so that power generated during optimal periods can be called upon during times of lower generation or higher demand.