“The cheapest power plant is one that does not have to be built.” That was the line of a former Carolina utility executive. It is no off-the-wall comment but a workable concept, with one big challenge.

A virtual power plant (VPP) does the same work as a big plant. It just is not a big plant.

The logic is that a big, central plant does not have to be built if customers either save the same amount of energy that a big plant would make, or if the utility is able to piece together enough small power resources to roughly equal the amount of energy from a large plant.

The energy-gathering scenario is built around distributed energy sources, or, smaller power resources such as solar, wind or battery storage. The utility combines the power output from these separate systems to make one large source of electricity for customers.

The benefit of that is that a large plant, with its capital intense investment and, if the fuel is a carbon-based source like gas or coal, has pollution. The challenge is the coordination of disparate energy resources not necessarily under the direct control of the utility. For instance, if the wind is not blowing, then wind turbine generation is low. Or, the utility may tap into many home battery systems, but those homes need to have stored energy ready to use.

Advanced data systems play into the VPP concept, adding some complexity in the constant need to feed into the grid.

VPP trial runs are happening.

  • An Australia energy retailer has been working on a plan to aggregate power storage in 1,000 Australian homes into one energy source for the grid. Electricity will be stored in homes until needed by the VPP. (Source)
  • In Colorado, a handful of homes using solar plus storage are apparently running as virtual power plant.  Each home has a controller device to manage the solar generation and storage. (Source)
  • An Oregon utility has put together a “technology agnostic, inter-operable VPP that enables control, optimization, and demand management” of various distributed energy resources. This coordinates the energy vendors and schedules for power. (Source)

As with so many energy issues there are two components that have to match: Technology and regulations. In the case of VPPs the technology is essentially available. Regulations – the political human element – has to match the technological capabilities to open up this opportunity for customers.