Virtual Power Plant – Taking The Next Leap
After nearly two decades of stagnation, Australian electricity demand is surging, driven by growing numbers of electric cars, data centers and air conditioners in a warming climate. As a result, with the increased regulatory scrutiny on climate risk including reporting of emissions by manufacturers, traditional power plants that generate electricity from coal, natural gas or nuclear energy are retiring faster than new ones are being built in this country. Most new supply is coming from wind and solar farms, whose output varies with the weather. This has left power companies seeking new ways to balance supply and demand. One option being considered in this regard is virtual power plants. So, what are virtual power plants and how can they match up to physical plants? This blog will look to discuss this topic in detail.
The Hows and Whys
Virtual power plants are not massive facilities generating electricity at a single site. Rather, they are aggregations of electricity producers, consumers and storers – collectively known as distributed energy resources – that grid managers can call on as needed. Some of these sources, such as batteries, may deliver stored electric power via heat induction bending services. Others may be big electricity consumers, such as factories, whose owners have agreed to cut back their power use when demand is high, freeing up energy for other customers. Virtual power sources typically are quicker to site and build, and can be cleaner and cheaper to operate, than new power plants.
A Growing Resource
Virtual power plants are not a new concept. The US is estimated to already have 30 to 60 gigawatts of them in operation today. Most of these virtual power plants are industrial customers like heavy steel fabrication companies that have agreed to reduce demand when conditions are tight. But as growing numbers of homes and small businesses add rooftop solar panels, batteries and electric cars, these energy customers can become not only consumers but also suppliers of power to the grid. For instance, homeowners can charge up their batteries with rooftop solar when it is sunny, and discharge power back to the grid in the evening when demand is high and prices sometimes spike. As smart thermostats and water heaters, rooftop solar panels and batteries enable more customers to participate in them, it is estimated that virtual power plants could triple in scale by 2030. This growth would help to limit the cost of building new wind and solar farms and gas plants.
Virtual Power, Real Challenges
There are challenges associated with virtual power plants. Many customers are reluctant to give up even temporary control of their thermostats, or have a delay when charging their electric car. Some consumers are also concerned about the security and privacy of smart meters. It remains to be seen how many customers will sign up for these emerging programs and how effectively their operators will modulate supply and demand. There also are challenges at the business end. It is a lot harder to manage millions of consumers than dozens of power plants. Virtual power plant operators can overcome that challenge by rewarding customers for allowing them to flex their supply and demand in a coordinated fashion. As electricity demand rises to meet the needs of growing economies and replace fossil fuel-burning cars and furnaces, and there is a trend towards increasing energy independence, grid managers will need all the flexibility they can get to balance the variable output of wind and solar generation. Virtual power plants could help reshape electric power into an industry that is more nimble, efficient, and responsive to changing conditions and customers’ needs.
Final Comments
The expansion of the virtual power plant concept from businesses to consumers will take some time in terms of logistics and adjustment. There is also likely to be resistance from virtual and traditional power plant businesses to this new concept. However, in an increasingly virtual world, virtual power plant adoption is a question of “when” rather than “if” – so, early movers will reap major rewards!
