Virtual power plant

A virtual power plant (VPP) is a system that integrates multiple, possibly heterogeneous, power resources to provide grid power. A VPP typically sells its output to an electric utility. VPPs allow energy resources that are individually too small to be of interest to a utility to aggregate and market their power. As of 2024, VPPs operated in the United States, Europe, Asia and Australia. One study reported that VPPs during peak demand periods are up to 60% more cost effective than peaker plants.

VPPs typically aggregate large numbers of distributed energy resources (DER). Resources can be dispatchable or non-dispatchable, controllable or flexible load (CL or FL). Resources can include microCHPs, natural gas-fired reciprocating engines, small-scale wind power plants (WPP), photovoltaics (PV), run-of-river hydroelectricity plants, small hydro, biomass, backup generators, and energy storage systems such as home or vehicle batteries (ESS), and devices whose consumption is adjustable (such as water heaters, and appliances). The numbers and heterogeneity mean that system output is not dependent on any single resource, offering the potential for stable output even if the output of any single resource is not predictable.

Vehicle to Grid technology allows electric vehicles that are connected to the grid to participate in VPPs. The VPP then controls the rate at which each vehicle charges/discharges (accepts/delivers power). The VPP can slow or reverse the rate at which vehicles charge. Conversely, when the grid has surplus power, vehicles can charge freely.

The same principle applies to other systems, such as heat pumps or air conditioners that can lower their power demands to reduce demand.

VPPs based on storage can ramp at higher rates than thermal generators (such as fossil fuel plants), which is especially valuable in grids that experience a duck curve and must satisfy high ramping requirements in the morning and evening.

Forbes' senior contributor Ken Silverstein wrote a story about virtual power plants in December 2024, referencing studies by the Brattle Group and Guidehouse Insights. Brattle said VPPs are just as dependable as conventional powers but they cost 40-60 percent less. Guidehouse estimated that decentralized generation will make up 500,000 megawatts of capacity compared to centralized generation of 280,000 megawatts. The story is titled "Electricity Users May Warm to the Next Trend: Virtual Power Plants."

Power delivery is controlled by a management system. The distributed nature of VPPs requires software to respond appropriately and securely to power requests, utility billing, payments to resource owners, etc.

Typically, the VPP provides power (only) when requested by the utility.