Exploring the Advantages of Virtual Power Plants

In a Utility Dive article, Guidehouse Insights explains the benefits virtual power plants have over their traditional counterparts

As more renewables penetrate the market and customers adopt distributed energy resources (DER), electricity providers are shifting their attention to distribution systems such as virtual power plants (VPPs) that can balance renewable generation variability and supply grid resources.

In a Utility Dive article, Peter Asmus, research director at Guidehouse Insights, defined VPPs and discussed their advantages over traditional power plants.

"A virtual power plant is aggregated and optimized distributed resources that essentially provide the same services as a traditional power plant," Asmus said. "Any resource that can be sensed, touch[ed], controlled and automated can be part of a virtual power plant, which means it can be different every day, depending on grid and market conditions."

With software and automation, VPPs expand DER functions on the distribution system. Asmus said that VPPs deliver the same services (and more) as a traditional power plant without the concerns about land use, air emissions, and waste management. 

Making a VPP work can be both challenging and pricy, though. Asmus said regulatory and cost barriers must be overcome to successfully implement VPPs on a large scale. However, many utilities are beginning to see the advantages of VPPs and have begun testing pilot programs, including the Los Angeles Department of Water and Power.

According to the article, a VPP proposed for the system that serves Hollywood and much of the city may soon become the first full-scale test of the value proposition.

Read the Utility Dive Article
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