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What Is a Virtual Power Plant (VPP)?

By: Christine Canaly

Date: October 11th, 2024


This growing reality was brought up at the Crestone Energy Fair (CEF) Renewable

Energy Panel in September, as part of individuals being able to participate in generating

their own energy and putting what is not used (in household or business) back onto the

grid, or in case of emergency, cycle energy back into their homes; and ideally being

financially compensated for generating excess energy back onto the grid.


At its core, a VPP is comprised of hundreds or thousands of households and

businesses that offer the latent potential of their thermostats, electric vehicles (EVs),

appliances, batteries, and solar arrays to support the grid. These devices can be flexibly

charged, discharged, or managed to meet grid needs. When these devices are combined and

coordinated, they can provide many of the same energy services (capacity, energy, ancillary

services) as a traditional power plant.


The components of a VPP can include electric vehicles (EVs) and chargers, heat

pumps, home appliances, HVAC equipment, batteries, plug loads, and industrial mechanical

equipment. Single-family homes, multi-family homes, offices, stores, factories, cars, trucks,

and buses can all participate in a VPP.


Jan Rose, who was the featured Renewable Energy panelist at CEF, mentioned that

the newer F-150 Ford trucks, “have storage capacity that can provide an energy source

back to your home. I hear there is a 4-month waiting list for these trucks.”


VPP’s aren’t just theoretical, they are already happening. “On the edge of the

Bavarian Forest, you can already see the enormous reorganization of the electricity system

from the train window, which is progressing step by step here as everywhere else in the

country. Photovoltaic panels greet travelers from the roofs of houses, warehouses, fences,

noise barriers, and along the railway line itself, promising a little optimism in uncertain

times.”


PV systems have been integrated into Next Kraftwerke’s virtual power

plant. Through the virtual power plant's electricity trading, FIMA generates income on the

power exchange, most of which is directly reinvested in new projects.


To learn about VPP’s closer to home, the state of Maryland has been a leader in

VPP’s.


Succinctly put, a virtual power plant (VPP) is a collection of small-scale energy

resources that, combined together and coordinated with grid operations; can provide the

same kind of reliability and economic value to the grid as traditional power plants.

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