Virtual power plants, which rely upon software systems to remotely and automatically dispatch and optimize generation, demand-side, or energy storage resources, can provide extraordinary value and services to transmission and distribution grid infrastructure, as well as revenue streams to myriad stakeholders engaged in the delivery of electric power.
While the concept of a virtual power plant is hardly new, it is only over the course of the last decade that technology and market designs have enabled a growing list of pilot projects to test and validate this smart grid platform concept.
According to a new report from Pike Research, a part of Navigant's Energy Practice, the total worldwide capacity of virtual power plants will grow from 3,800 MW in 2013 to 15,400 MW in 2020 — a nearly five-fold increase.
"Virtual power plants represent an 'Internet of energy,' tapping existing grid networks to tailor electricity supply and demand services for a customer, utility, or grid operator," says principal research analyst Peter Asmus. "By stretching supplies from existing generators and utility demand reduction programs, they deliver greater value to the customer while also creating benefits for the host distribution utility and the transmission grid operator."
The virtual power plant market can be broken down into four distinct segments, based on the types of resources aggregated: demand response-based virtual power plants (the largest commercial segment in the U.S.), supply-side virtual power plants, mixed asset virtual power plants (which bring together distributed generation, energy storage, demand response and other distributed energy resources) and wholesale auction virtual power plants, which are unique to Europe.
Because utilities and grid operators are leading the development of smart grid projects, they will almost certainly have to play a role in future deployments of virtual power plants.