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What are Virtual Power Plants?


The energy habits of UK homeowners have changed dramatically over the years. And as our lives become increasingly digital, Virtual Power Plants have been designed to aid the National Grid in a transition to a wireless future.

Virtual Power Plants cover certain areas and connect electricity generators, consumers and storage systems through a cloud-based network. Energy usage is then monitored, forecasted and distributed to properties in real-time.

What are Virtual Power Plants?

Conventionally, energy generation takes place in a single centralised location such as a power plant. Power plants typically burn fossil fuels including coal, natural gas and oil to produce energy which isn’t environmentally-friendly.

Fortunately, times are changing. Renewable energy generation has accelerated in recent years and coal, which for a number of years has been the predominant source of energy in the UK, is rarely used.

The appeal of free clean renewable energy – particularly in the form of solar panels – has seen an increasing number of homeowners become energy generators. So it’s no longer the case that energy must be supplied by an energy supplier from a centralised location. Instead, energy generation can happen anywhere from domestic homes to commercial buildings.

An expanding energy network means plenty of excess energy. A home with solar panels, for example, will be generating more energy than can be used during the day. As part of a Virtual Power Plant (VPP), this energy can be distributed to other buildings. The VPP monitors the supply and demand of energy at all times to keep the National Grid running reliably and efficiently.

How do Virtual Power Plants work?

Energy demand and usage fluctuates during the day and to match this, Virtual Power Plants have the ability to adjust the energy delivered to any given location.

Virtual Power Plants are made up of energy generators and consumers which are all connected to a central control system. The central control system constantly monitors energy generation against usage and demand. When the energy usage needs balancing there isn’t a delay in balancing the network as it’s completely cloud-based.

Benefits of Virtual Power Plants The benefits of Virtual Power Plants vary depending on whether you’re an energy consumer or generator. When it comes to energy usage, being part of a VPP will manage the delivery of energy in the most efficient way, which could help to lower energy bills for consumers. This is because the VPP will increase and reduce the energy supply automatically depending on demand.

Virtual Power Plants have the potential to deliver many benefits to energy consumers and energy generators alike:

  • Makes efficient use of renewable energy generation
  • Helps to lower carbon emissions
  • Potentially lowers energy bills for consumers
  • Energy generators can earn payments
  • Delivers a more balanced energy distribution network

Potential downsides of Virtual Power Plants

On paper, Virtual Power Plants might sound like the clear future for the UK energy network. However, in reality the response to the technology has been relatively muted while uptake has been slow. There’s plenty of scepticism within the industry around such a shift in how the energy network is managed and the idea is still a relatively new one.

On the consumer side, one potential downside could be during peak times for energy demand. To maintain an evenly distributed energy supply, the supply fed to some buildings could be lowered for a short time. To put this into context, the air conditioning in a building could be turned down for a couple of seconds to allow for the energy to go elsewhere. Fortunately, this would barely be noticeable.

Solar panel owners can contribute to a Virtual Power Plant

Virtual Power Plants have been designed to accelerate the growth of renewable energy generation. And properties contributing to a VPP with electricity generated through their own energy generation can potentially earn payments.

Solar panels are the most popular choice of renewable energy system for domestic homes. Even in the UK, where we get plenty of cloudy weather, solar panels are able to generate more energy than is needed by a home. Many homeowners choose to store some of this excess energy in a solar battery. Electricity stored in a solar battery is ready to power the home when the solar panels are no longer generating energy (such as in the evening or at night).

Alternatively, or in addition to a solar battery, domestic solar panel owners could also receive payments by joining a Virtual Power Plant.

By joining a Virtual Power Plant, any unused energy would circulate to other energy consumers in the VPP. Most consumers receive energy from suppliers that burn fossil fuels (coal, gas and oil) to generate energy. So, receiving energy through a VPP would help to increase the amount of energy being supplied to properties from renewable energy sources. The key benefit of this is that fewer carbon emissions will be released into the atmosphere.

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