For most of the industrialized era, power generation has come from centralized sources (such as coal-fired plants.) However, with the further development of other power sources including renewables on a much smaller scale, the opportunity to combine these energy streams to help meet power demands has become a reality.
This is the concept behind a virtual power plant (VPP) which aims to optimize power plants including fossil fuel and solar. Each of the power sources within a VPP network is independently owned and operated but are administered through a central system that monitors each of them and controls them through encrypted data.
The concept of a VPP is not new: its roots date back to the 90’s, but they were mostly theoretical at the time due to restrictions and technology limitations. But by 2010 the technology had evolved, and Germany in particular embraced this model as the country closed its nuclear power sources. VPPs have now become a viable and growing approach meeting energy demands across the world.
A VPP is an interface for the various distributed energy sources (DERs), which can include both fossil-fuel burning plants and renewables. All of the assets on a VPP can be traded as one collective unit, opening up opportunities for smaller producers that otherwise would not be allowed to join the wholesale electricity market. By joining together, this puts VPPs on a level playing ground with centralized power plants.