COVER STORY: VIRTUAL POWER PLANTS
The next generation of electricity delivery — theoretically without power plants — is just round the corner. Paul Crompton reports.
The utility death spiral. It’s been the energy industry chatter for the past five years. It follows an analysis by the Edison Electric Institute that the rise of distributed energy resources would kill off the utilities. At its most basic — and the thinking was clearly far more nuanced than this — was the idea that when everyone generated their own electricity, there would be little need for the huge generating capabilities and transmission networks of the old-fashioned utility. But a new business model is emerging for the energy business. And the rise of virtual power plants — where individual distributed energy resources (DERs) are aggregated and then coordinated into a larger generating network — doesn’t necessarily spell the end of the regular power utility. Rather it would fit into a newer type of operation, where the customer is able to coordinate their own assets through an outside party — think Uber, the taxi firm with no taxis; Airbnb, the hotel with no beds; or eBay, the retailer with no shops. The technology to do this so far is now advancing from pilot projects to larger scale operations. If utilities as well as transmission operators can reorganize themselves — they already have most of the expertise in place — to moving to this new model, they could well continue to have a useful and profitable future. Future grid operators will be more an aggregator of distributed energy resources than an asset owner; teams of analysts will manage mega data from hundreds of separate sources to balance the grid, rather than rely on engineers and traditional power supply methods. The big question will be who is willing to step up to the plate to create the partnerships between regulators, utilities and customers that will help nurture the environment that can make this transition possible.
A changing business
In the UK the role of Distribution Network Operators is moving to a Distributed Systems Operator model to reflect the twoway relationship of supply and demand as the means and methods by which power is generated, distributed and consumed.
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Transmission network operators have to ensure the grid remains stable at 50Hz, which entails balancing supply and demand as finely as possible. However, traditional methods of balancing the grid, such as Peaker plants, are slowly being usurped by energy storage systems as grid operators seek cheaper and quicker ways to maintain grid frequency, especially during unforeseen fluctuations in generation and consumption. UK energy aggregator Limejump works with 1,200 organizations and 150 generators to create a VPP capable of supplying more than 200MW of capacity to the National Grid. Its head of business development, Joe McDonald, says: “Aggregators and suppliers have always been there in the energy industry. Now the Internet of Things is spilling over into the energy industry, so there will be a big fundamental
Energy Storage Journal • Summer 2018 • 21