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Abstract—A virtual power plant assists in the integration of Power (CHP) plants, are all weather dependent. DG
distributed energy resources in the power system. With a rising components are currently connected using a fit and forget
share of distributed generation, an active management of strategy [5], [6]. Hence, DG is not actively monitored and
distributed energy resources is indispensable in order to ensure system operators (SOs) are confronted with an increasing
operation of the electricity network towards the future. In this complexity of system operation. On the transmission level,
paper, the virtual power plant concept is analyzed. Three TSOs are challenged to maintain an instantaneous balance
essential components that characterize a virtual power plant are between supply and demand, which is a prerequisite for
distinguished, followed by a comprehensive overview of the reliable system operation and to avoid black-outs [7]. On the
services they can deliver in today’s liberalized markets in
distribution system level, network congestion and voltage
Europe. It is found that a combination of technical, economic
and regulatory barriers still hamper a widespread
control problems may occur [8].
implementation of the concept. In addition, specific regulatory In order to cope with these challenges, DG units will have
barriers are identified that hinder a virtual power plant in to be aggregated with other distributed energy resources
providing certain services. Hence, it is advised that primarily (DERs) and actively controlled. DERs comprise not only DG
product and service definitions, as well as market mechanisms, and storage units, but also include flexible electrical loads that
are reviewed. inherently have the ability to be postponed, modulated or
shed, such as heating and cooling applications or electrical
Index Terms--Distributed Energy Resources, Distributed vehicles [9]. In practice, virtual power plants (VPPs) provide
Generation, Smart Grid, Virtual Power Plant opportunities to support the integration of DERs in the current
power system by aggregating the various components and
I. INTRODUCTION acting as a single player on the energy markets [5], [10].
Hereby, they reduce scale and intermittency related problems
Historically, electricity markets were characterized by a of DG.
top-down approach in which large, centralized power plants The VPP concept appeared in the late 1990s and various
dominated electricity generation. Nowadays, the system is different interpretations have emerged since. The objective of
shifting away from this traditional approach in the direction of this paper is to report on the state of the VPP concept in the
distributed generation (DG). DG units can be defined as current market given the technical, economic and regulatory
electric power sources connected directly to the distribution context. Section I sets the scene by clarifying the definition of
network or on the consumer side of the meter [1], [2]. The a VPP. Section II continues with an elaborate overview of the
growing share of DG can be explained by market reforms on services VPPs can provide in liberalized markets. Next,
the one hand and renewable energy policy and targets on the section III goes deeper into the technical, economic and
other. In Europe, this trend is fostered especially by ambitious regulatory barriers a VPP faces in marketing its services. A
targets concerning the share of renewable energy consumed in last section concludes.
the EU, which is set at 27% – not yet converted into binding
regulation – in the 2030 framework for climate and energy II. DEFINITION OF A VIRTUAL POWER PLANT
policies [3].
The increasing share of DG creates challenges for the A. Definition
power system. DG units are generally characterized by A variety of definitions exists in literature. A widely
relatively small installation size and by intermittent power accepted definition determines a VPP as:
output. Intermittency refers to the limited controllability and
only partial predictability of their output [4]. Photovoltaics “A flexible representation of a portfolio of DERs, not only
(PV), wind turbine installations, as well as Combined Heat & aggregating the capacity of many diverse DERs, but also
1
Kasteelpark Arenberg 10, 3001 Heverlee, Belgium
glenn.plancke@esat.kuleuven.be
Submitted to: International Conference on the European Energy Market –
EEM15
A. Technical
A vital technical component of a VPP consists of its
control system by which it manages and communicates with
individual DERs. The absence of an interoperable solution is
an obstacle concerning the scalability of VPPs [26].
Interoperability refers to all conceptual and ICT related
Figure 2. Regulatory barriers to implementation of VPP
challenges, such as communication standards and the
coexistence of multiple solutions on the same grid, pertaining First of all, markets should be designed and mechanisms
to the many actors and their complex interactions that are organized in a non-discriminatory way for VPPs to be able to
required for an effective deployment of a solution [27]. In participate. Where necessary, product and service definitions,
today’s market, a variety of custom solutions are being which are often determined in accordance with regulators,
developed, e.g. Kraftwerke’s “Next Box” [23]. Moreover, the have to be adapted such that also VPPs qualify for providing
control system also has to be sufficiently performant to balancing services. Additionally, up to now, ancillary services
manage numerous units in near real-time. This depends were often tailored to conventional generation units. Recently
largely on the implemented control algorithm. though, a tendency has emerged to allow distribution-
Furthermore, the absence of smart grid infrastructure has a connected entities to participate in operating reserves, e.g. the
negative effect on the deployment of VPPs. A smart grid can “Flexibility R3DP” product [17]. Next, also market
be defined as an “electricity network that can cost efficiently mechanisms should be reviewed. In the MASSIG project for
integrate the behavior and actions of all users connected to it – example, a recommendation has been made to reduce gate
generators, consumers and those that do both – …” [8]. closure time before the delivery period to preferably only a
Therefore, it increases the potential for accurately monitoring couple of hours [18]. This helps more volatile technologies to
the demand and production profiles of its connected units. A participate as well. Finally, regulation also plays a role in
wider use of real-time metering would thus encourage VPPs to establishing standards concerning communication technology
make full use of DER flexibility [14]. However, with such a or infrastructure, which might have a positive effect regarding
solution, it will still be a challenge to determine to which the interoperability of the control systems of VPPs or on
extent a unit has delivered flexibility, by comparing actual off- facilitating a widespread roll-out of smart meters.
take or injection data with a reference scenario. Secondly, a clarification surrounding the roles and actors
in today’s liberalized electricity markets is required. Besides
B. Economic taking into account incumbent players, thought should also be
For parties operating DER units, joining a VPP has to be given to potentially desirable new market parties. As
profitable over stand-alone operation. The outcome of this mentioned in Section III, the DSO is evolving to a more active
consideration first of all depends on price-based mechanisms. role. In this respect, it can be questioned to what extent the
Renewable energy support schemes certainly influence the DSO should be responsible for managing the distribution grid
decision. For example, a feed-in tariff results in DG units and providing system services. Another key aspect is that the
producing as much as possible, not considering network and way in which DSO remuneration is organized influences its
market realities. But also dynamic pricing of energy and behaviour [29]. The current incentive-based remuneration, in
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