"A distinction needs to be made between technical and regulatory challenges". Dr. Bernd Koch, Head of Distributed Energy Systems for Germany and Ralf Korntner, Head of Microgrid Solutions at Siemens AG, respond to seven questions on virtual power plants.
Mr. Korntner, how would you define a virtual power plant and what advantages does it offer?
Virtual power plants interconnect and optimize decentralized power producers as well as smart buildings and entire infrastructures which are integrated in microgrids. That is to say, they use software to pool the energy from decentralized power generation installations and microgrids and treat them as if they were one large-scale power plant. This enables utility companies, for example, to offset fluctuations in the infeed and provide a reliable energy supply. Monitored and controlled using a decentralized energy management system, virtual power plants are often operated together with a demand response program which allows for the flexible connection and disconnection of loads.
Mr. Koch, what are the main types of generating installations that can be connected?
Any type of decentralized energy resource, as well as energy storage devices and intelligently controlled buildings and infrastructure. These include, for example, biogas plants, decentralized heat/power-generation units, photovoltaic systems, hydroelectric power plants and wind energy plants – but also entire buildings, neighborhoods and infrastructures, such as the charging infrastructure for electric vehicles. As part of sector coupling, thermal or power-to-X plants, for example, can be integrated and optimized using virtual power plants.
What solutions does Siemens offer for virtual power plants?
At Siemens, we offer our customers an extensive portfolio for virtual power plants, from consulting and concept development based on studies, to solutions for generating electricity, heat and cooling power, to energy storage devices, to communication-capable devices and software enabling intelligent and automated management processes for energy, the grid and buildings. With its e-mobility ecosystem, Siemens also provides solutions for a secure and reliable charging infrastructure. Connection to Internet of Things platforms such as MindSphere, the cloud-based open operating system from Siemens, enables advanced analyses based on a wide range of applications. For example, a digital twin of the system can be created and used to simulate different scenarios. Siemens offers individual products as well as complete solutions and models, such as energy as a service combined with various financing models.
What do you think is the main challenge in the connection and operation of virtual power plants?
When we talk about the connection and operation of virtual power plants, a distinction needs to be made between technical and regulatory challenges. From a technical perspective, the connectivity of the technologies used plays a significant role. It requires high-speed data transfer, as well as tighter standards for data security – increasing digitalization makes it all the more necessary to adopt comprehensive security approaches to guarantee supply security. On top of this, it is essential to have a thorough understanding of the regulatory challenges, which can vary greatly depending on the country and region. The conditions are highly dynamic and can change extremely quickly.
Mr. Korntner, who are the customers for virtual power plants?
What began with linking decentralized generators is now opening up new opportunities in demand response, microgrids and city and neighborhood optimization, as well as enabling greater flexibility with the development of Industry 4.0. Alongside distribution grid operators and aggregators, in the future we will increasingly see customers coming from industry and real estate. At the moment, the customers are mainly early adopters. However, we can see a strong trend. For example, one such early adopter is the Sello shopping mall in Finland, which initiated a project to set up a microgrid. In addition to cutting CO2 emissions by over 280 metric tons per year, it generates an annual profit of 480,000 euros through active participation in the local energy market with the aid of demand response.
How do the markets for virtual power plants in Europe differ from one another?
By and large, there are four markets. The conventional market for virtual power plants in Europe focuses on the aggregation of decentralized plants in the distribution grid for marketing control reserves, energy trading, and connecting and optimizing the electricity, heat and gas sectors. But there are ever more pilot projects exploring demand response as a solution for grid stabilization – that is, flexible connection or disconnection of loads by the distribution grid operator according to agreed usage parameters, or economic incentives.
And the other two markets?
One market which will play an ever-greater role in the years to come is microgrids, for example as part of the optimization of cities and neighborhoods, where it is possible to measure load profiles and make predictions for controlling the smart grid. And in the future, virtual power plants will also find their way into the rapidly developing market of Industry 4.0. The aim is to increase the energy efficiency of systems by reducing peak loads. In addition, excess flexibility reserves can be marketed to generate additional revenues.