By Mark Triplett, COO | February 28, 2017

Diversification—that tried and true strategy for financial investing—holds true for energy markets as well. As the volatility of energy generation and loads grows, utilities are gaining more agility by tapping into distributed energy resources (DERs)—loads, generation, and storage—to ensure adequate power to meet demand and to cost-efficiently mitigate the effects of oversupply.

With the emergence of the smart grid, the need to access and control DERs has given rise to the notion of virtual power plants (VPPs), a concept that generally refers to the control and optimization of aggregated DERs as if they were a centralized power plant.

Supply-side VPPs are now common in the United States; utilities are leveraging their alternative energy assets, such as solar PV arrays and wind farms, as well as back-up generation assets, to meet their ISO obligations. The problem comes with using traditional grid operational systems to manage these VPPs. For example, grid energy management systems (EMSs) are designed to control a limited number of single-service resources, such as coal, gas, and hydroelectric power plants. Likewise, distribution management systems (DMSs) manage networks of single service distribution network equipment delivering electricity to homes and businesses.

This may be why utility VPPs have traditionally been defined in terms of single-purpose fleets: standalone solar PV systems, or wind farms, or backup generation assets, and so on. This works, as long as these resources operate in isolation. However, as utilities increasingly collocate energy storage systems with their other DERs, they need new tools to deal with what have become mixed-asset VPPs.

There are mixed assets behind the meter as well. The growing trend toward using smart devices to control customer-sited loads and renewable capacity as part of advanced demand response programs may be considered part of a broader VPP management strategy. As customers add energy storage systems to their premises, utilities must figure out how to take these systems into account for forecasting, aggregation, and control.

This is a whole new breed of VPP challenge. And it requires a new type of VPP software. In my next post, I’ll get into how this new type of software offers exciting opportunities to deliver multiple mixed-asset VPP services from behind the meter through a single point of control.