Turning virtual into reality: Virtual power plants for energy business

Virtual Power Plants (VPPs) represent a way for energy businesses to take advantage of growing distributed generation and storage in a way that adds value to the company and its customers.

When done right, VPPs stand to benefit retailers, distributors, end consumers and asset providers.

While existing as an idea for some time now, the VPP market in Australia is still in its infancy. The behind-the-scenes requirements to implement a successful VPP are complex and require energy businesses to scrap traditional thinking to make them a reality.

The development of configurable and flexible software-as-a-service can help VPPs become a realistic proposition for energy businesses.

MAKING IT WORK

VPPs are a disruption of the traditional, linear retail model. Rather than consisting of a single, large, centralised power station, VPPs are instead composed of multiple smaller, geographically distributed units, and are typically powered by renewable energy sources such as solar panels and battery storage.

The key to a successfully operating VPP is the use of remote aggregation and control software - otherwise known as a VPP platform. VPP platforms control the distributed energy resources in response to market signals, such as wholesale prices or grid constraints.

Outside of creating a more stable grid and using distributed renewable energy to its full potential, VPPs can bring tangible benefits to an energy business.

Retailers can use VPPs as a savvy hedging mechanism. If it looks like wholesale prices are set to rise, a retailer can trigger customer batteries to self-consume rather than importing energy from the grid. This protects the retailer from exposure to the wholesale market and can save them paying to shoulder high prices.

It is also a useful tool to respond to the uptake of solar PV and battery storage, especially in the Australian market where solar installations are expected to reach six million by 2030.

Some Australian VPP pilot programmes have identified the opportunity to attract long-term customers by providing the installation of distributed energy hardware so they can participate in the trial.

Often, customers will receive an up-front or monthly subsidy against the hardware purchase, in exchange for the retailer's right to operate the assets for their own purposes. 

OVERCOMING BARRIERS

One barrier some traditional energy businesses face in successfully offering VPPs to their customers is the rigidity of legacy energy software.

The API-driven flexibility of the Flux platform means we can deliver almost any VPP offering retailers want for their customers.

Flux's FlexiBill pricing and billing product enables retailers to easily add non-energy charges, such as VPP credits, to a customer's bill. Other price components such as spot pricing, time-of-use charges, or environmental charges can also be easily assigned.

The configurability of FlexiBill means new pricing structures and components can be added without affecting the core code base. This translates to lower development costs, and faster speed-to-market.

Finally, due to Flux's ability to ingest both on and off-market measurement data, we can easily absorb data streams from solar and battery hardware that can then be displayed on bills, customer apps and other communication channels.

VPPs are a rapidly evolving concept as new technology is developed and the uptake of distributed energy resources continues to grow. Flux’s configurable platform allows retailers to adapt to respond to changes in customer and industry demands.

Interested to know more or see a proof of concept? Get in touch with Flux to learn how you can make VPPs a reality for your customers.