
The way to this year's "The smarter E" was a doozy. Participants and visitors not only had to endure a hot climate, and endless traffic to the venue, but even had to find their way around the maze-like exhibition floor. But when we finally arrived at our stand and met with the first visitors, the effort immediately felt worthwhile: those who braved all the inconveniences immediately found themselves in the midst of the VIP topics of the energy industry.
Renewable energies, decentralization, digitalization, and cross-sector solutions for electricity, heat, and transportation - all sound like concepts from the future? Industry insiders know that these trends are already shaping the present and redefining the energy world as we know it. Right there at our booth in Hall B5, we had the chance to talk to you about one of the most promising innovations that builds on all the trends mentioned above: Virtual Power Plants (VPPs).
Call us fanboys (and girls), but we think that aggregating various distributed energy resources (DERs) such as solar panels, wind turbines, batteries, and demand response systems into a unified and manageable network has a huge potential. By the collective power of these resources, VPPs can provide grid services traditionally supplied by large, centralized power plants. This not only enhances grid stability and reliability but also promotes the integration of renewable energy sources and has the potential to reshape the way energy is distributed.
Challenges of VPP Operation
However, operating a VPP is far from straightforward, which also was made clear to us in the discussions we had in Munich. Having a diverse array of assets, each with its own characteristics and market requirements, many visitors to our booth were not sure where to start. VPPs mostly encompass renewable energy sources, which are often intermittent and distributed across various locations, which is why it requires sophisticated coordination and control systems, together with real-time data analytics, asset management, and market participation strategies to ensure optimal performance and compliance with regulatory standards.
So to operate a VPP effectively requires expertise in various areas such as energy trading, grid services, and regulatory compliance. Our nine-article #VPPblueprint series set out to outline the required components and considerations for successful VPP operations. But for many VPP operators, having all the pieces along with the necessary knowledge and resources under one roof remains challenging.
How to Enter New Markets
At ‘The smarter E’, we repeatedly heard that the often proclaimed “single European electricity market” isn't quite as "single" as it sounds - there are significant differences to each country that can create high barriers to entry, making localization a daunting task.
It’s because each country has specific regulatory frameworks governing energy markets, and these can vary significantly. You have to be aware of local grid codes, market participation rules, and regulatory reporting requirements.
Also, the structure of energy markets can differ greatly between countries. Some markets may have a high degree of centralization, while others are more decentralized. These structural differences can impact how VPPs interact with the market, including bidding strategies, pricing mechanisms, and grid services.
And most importantly, each market may have its own IT infrastructure and systems for managing energy transactions and grid operations. Integrating with these systems can be complex, requiring specialized knowledge and technical capabilities. Without data exchange and communication with local market platforms you can just forget all about running your VPP there.
Onboarding Smaller Assets
But there is also the question how far you can go in regards to asset size. The VPP operators we talked to are still having to focus on larger assets because the cost of onboarding and managing smaller assets often outweighs their value. They are aware that this restricts their capacity, and are looking for ways to capture the additional potential of smaller assets. However, VPP integration is evolving, and the advances in technology and automation are now making it more feasible to include them.
And this is important in the big picture, as smaller assets, such as residential solar panels and small-scale batteries, provide significant flexibility and resilience to VPPs. Rooftop solar installations on commercial buildings, for example, can contribute greatly, as with their predictable production patterns, they often integrate well with VPPs to optimize energy use and reduce costs. Additionally, incorporating demand response mechanisms, such as smart thermostats and HVAC systems, can enhance VPPs by adjusting energy consumption in real-time based on grid conditions. This aggregation of smaller resources and demand response devices creates a substantial and reliable source of flexibility that helps to keep the grid in balance.
Get the VIP-VPP treatment
Given these complexities involved in operating VPPs and expanding into new markets, at The smarter E, the people we talked to agreed that having a partner with deep local expertise and advanced technological solutions could be the only way to do it successfully. This is where our Energy Market of Things (EMoT) platform comes into play, providing critical support in several ways:
- One-Stop Shop for VPPs: EMoT offers an integrated suite of software tools that address every aspect of VPP operations. From real-time data analytics and asset management to market participation and compliance, EMoT covers the full spectrum of VPP requirements.
- Easy Integration: For operators who already have some systems in place, EMoT can integrate with existing technologies, including TSO systems and market platforms. This flexibility allows VPP operators to fill in the gaps in their current setup, providing smooth integration to their existing systems.
- Local Expertise and TSO Experience: EMoT provides critical local knowledge and experience. We have built market management systems for many TSOs across Europe, which means we are well-versed in the regulatory and market nuances of different countries.
- Faster Go-to-Market Strategy: By bringing in our experience and EMoT’s capabilities, we provide a smooth transition to new markets that enables operators to quickly establish a presence and start generating revenue.
- Onboarding of Smaller Assets: EMoT takes over the intricate processes required to onboard and manage smaller assets, making it economically viable for VPP operators to include them in their portfolios.
So VPP operators, listen up. If you are looking to expand into new markets, overcome market entry barriers, and increase the capacity of your VPP, you can greatly benefit from the expertise and solutions offered by us and our EMoT platform. Let us give you the VIP-VPP treatment.
Thanks for joining us at this year’s “The smarter E Europe” and we look forward to continuing the conversations to talk more about your future in energy.