Renewable Energy and Virtual Power Plants

Wind Energy Growth in USBy Pike Research (11/19/10)

Conventional wisdom is that only coal, natural gas, and nuclear are appropriate for 24/7 baseload electric power. The potential for wind and solar is seen as limited because of the variability from one solar facility or one wind farm. Often removed from the discussion are energy efficiency and shaping demand for electricity away from peak hours.

Virtual power plants (VPPs) utilize software systems to enable utilities to efficiently manage an increasing diversity of electricity generation, energy storage, and demand reduction assets. As the power generation mix becomes more complex over the next several years thanks to adoption of distributed generation, storage technologies, and demand response (DR) programs, VPPs will be a vital real-time management tool to make every megawatt count. According to a new report from Pike Research, the global VPP market will more than double in capacity over the next five years, rising from 19.4 gigawatts (GW) in 2009 to 41.1 GW by 2015, under a base case forecast scenario. By that year, the cleantech market intelligence firm forecasts that worldwide VPP revenues will reach $7.4 billion.

Pike Research divides up the VPP universe into four distinct segments: (1) DR-based VPPs, the largest commercial segment in the U.S.; (2) Supply-side VPPs, a category in which Europe, particularly Germany, has led the world; (3) Mixed Asset VPPs, the ultimate goal of the VPP, bringing distributed generation and DR together; and (4) Wholesale Auction VPPs, a segment that is unique to Europe as a condition of mergers, requiring asset owners to auction off capacity.

“Virtual power plants enable utilities to stretch supply from power generation and demand response, without requiring any large-scale infrastructure upgrades,” says senior analyst Peter Asmus. “This approach delivers greater value to the customer while also creating benefits to the host distribution utility as well as the transmission grid operator. When compared to the fossil fuel based centralized power plants that dominate electricity markets worldwide, one of the primary advantages of VPPs is that they can react quickly to changing customer load conditions, all in a dynamic and real-time fashion.”

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About Author: John Addison

Founder of the Clean Fleet Report, author of Save Gas, Save the Planet. John writes about electric cars, renewable energy, and sustainability.

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