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Your Guide to Virtual Power Plants

Today, the way we generate and use energy is changing to be more sustainable and efficient. One concept that is getting popular is the Virtual Power Plant (VPP). Unlike regular power plants, a VPP is flexible and decentralised, using technology to make energy production, use, and distribution better. In this blog, we'll explore what a VPP is, how it works and the associated benefits and drawbacks, to help you become more informed.

What is a Virtual Power Plant?

A Virtual Power Plant is essentially a network of distributed energy resources (DERs), such as solar panels, wind turbines, batteries, and other distributed energy systems. These are all connected through a cloud-based platform, and the coordination and management happen through advanced software and communication technology, rather than a centralised physical control centre.

How does it work?

  1. VPPs bring together various DERs in one network. These resources can be renewable energy sources like solar and wind, energy storage systems such as batteries or flexible loads such as smart appliances or electric vehicles.

  2. A VPP works well because it effectively communicates with all its connected resources. It uses high-tech systems that keep an eye on things and make quick adjustments using the Internet of Things (IoT) and real-time data exchange to ensure everything is running smoothly and efficiently.

  3. Smart algorithms are crucial for a VPP. They look at data from all the connected resources, considering factors such as energy demand, weather conditions, and market prices. The aim is to use resources in the best way possible to meet the energy demand efficiently.

  4. Machine learning and predictive analytics help a VPP predict how much energy people will use, how much can be generated, and what the market trends are. This foresight enables the system to make informed decisions, adjusting energy production or consumption as necessary.

  5. One of the primary functions of a VPP is to keep the balance between how much electricity is available and how much is needed right now. It does this by adjusting the output of renewable resources and using stored energy when necessary. This helps to keep the overall electricity system stable.

  6. Virtual Power Plants (VPPs) can join energy markets, selling excess energy to the grid or purchasing electricity when prices are low. This interaction with the market helps make the entire electricity system more efficient and resilient.

What are the benefits of VPPs?

VPPs bring various benefits to both large-scale and individual settings. Let's take a closer look at these advantages to understand their practical applications and implications better.

1. Grid Stability:

VPPs stabilise the power grid by responding rapidly to and balancing changes in energy production and use. This helps prevent blackouts and ensures a reliable supply of electricity.

2. Renewable Integration: 

VPPs efficiently include renewable energy sources, helping cut down on greenhouse gas emissions and promoting a cleaner, more sustainable energy mix. This means that they play a crucial role in supporting a sustainable energy system, aligning with global environmental goals.

3. Cost Savings:

VPPs can significantly lower your electricity costs, and therefore reduce your energy bills. They work by using DERs which are usually less expensive and more environmentally friendly than traditional fossil fuels or nuclear power plants.

VPPs can also participate in energy markets and provide services such as reducing peak energy usage and responding to changes in demand. By doing so, they have the potential to bring economic advantages.

4. Flexibility and Adaptability: Traditional power plants operate on an ‘always-on’ basis, which means resources are often wasted during periods of low demand. However, VPPs are decentralised, so they can easily adjust to changing energy demands. This makes them resilient and able to handle uncertainties in energy demands.

5. Decentralisation and Resilience:

VPPs help spread out energy generation across different locations, making centralised power systems less vulnerable. In the face of disruptions or disasters, VPPs boost the resilience of the energy infrastructure.

6. Enhance energy security:

By generating and storing power locally, you rely less on the main power grid. This makes your energy system more resilient and self-sufficient ensuring the ability to operate at full capacity even during peak demand periods.

7. Additional Consideration for Homeowners:

As a homeowner, one of the exciting opportunities with VPPs is using your battery for a quick response to energy demands. Companies generally require at least 1MWh of battery storage to participate in a VPP, which they achieve by bringing together multiple customers like you into their program. 

But is this the right choice for you? It depends on your individual circumstances. Allowing a third party to control the charging and discharging of your battery can significantly reduce its lifespan by not following its optimal cycle. In many instances, the potential drawbacks, such as a shorter battery life, can outweigh the benefits of joining a VPP.  

You might find more advantages in using an intelligent algorithm that learns your home’s energy patterns and optimises battery use based on what’s best for you. To make the best decision, we suggest reaching out to an Energy Wired team member. We’re here to help you figure out the best solution for your specific needs and ensure you’re getting the most out of your energy system. You can find our contact details, please don’t hesitate to reach out. 


Virtual Power Plants are a key move towards a better energy future, changing how we make and use energy. They're a sustainable and efficient alternative to traditional power plants. With advancing technology, using VPPs can make our energy future cleaner, more reliable, and cost-effective. We can create a cleaner and stronger energy system for the future.



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