When we think about building a power plant, the first image that comes to mind is a centralised facility connected to the power network, from which energy is distributed to other locations. However, it is also possible to create “virtual power plants” by combining the capacity of smaller generation systems spread across various locations. Information technologies and high-speed Internet can be deployed to link multiple installations, allowing them to operate as a single generation system.
Rooftop solar power is being deployed at a fast rate by Australian homes and businesses – over 107 megawatts of new capacity were added in October 2017 alone. Of the 6.7 gigawatts of total solar PV capacity in the country, small-scale installations below 100 kW add up 6 GW. There have been technical barriers for the creation of virtual power plants with these distributed generation systems: the variable output of solar panels and their inability to produce energy at night. However, this will change as battery technology becomes more affordable.
A virtual power plant uses a control system with artificial intelligence, which knows the total generation and storage capacity connected to the system. Even though solar panels have a variable and uncontrollable output, a virtual power plant can take advantage of battery storage to supply energy whenever needed. In other words, it can mimic the behaviour of a power plant fired by coal or natural gas, but without the greenhouse gas emissions!
Assume you live in a city that requires 200 MW of new generation capacity, available for 3 hours each day. The conventional solution is to build a power plant with natural gas turbines and generators, but this is not environmentally friendly, and can lead to higher electricity tariffs if gas becomes more expensive. Reliance on natural gas is the main reason why South Australia has expensive electricity; network and retail costs are the main cause in other parts of Australia.
An alternative is to take advantage of the ample rooftop solar power capacity available in South Australia, and complement it with distributed battery systems. If the total output is 200 MW and the storage capacity is 600 MWh (for three hours), a virtual power plant can perform the role of the natural gas power plant described above. Surveys have revealed that most Australian homeowners with solar PV systems have a positive perception of batteries and are considering the upgrade in the short term.
Virtual power plants are not limited to specific technologies. Using sensors, controls and artificial intelligence, they can link generation and storage system with different operating characteristics. Virtual power plants can also reduce the need for expensive power network upgrades, since both generation and consumption are located at customer premises, reducing transmission distances. For example, a house could be powered with surplus energy from a nearby PV system in a commercial rooftop, instead of energy from a conventional power plant located many kilometres away.