SIEMENS

In line with Germany’s transition to alternative sources of energy, plans call for the country to generate 80 percent of its electricity from renewables by 2050. The associated expansion of wind, photovoltaic, and biogas generation will necessitate a completely new grid infrastructure to distribute electricity. To date, power in Germany has come from a limited number of large-scale plants; in the future it will be supplied by millions of small-scale distributed generators. This will have repercussions for the current power market. Anybody with a couple of voltaic panels on his roof can become a “prosumer” — both a producer and a consumer of power.

This in turn will require new software systems to control and coordinate such a complex infrastructure. Here, the industry buzzword is “virtual power plant,” which refers to a cluster of small-scale generators that collectively act like a single large power plant, thus avoiding the fluctuations that characterize individual wind and photovoltaic power facilities. According to a study by the corporate consultants PricewaterhouseCoopers (PwC), virtual power plants are a vital part of the transition to alternative energy sources.

As the name suggests, a virtual power plant does not physically exist as a power generator in the conventional sense. Instead, it pools a cluster of small-scale plants, using sophisticated software to operate them collectively as if it were a single large facility. In the future such virtual power plants will play a vital role in the transition to alternative sources of energy, serving to aggregate the output of countless wind generators, photovoltaic plants, biomass facilities, and combined heat and power (CHP) plants. RWE, a major German utility, was quick to recognize the strategic significance of virtual power plant and has been operating one in Dortmund since 2008. Its “brain” is the Decentralized Energy Management System (DEMS) from Siemens. It processes weather bulletins, the latest power prices, and consumer demand in order to produce hourly forecasts and operating schedules for the virtual facility’s constituent generators.

Today, this virtual power plant pools a generating capacity of 150 megawatts, mainly from wind power, but also from photovoltaic and biogas plants. RWE sells the power for the plant operators either on the European Energy Exchange (EEX) in Leipzig or on the spot market for balancing energy, where higher prices are paid for power that’s available at short notice. The individual generators, which are too small to trade on the EEX, receive a premium on the normal feed-in tariff per kilowatt hour specified in Germany’s Renewable Energy Act. In the future, virtual power plants will pool not only generating capacity, but also power consumption, i.e. individual loads. From the perspective of the power grid it makes no difference whether a load goes off-stream — e.g. a refrigeration unit switches off in a cold-storage warehouse — or a generator comes on-stream — e.g. a standby diesel generator is switched on. As soon as a load goes off-stream, more energy is available for other consumers. “In the future we will see virtual power plants that consist exclusively of switchable loads,” says Dr. Thomas Werner, the product manager for virtual power plants at the Smart Grids Division of Infrastructure & Cities at Siemens in Nuremberg.

Harmonizing a Diverse Mix. A smaller virtual power plant is operated by Munich’s municipal utility, Stadtwerke München — here too with DEMS. The entity aggregates plants with a combined generating capacity of over 20 megawatts, including the utility’s own hydroelectric plant on the Isar River, five CHP plants, a wind power plant, a photovoltaic plant, and several standby diesel generators. The smallest unit delivers 30 kilowatts. Next in line to join the conglomerate are a biogas plant, a geothermal plant, and several switchable loads such as large-scale pumps and cold-storage warehouses. According to Markus Henle, head of Stadtwerke München’s virtual power plant program, the project isn’t aimed at reaching large-scale operation. Instead, its priority is to gain experience in the coordination of as many different types of energy source as possible and in the day-to-day management of the organizational and operational processes. DEMS enables more reliable forecasting and planning, thus creating new opportunities for value creation, since planned power generates greater revenue on the electricity market.

The more energy sources are pooled, the easier it is to balance supply and demand. This has led to the emergence of more and more companies acting as electricity aggregators, which combine small-scale power generators — sometimes by offering tariffs significantly higher than those mandated by the Renewable Energy Act. This is a thorn in the government’s side, because it means that plant operators earn twice for their power. The next amendment to the Renewable Energy Act, scheduled for early 2013, should put a stop to this, but could thereby make the market for virtual power plants more difficult.