Virtual power plants

Small distributed power plants, fluctuating energy sources such as wind and sunlight, and the deregulation of electric power markets have one thing in common; they all increase the need for a reliable and economical operation of electric power grids. Siemens has developed intelligent solutions to meet this need such as with bundling small and distributed power stations into a virtual power plant. This virtual power plant is not only reliable, but also economical for electric power grids since it allows new forms of energy sources to enter the grid that were never able to do so before.

Just about everybody stands to gain from a virtual power plant -power plant owners, electricity traders, power grid operators, and of course, the end customer, who can profit from more intense competition. The virtual power plant concept also compliments big utilities with their large, central power plants by creating new suppliers with small, distributed power systems, which are linked to form virtual pools that can be operated from a central control station. Such a pool can unite wind power, cogeneration, photovoltaic, small hydroelectric, and biogas systems, to function as a single supplier. Furthermore, large power consumers such as aluminum smelters and large process water pumps can also be integrated into a virtual power plant as negative generation.

Siemens has already gained comprehensive experience in setting up virtual power plants in research projects as well as in practical implementations for utilities. One of these successful operative virtual power plants was built together with RWE, a major German utility in 2008. Nine small hydroelectric plants in the project function were connected as a single large one- their total initial output for pilot operation was 8.6 MW.

What helps make Siemens´ projects successful like the one mentioned above is the Decentralized Energy Management System (DEMS). DEMS was developed by Siemens when it became evident how the electric power grid and the electric power market would be affected by increasing supply from distributed and renewable energies. DEMS is able to display the present status of systems, generate prognoses and quotations, and control electric power generation as scheduled. The system overview is effectively subdivided into producers and loads, contracts, and power storage. Additional information is provided on "forecasting and usage planning" and "monitoring and control." As a result, a portfolio manager can operate the system more efficiently by viewing color bar graphs showing which power stations are currently running at peak load or at base load and how much power they are producing.

Using plant status information, such as electric power output, and combining it with market forecasts, DEMS generates a forecast that also takes into account the next day's prices and the total power available helping operators set a quotation that allows them to earn the highest profit available. Even weather data is factored into the energy management system to provide a forecast of the power available from sources with fluctuating availability, such as wind and solar.

Once the quotation has been approved and accepted by the market, DEMS generates an operating schedule for the individual power plants in the virtual one. The schedule specifies exactly when and how much power must be available from which plant. "DEMS does such a good job of modeling that its schedules can be run exactly the way it defines them," says Dr. Thomas Werner, Product Manager, Power System Management at Siemens Energy; no manual corrections are needed.

Siemens also provides communication devices in power stations, which link the stations with the control center via wireless communication modems. These communication systems ensure reliable connections between the control center and individual power plants.  The advantage of this approach is that it requires no costly cables or rented landlines.

Existing business models for virtual power plants already promise attractive profits. As a case in point, power grid operators need to maintain a constant balance in the power grid despite fluctuations in consumption and electric power generation. This is where the virtual power plant's operator can sell reserve power and make a specific capacity available as a minute reserve. When needed, the purchaser places an order for the agreed upon power for a fee. The seller then starts up or shuts down generators as specified in the contract within the agreed upon timeframe to stabilize the net frequency at 50 or 60 Hz.

There are also other uses of virtual power plants, as was shown in the case of a municipal power plant in Germany's Ruhr district. Adding electric power lines to supply energy for a new residential area would have required a large capital investment for the Ruhr district. Instead of creating new lines, the area's electric power needs were met by installing distributed, gas-powered, mini block-type cogeneration plants and interconnecting them to form a virtual power plant that delivers electric power and heating. This made it possible to postpone a huge investment for several years, saving thousands of euros. Siemens can also "produce" virtual power plants from less obvious components, such as by interconnecting the emergency power generators in hospitals and factories with the battery storage systems common in telephone and Internet communications centers.

Virtual power plants also have a macroeconomic advantage. "The benefit of a power station network extends far beyond its present applications," says Dr. Werner. For example, at present consumption rates, global copper reserves will be exhausted in 32 years (Pictures of the Future, Fall 2008, Rare Minerals). If the infrastructures of countries such as India and China consume as much copper as the industrial countries, shortages and price increases of this scarce metal are likely to occur even sooner. However, if newly-industrializing countries base the expansion of their energy infrastructures on intelligent power grids and virtual power plants, fewer power lines will have to be built to transport electricity, and the limited copper reserves will last longer.