HomeRegional NewsAfricaThe virtual power plant market in real terms

The virtual power plant market in real terms

The energy sector needs innovative solutions to strengthen the market’s backbone against disruptive technologies. One such solution is the use of virtual power plants (VPPs), which are now remodelling utility assets to remain on par with the unfolding fourth industrial revolution.

This article first appeared in ESI Africa Issue 4-2019.
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The need for reliable power generation in response to growing consumer demand is a contributing factor for utilities to favour VPP technology. A report by BIS Research explains how governments’ choosing to use renewable energy and battery storage systems is stimulating this market. The study anticipates the global VPP market growth to be worth $4.5 billion by 2024, with the US currently dominating its uptake.

However, one of the most lucrative markets for this technology is the Asia-Pacific region where conditions allow it to flourish. Rising demand for electricity generation from renewable energy sources and low grid strength are clear VPP market drivers. As such, South America and Africa are regions that exhibit significant growth opportunities for VPP implementation due to the increased optimism in their economic conditions.

The rise of the prosumer and demand for continuous power supply are creating a space for ingenuity. “Distributed generation, demand response, and mixed assets are the major technologies used by the solution providers for grid optimisation and aggregation of distributed energy resources,” states the report. According to the study, in 2018 the demand-response technology-based virtual power plant accounted for more than 60% of the total VPP market. “During the forecast period [to 2024], mixed assets technology-based virtual power plant is expected to display the highest growth of 33.09% owing to the increasing concerns over the continuous source of power supply for bidirectional flow of electricity,” the report added.

Brazil takes virtual leap

Atlas Renewable Energy’s 156MWp Juazeiro Solar Plant in Brazil, sporting Latin America’s first digital substation enhancing the plant’s controllability and reliability, became operational in August. The plant’s 475,200 modules span over 350 hectares and are projected to generate 357GWh annually

This could benefit approximately 207,592 families and reduce the emission of more than 47,000 tonnes of carbon dioxide. Located in Juazeiro, State of Bahia, the digital substation breaks technological boundaries by advancing in the efficiency and quality of energy distribution. A digital substation works like the heart of a power grid, transmitting and distributing electricity to distant locations, while increasing local operators’ productivity, safety and reliability.

Compared to a conventional substation, digitalisation requires substantially less space and reduces the quantity of copper wire needed. VPPs also facilitate more efficient monitoring, diagnostics, control, and other operational aspects for utility networks.

UK takes VPP to the next level

Nordic energy company Statkraft has taken its VPP concept in the UK to the next level by inking a deal with battery storage company Statera Energy. Together the companies plan to deliver 1GW of energy storage and utility-scale, flexible gaspowered generation. Unveiled in March, the VPP operateswith the company’s 3.8GW UK renewable generation portfolio.

To date, Statera Energy’s contribution to the project is twofold: it will provide one of the UK’s largest battery facilities to store renewable energy at times of excess production; and will deliver efficient, flexible reciprocating gas engines to generate electricity at short notice to respond to times of underproduction or peak demand. The battery storage company asserted that it would continue to develop, build, own, and operate its flexible gas generation and energy storage portfolio throughout the partnership with Statkraft. As new assets come online, they will be integrated into the VPP and trading platform, and the Nordic energy firm will provide market optimisation, trading and risk management services to the assets.

According to Duncan Dale, head of Statkraft’s UK markets business, everything about these projects suggests that new efficiencies can be made, which means lower carbon emissions and lower costs to the consumer. “The energy market and the UK’s transition to a low carbon future should benefit greatly from unlocking this potential,” he added.

VPP, a first for the Middle East

Recognising the gains that come with employing VPP, the Dubai Electricity and Water Authority (DEWA) partnered with Canadian company Enbala to build the region’s first VPP. DEWA underlined that with the utilisation of VPP, it aims to increase the visibility of distributed energy resources and maximise their value by providing grid services such as peak shaving, frequency regulation or energy balancing.

The pilot VPP is a result of research collaboration between DEWA’s Research and Development Centre at the Mohammed bin Rashid Al Maktoum Solar Park and Enbala. The power utility’s CEO and MD, Saeed Mohammed Al Tayer, said with this project they want to make Dubai the smartest and happiest city in the world, and fulfil the objectives of the UAE Centennial 2071, the UAE Vision 2021, and the Dubai Plan 2021 to make Dubai a smart and sustainable city.

“In line with DEWA’s vision to become a globally leading, sustainable, innovative corporation, we seek to shape the future of the local, regional, and global energy sectors. We will do this by keeping pace with the fourth industrial revolution and adopting innovative disruptive technologies to anticipate and shape the future of energy. The VPP will increase renewable energy integration capabilities, supporting the Dubai Clean Energy Strategy 2050 to produce 75% of Dubai’s total energy from clean energy sources,” stated Al Tayer.

What does the future hold?

The forecast for this technology’s global market revenue is set to expand by 48.6% per annum between 2018 through to 2028. The main drivers behind implementation of further VPP models include the growth in consumers’ onsite energy generation and efforts by utilities to transform passive consumers into prosumers. It is through the rollout of solutions such as electric vehicles, demand response projects, and advanced battery storage technologies that utilities can lead the uptake of VPP solutions and enter a new electrical era. ESI