Case Study: How Virtual Power Plants Can Solve Grid Problems

By RTInsights Team | February 21, 2016

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What if onsite power generation — such as solar PV

systems — could be aggregated into a single virtual power
plant?

Name of Organization: E.ON Connecting Energies

Industry: Energy

 Location: Essen, Germany

Business Opportunity or Challenge Encountered:

Renewable energy has been flocking to the electric grid as solar PV costs continue to decline, and wind energy
in many parts of the United States compares favorably with natural gas power — if not cheaper. Meanwhile,
the explosion of electric battery storage, such as through lithium-ion batteries, offers a way to store excess
renewable energy production. These technologies and others have created a surge in the use of on-site power
generation.

Unfortunately, much of this on-site power generation is not monetized in electric markets, which have
multiples products to meet electric grid needs, such as imbalance energy when the wind dies down or clouds
pass over solar PV systems. Electric markets also have pricing for meeting or avoiding peak electric use, such
as through demand response.

One challenge is that on-site power, or distributed generation, is used to satisfy a customer’s needs, and is
not directly connected to the overall electric grid. Even if it were, grid managers would be loathe to manage
thousands of small generating units at industrial, commercial, or residential spaces. That’s even if they could—
electric grids usually require a direct metering connection, which can be expensive, and
a SCADA communications protocol, which many distributed generation sources do not have.

Enter E.ON Connecting Energies, a global provider of integrated energy solutions for commercial, industrial and
government customers. E.ON recently entered the “virtual power plant” space, which involves helping
customers offer and monetize distributed power sources such as solar systems, wind farms, co-generation
facilities, and biogas units. These virtual power plants can smooth peaks and valleys in overall energy demand.

E.ON, however, needed a real-time platform through which it analyze on-site power generation units and
transform their capacities into virtual power plants, which can be controlled by a central control system that
could access distributed generation data 24/7. Eventually, these virtual power plants sell the excess energy
and capacity for the customer into the energy markets, such as wholesale markets (e.g. spot, intraday),
reserve markets (primary, secondary, tertiary reserve) or local optimization (e.g. peak charge reductions and
energy imbalance optimization).

How This Business Opportunity or Challenge Was Met:

E.ON first reviews customers’ power assets, including types of on-site generation units are available (e.g. CHP,
diesel generators, wind, solar), and the role controllable loads play in customers’ individual energy systems
(e.g. industrial processes, HVAC, pumps), as well as which opportunities for energy storage are in place
(e.g. cold storage, compressed gas, or electric batteries such as lithium-ion technology found in Tesla electric
cars). These components and equipment are then connected to E.ON’s systems to be transformed in to virtual
power plants.

To enable its virtual power plant program, E.ON Connecting Energies leveraged technologies such as machine-
to-machine communication and data analytics to provide integrated energy solutions with tangible cost
benefits for customers.

To support these capabilities, the company adopted a solution from

the Eclipse SCADA project, an open-source supervisory control and
data acquisition (SCADA) communication system that operates with
coded signals over communication channels to provide remote
control of distributed generation. SCADA systems historically
distinguish themselves from other industrial control systems by
being large-scale processes that can include multiple sites, and
Many commercial buildings with solar panels or large distances. Eclipse SCADA was attractive to E.ON Connecting
other forms of generation could be aggregated Energies because the company needed to remain vendor-neutral
to function as a virtual power plant. and preferred the flexibility of an open source project.

E.ON Connecting Energies developed a virtual power plant system to reach remote machines and pull data
through a communication box that bridges a network and a secure gateway. The data is brought through a
cellular network to the data center, and goes through Eclipse SCADA to do the remote command and control
of the units.

To avoid the problem off too many distributed power plants on the grid—which would cause a headache for
grid managers—E.ON created a system in which the distributed systems would be presented to electric grid
managers as one very large unit. To do that, the virtual power plant has two engines – one that virtualizes the
units in the field, and the virtual power plant engine that optimizes those units and presents it to grid
operators.

Eclipse SCADA abstracts the various distributed generation units so they can talk to the virtual power plant.
E.ON Connecting Energies, meanwhile, helps customers integrate their hardware with their virtual power plant
business application for data acquisition, monitoring, data and event archival, visualization and value
processing.

Measurable/Quantifiable and “Soft” Benefits from This Initiative

The flexibility of the Virtual Power Plant lets E.ON turn remote equipment on or off on demand. They take that
control and calculate how much power can be made or consumed, and then sell extra power as a product
back to the grid.

This arrangement enables E.ON’s customers to offer and monetize capacities beyond their own needs and to
contribute to the energy system. Participation in the virtual power plant program enables them to earn
revenues with installed generation capacities, and provides greater flexibility in rapidly changing markets.
Customers are also able to track their assets in individual portals, as well as become an active part of the
transition to a smarter-energy society.

E.ON, which sees more than $100 billion in annual sales across the world, plans to ultimately focus on
renewables, energy networks and customer solutions. Approximately 33 million customers purchase gas and
electricity from E.ON.

(Sources: Eclipse, E.ON Connecting Energies)