With the complexity of energy grids, including concentrated power needs in large urban areas, transmission lines extending across remote rural areas, and the rise in renewable energy sources creating the “duck curve,” grid operators are being challenged more and more to supply readily-available and consistent power.

Now the interest in Virtual Power Plants (VPPs) is on the rise to help companies understand ongoing and upcoming challenges on the energy grid and be able to resolve them quickly and efficiently.

At its core, a virtual power plant is a network of small-scale energy resources called distributed energy resources (DERs), such as rooftop solar, wind generating units, and battery storage systems, interconnected through a sophisticated software platform and coupled with customer usage. This digital infrastructure enables real-time monitoring, control, and optimization of diverse energy assets, effectively creating a “virtual” power plant that operates as a unified and dynamic entity. As published by MIT Technology Review, according to Rudy Shankar, director of Energy Systems Engineering at Lehigh University, “a VPP is a way of ‘stitching together’ a portfolio of resources that can help the grid respond to high energy demand while reducing the energy systems’ carbon footprint.”

One of the key advantages of VPPs is their ability to harness the flexibility and resilience inherent in distributed energy resources. By aggregating and orchestrating these resources, VPP operators can respond to fluctuations in energy supply and demand, mitigate grid imbalances, and provide critical grid services, such as frequency regulation or voltage support.

The implementation of VPPs is not only transforming the technical aspects of energy management but also reshaping the business models and market dynamics within the energy sector. With VPPs, energy consumers are empowered to actively participate in the energy market by monetizing their DERs and contributing to grid stability through demand response programs and energy trading schemes.

Ruben Llanes is CEO of Silicon Valley VPP pioneer AutoGrid Systems Inc., a software solutions company that aims to “unlock the full potential of distributed energy resources.” Mr. Llanes said in a recent interview, “For a long time, we’ve been developing technology, infusing AI into it, machine learning into it, data science into it, and I feel there is finally this convergence between the capabilities that we’ve developed with the market need…Now is the time to be ambitious.”