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Germany has led efforts to develop more sophisticated controls. In 2007, Kassel University and several energy companies, including wind turbine maker Enercon and photovoltaics producer SolarWorld, launched a pilot project to test the concept of a virtual power plant. In one of the biggest demonstrations of its kind, Kassel linked 28 wind turbines, solar systems, biogas-fired generating stations, and hydropower plants from across Germany. 

The demonstration was a technical success with “enormous implications” for German power policy, according to Peter Asmus, a distributed-energy analyst with Pike Research. The Kassel team showed that although wind turbines and solar farms might produce power irregularly, the overall power supply could be evened out by bringing in power from dams or biogas plants running on waste. That result, says Asmus, suggested that “Germany could be completely powered with a diverse blend of complementary renewable energy resources.”

Confidence in a larger role for renewable power underpinned Germany’s decision last year to shut down all 17 of its nuclear reactors within a decade. About one-third of Germany’s electricity comes from nuclear plants; under current plans, renewable power will replace all of it. “We want to end the use of nuclear energy and reach the age of renewable energy as fast as possible,” said Chancellor Angela Merkel in announcing the new policy in May.

For Siemens and RWE, growth has been rapid since the launch of their virtual power plant on Leipzig’s energy exchange. What began as a 20-megawatt offering two months ago has quadrupled in size as more RWE customers have signed up to sell power they generate at their homes and businesses. The program appears destined to easily achieve its goal of 200 megawatts—perhaps even by the end of this year, three years ahead of schedule.

That scale would put the virtual power plant on equal footing with some natural-gas-fired power plants. And the system could grow even bigger. “From the technical side, there’s no limitation,” says Martin Kramer, the virtual-plant project manager for RWE’s technology development unit.

So far, the business case for RWE’s virtual power supply still depends heavily on government largesse. An amendment to Germany’s renewable-energy law that took effect this year guarantees extra payment for any renewable power sold on an energy market. Land-based wind turbines, for example, can earn an extra $16 (12 euros) on top of the government-mandated rate for wind power of $116 (89 euros) per megawatt-hour. Kramer says that is why producers have been quick to join. “You get the value of the energy and the marketing premium on top,” he says.

Germany’s belief is that an efficient marketplace  in which small producers bid alongside large power plants will encourage distributed green powers. Subsidies might also become irrelevant if power prices rise, as they are expected to. “The idea is to change from a regulated system to a more or less market-driven energy system,” says Kramer.

Utilities in the United States and Canada are now experimenting with virtual plants in smart-grid demonstration projects. But virtual power generation will not become an enticing opportunity without subsidies such as Germany’s, says analyst Asmus. Of the 1.5 gigawatts that Asmus expects will flow through virtual power plants in 2017—a threefold increase over this year—he predicts that 75 percent will be generated in Europe.

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Credit: Steffen Kugler

Tagged: Business, Business Impact, business

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