Many businesses now have a range of on-site energy equipment, like batteries, solar panels and EV chargers. The smart software that controls this equipment helps firms do two things:
- Cut their electricity bills
- Sell their surplus electricity back to the grid for income
The problem is that individually, one site on its own may not have enough flexible demand or export capacity to trade in the wholesale electricity market. Virtual power plants (VPP) solve this by grouping many of these smaller sites to manage their batteries, solar output and EV chargers together.
This means, together, they act like one larger energy asset, with enough combined power to trade electricity in the wholesale market. In this article, learn what a VPP is, what value they deliver and how to connect your site up to one.
What a virtual power plant is
A virtual power plant connects the batteries, solar panels and other equipment that can generate, store or adjust electricity use across multiple sites. The industry name for this equipment is distributed energy resources (DER).
VPPs run this equipment together as one coordinated source of flexible power. On an individual site, the software can tell a battery when to charge, when to power the building and when to export electricity to the grid for income. Across the estate of sites, it coordinates these decisions so that the group can trade as one larger source of flexible power.
How to join a virtual power plant
To join a VPP network, you need your own batteries, solar or other on-site equipment. You then hand control over your DERs to the VPP's software.
At all times, your site takes priorities so you can set limits on:
- How much energy from your battery it can use to trade
- How much energy you want kept back to power your own site
- When it can access your equipment and when it can't
The VPP also needs the right meter and data setup. Most commercial batteries and solar arrays are installed behind the meter. This means they are connected on your side of the grid meter, where your site uses power.
The meter records how much electricity you buy from the grid and how much you export back to it. Those records matter because the VPP uses them to check what your site contributed and calculate any trading income due back to you.
If the software tells your battery to power the building, the meter should show lower grid import. If it tells the battery to export, the meter should show power leaving the site. If it tells the battery to charge or discharge at a set time, the VPP may also use controller data to check that the battery followed the instruction.
Why virtual power plants exist
The electricity generation and distribution system needs to match supply and demand constantly. Grid balancing is essential because the grid cannot store large amounts of power by itself, so electricity has to be produced and used at almost the same time.
In recent years, this has become a lot harder because:
- Renewables: Wind and solar now make a large share of our power, and the amount of electricity they generate rises and falls depending on weather conditions. For example, on a windy night there can be too much power and on a still evening, too little.
- Demand patterns: How much electricity the country needs varies from minute to minute.
The biggest challenges come at times of peak demand. That's when businesses and households want the most power. These are the most expensive times for the grid because it may need to pay for extra power, pay sites to reduce demand, or do both at once.
At these times, VPPs help by providing flexibility through demand response, also called demand side response (DSR). This means changing how much electricity connected sites take from the grid for a short time. A VPP can do this by telling a battery to power the site, delay charging, or export stored power where the site’s setup and contract allow it.
Example: A cold store can charge its battery overnight, when power is cheap and plentiful. Then, when the grid needs more power in the early evening, the battery helps power the site instead of the grid. If the site has spare stored power, and its export setup and contract allow it, it can also send power back for others to use while the cold store keeps stock at the required temperature.
What energy assets do you need to join a virtual power plant?
On a commercial site, the equipment you need to join a virtual power plant includes:
- Battery storage
- Solar panels
- EV chargers
- Heat pumps
- Cold-store compressors
- Non-critical pumps
You do not need all of these. Even one can be enough, as long as a VPP can measure and control it.
Some equipment can use more power at one time and less power at another without disrupting operations at your site. For example:
- An EV charger can slow down its charging, as long as it’s available to charge when needed
- A heat pump can warm or cool a building a little earlier, while power is cheaper, then draw less power, while the building is still comfortable to be in the whole time
- A cold-store compressor can work harder before a high-price period, then drop back while the store stays in its safe temperature range
This is demand response at work.
The table below shows how each type of equipment can provide flexibility, and what may limit how much control a VPP can take.
| Equipment | What it can do | What limits it |
|---|---|---|
| Battery storage | Stores electricity for later. The software can choose when the battery charges, when it helps power the site, and when it sends spare power back to the grid. | The site may need to keep some charge for its own use. The battery maker may also set rules on how often the battery can charge and discharge so that will need checking. |
| Solar panels | Generate and store electricity when there is enough daylight. That power can then run the site, charge a battery, or go back to the grid. | Solar panels only generate power when there is enough daylight. Without a battery or a way to control export, there is not much for a VPP to change. |
| EV chargers | Charge vehicles sooner, later or more slowly while they are parked | Vehicles still need enough charge before drivers leave |
| Heat pumps | Heat or cool the building earlier, then use less power for a short time | The building still needs to stay warm or cool enough for the people inside |
| Cold-store compressors | Cool the store a little more before electricity gets expensive, then use less power for a short time | The store must stay cold enough to protect what is inside |
| Non-critical pumps | Run earlier, later or more slowly when the site does not need full flow all the time | The pump must not stop production, affect safety or block water flow |
Battery size alone does not decide whether your site can join a VPP. The VPP needs equipment it can measure, control and use without disrupting your site.
That is why many different commercial sites can work well, including farms, hotels, warehouses, factories, cold stores and EV charging sites. Each one may have equipment that can store power, reduce grid demand or export spare electricity for short periods.
How virtual power plant software controls your flexible energy assets
Once your equipment is connected, the VPP software checks your site demand, solar generation, battery charge and the limits you have set.
It then looks for times when it makes sense to charge the battery, discharge it or reduce grid demand. It can do this when prices, site demand or grid conditions make the change worthwhile. The instructions it sends to your equipment are often called dispatch instructions.
The software keeps adjusting as the day goes on. It must stay inside the limits you set, including how much of the battery it can use and when it can control your equipment. Depending on the setup, you can usually override the software or reserve the battery for your own site when needed.
How commercial batteries fits into VPP model
For most commercial sites, the first job of a battery is to cut electricity bills. The battery does this by powering your site when grid electricity is expensive, instead of drawing power from the grid at those times. This is often called peak shaving.
Trading income is possible, but you should not bank on it until your site has been checked. These factors decide whether your battery can take part:
- Meter: Your meter must record import and export, usually every half hour
- Battery controls: Your VPP has to be able to control your battery remotely, telling it when to charge or discharge
- Export limits: Your supplier may cap the amount of power you can send back to the grid for trading
- Supplier contract: Your electricity contract has to permit another firm to use your battery in this way, and not all do
- Aggregator or trading partner: You must have at least one battery they can add to their pool
All virtual power plants in the UK usually check these points before adding your site to its network. If your battery can only reduce your own grid use, it may still cut your bills. If it can also export power under the right contract, it may also earn trading income.
The next step for your commercial sites
To reduce your energy bills and introduce the possibility of selling electricity back to the grid, contact GridVolt.
We'll first examine your load, your tariff, your solar, your battery controls and your export limit. That helps us to work out what your equipment can safely do and the savings we can achieve for you.
From there, there are two routes:
- Energy Manager: Ideal if your main aim is a lower bill. It runs the battery around your load, your solar and your tariff, so you buy less at the priciest times.
- GridTrade: A companion to Energy Manager for GB sites wanting to benefit from wholesale trading. GridTrade is currently not available for Irish sites.
Get in touch with GridVolt today for a bespoke proposal for your sites.
Frequently asked questions
Virtual power plant vs P415
P415 is a rule change that came into effect in November 2024. It lets independent aggregators sell your site’s flexibility into the wholesale market on your behalf. Before then, most businesses could only do this through their electricity supplier, and many suppliers did not offer that route.
On its own, one commercial battery may be too small to make battery energy trading worth the effort for aggregators. VPPs group sites like these together, giving the aggregator enough battery capacity to trade, while each site still sets limits on how its equipment can be used.
Virtual power plant vs microgrid
A microgrid is a local power system that can run on its own, like many hospitals have. This means they have their own generators and batteries, so when the grid goes down, they can keep their theatres, wards and equipment running without a break. Microgrids are there to keep a site powered if there is a failure in the wider grid.
VPPs are different in that they join equipment up across many separate sites and work with the grid to take part in the wider market.
Virtual power plant vs aggregator
While a VPP is batteries and equipment, an energy aggregator sends the instructions to control how they operate at each site. They work together rather than compete against each other.