Fair market conditions for virtual power plants

Analysis of technical, economical and regulatory conditions to get fair terms under competition in the liberalised market for virtual power plants on renewable energy basis.

Short Description

Currently, electricity production from renewable energy sources (RES-E) in Austria is concentrated by the federal support mechanism. Green-power producers within this scheme are not liable for meeting a certain demand or to fulfil a scheduled delivery, but receive a feed in tariff for their overall production independently of actual demand and transmission grid imbalances. Imbalance costs are being socialised.

Green power marketers already now face the entrepreneurial risk of settling imbalances within their firm connected to financial payments. For the near future considerable RES-E capacity is determined to enter the competitive electricity market as well, due to a limited support period of 13 years for particular plants.

Virtual Power Plants (VPP) may integrate these capacities by economically as well as technically efficient means into the existing energy system. We define a VPP as an interactive, centrally controllable network of decentralised generation units and loads being aligned to respective mutual technical characteristics of power generation/consumption.

Technical monitoring and control equipment as part of an energy management system is utilised by the operator of a VPP to conduct an economic optimisation of the operational mode - affecting prevailing load and generation.

The flexibility of this system facilitates the integration of fluctuating generation mainly from wind power and raises the net social benefit of the utilisation of renewable energies in comparison to conventional operation, which accounts for higher quantities and costs of imbalance and has negative impact on system stability.

In an economic model the VPP is defined as a so-called balancing group within the boundaries of the Austrian electricity market organisation. Results of model runs show that the utilisation of wind power effectuates increasing quantities of imbalance and respective costs. Balancing groups incorporating high shares of wind power into their generation mix tend towards similar power deviations as observed in the transmission grid with respect to either shortage or excess. As the imbalance settlement mechanism in force incentivises counterbalancing the transmission grid and penalises additional deviations, imbalance due to wind power is comparatively costly. High shares of electricity from small hydro reduce power deviations. PV has a positive impact on imbalance costs rather than quantities.

A comparison of international market designs reveals that the implementation of short term power markets facilitates the further integration of wind power into energy systems and an international extension of regulating power markets provides favourable conditions for cost-effective supply of power reserves. International electricity labeling practice lacks a concerted closed system for the issue and central custody of certificates of origin.

The technical specification sheet - worked out within this project - describes essential requirements with respect to communication and information technologies for the implementation of a VPP based on renewable energy sources within the liberalised Austrian power market.

Project status


Project Partners

Project leader

Univ.-Ass. DI Dr. Hans Auer
TU-Wien, Institut für Elektrische Anlagen und Energiewirtschaft (EEG)
Gusshausstrasse 25-29/E373-2, 1040 Wien
Tel: +43-(0)1-58801 + 37357
Fax: +43-(0)1-58801 + 37397
E-Mail: auer@eeg.tuwien.ac.at
Internet: http://eeg.tuwien.ac.at

Institute: TU Wien, Institut für Elektrische Anlagen und Energiewirtschaft (EEG)

Project partners

oekostrom AG für Energieerzeugung und -handel (Werkvertragspartner)
SIEMENS AG Österreich - PSE E&I (Werkvertragspartner)