Electric Self-Consumption: Virtual Power Plants (VPP)

7/18/2019 Mario HonrubiaEnergy

Written by Gerdo Dalhuizen Gerdo Dalhuizen is the winner of one ennomotive challenge. He has expertise in the conventional energy generation field and wrote this article for himself.   


With the Spanish Royal Decree RD 244/2019, of 5th April, most limitations to electric "self-consumption" and collective consumption enforced years ago were eliminated. The integration of the installations of the "supply method with electric self-consumption with surplus" in the Spanish power network will be one of the most important boosts for the creation of Virtual Power Plants (VPP) in Spain. Virtual Power Plants will have an important role in the energy transition since it supports the policies stated on the Royal Decree-Law 15/2018, of 5th October, the integration of renewables, sustainable mobility, and energy efficiency. VPP will also answer many proposals included in the report "Expert Comittee for the Energy Transition. Proposals and analysis for the decarbonisation" of March 2018, specially the ones for the role of networks in future energy case-scenarios and the ones for a fair energy transition.  In this article, we will discuss how different self-consumers could be integrated, together with other energy generators and consumers (if necessary), in Virtual Power Plants and what services VPP can offer to the different electric market players.  

Electric Self-Consumption in Spain

The first regulations about electric self-consumption in Spain started in 2011 with the RD 1699/2011, of 18th November, that "announces the future and upcoming regulation of the electric power supply generated within a consumer's network for their own consumption, which will encourage the electric self-consumption". In said RD, a 4 month period was established to take to the Goverment the royal decree proposal whose goal is to regulate the administrative, technical, and economic conditions of the electric power generated within a consumer's network for their own consumption. However, with the  RD 900/2015, of 9th of October, most of the electric self-consumption initiatives were halted by imposing the "Sun Tax". It wasn't until the RD 244/2019, of 5th April, when most limitations to electric self-consumption and collective self-consumption were eliminated. 

Virtual Power Plants

A Virtual Power Plant (VPP) is a newtwork of:  
  • decentralized energy generation units (e.g. wind plants, solar pannels, cogenerators, etc.) 
  • flexible energy consumers  
  • storage systems, managed by a demand aggregator.
According to the new directive 944/2019, of 5th June, a demand aggregator is a "market player that offers aggregation services and is not related to the client's supplier".  VPP are also called local energy markets. In other countries, where the legal framework and the electric market are more favorable, like in the USA and Australia, efforts on the VPP are being made. The lessons learned in these countries could be applied to the Spanish market.  Figure 1: Scheme of a VPP and its services. See more.
With the new Directive 944/2019 and the new Regulation 943/2019, both of 5th June, and the European Parliament and Council, the role of aggregators has been significantly pushed forward. Specially Article 17 of the Directive asks for the member states' permission and participation encouragement of independent aggregators. This regulation should be implemented in the Spanish regulation before the end of 2020 so that independent aggregators can start operating in Spain. A VPP can generate value through the monitorization, prediction, optimization and dispatching of the generation or the consumption, thus balancing fluctuations in generation (renewables) and consumption of controlled units. One big enough VPP can provide the same service than conventional power generation plants or (big) industrial consumers, and can operate in the same electric markets or sell services to the system operator. 

Independent Aggregator Services through a VPP 

The services offered by the independent aggregator are like the management of one part of the network, and can be of interest for the different electric market players: 
  • Prosumers
  • Generators
  • Consumers
  • Storage systems' owners
  • Power companies
  • Electricity distributors 
  • Transmission system operators (Red Eléctrica Española)
For the prosumers, the cost can be reduce by taking advantage of the flexibility in production (e.g. the photovoltaic installation), in the storage and consumption field (electric equitmental remotely controllable). Depending on market prices and their fluctuation during the day, they can use the produced energy, store it, use the electricity from the storage system, sell electricity or buy power from the network.  The service for generators (cogenerators, small open cycles, etc.) and storage systems' owners is the purchase of power. If there is an power deficit on a VPP, the aggregator can request them to generate/supply power to the network.  For the consumers, e.g. industries that can use time-flexible electric consumption, the service is the consumption management through a remote control for the electric equipment. Using the equipment at low-cost times and not using it during high-cost times may create major saving in power costs.  Through a VPP, the independent aggregator may become an electric company, by offering the same service as the existing companies. By controlling the consumers through the VPP, the independent aggregator may offer electricity distributors the possibility to reduce the distribution network's congestion disconnecting consumers and/or equipment, thus reducing the demand. It can also assisst distributors with the voltage control in the distribution network by actively managing production and consumption of the VPP.  For the transmission system operator, who ensures the continuity and safety of the national electric system, the main service is also the flexibility, which allows the operator make the most of the generation/storage capacity depending on its needs.  Reducing the power transportation through the system and, therefore, power losses, thanks to VPPs, both the distributors and the transmission system operator may become more energy efficient. 


Recent national and European boosts, which will enable both the electric self-consumption and the role of the independent aggregator in the future, will allow the creation of the first VPPs. The VPPs will be sold as the main management systems for the components and flexibility, which will help the aggregator and other electric market players to generate value. Besies, it will enable the integration of large amounts of renewable energy to the electric network and a fair energy transition.  Tell us about how the electric consumption works in your country and explore what ennomotive has to offer. Join our community of engineers