What are the advantages of virtual power plants?

Jochen Schwill, Founder and CEO of Next Kraftwerke

Jochen Schwill: "Providing more flexibility boosts system efficiency". Jochen Schwill, Founder and CEO of Next Kraftwerke, responds to seven questions on virtual power plants.

Mr. Schwill, how would you define a virtual power plant and what are its advantages?

We digitally connect small and medium-sized energy consumers, producers and storage systems in our Next Pool, aggregating their capacity. Electricity producers include biogas plants, cogeneration systems, photovoltaic installations, and hydropower and wind power plants. We use the aggregated capacity to supply transmission system operators with control reserve, thus stabilizing the grid. In addition, we directly market the regular electricity generated by all of these systems via the energy exchange, and we optimize plant production by regulating it in response to the energy exchange’s price signals. The idea is to produce electricity when the price is high because the supply is low, and to consume electricity when the price is low because of high demand. This allows us to balance the fluctuations resulting from the volatile feed-in levels typical for renewable energies and to optimize profits for our customers, who can earn additional income thanks to the optimized operation. As a result, renewable sources of energy become more economical, which in turn boosts their deployment and speeds up the energy transition. Providing more flexibility also boosts efficiency, which benefits the system as a whole.


In which countries outside of Germany does Next Kraftwerke operate? How do the framework conditions differ?

We have operations in Belgium, France, Italy, the Netherlands, Poland, Austria and Switzerland. To be able to operate in any given country, their regulations must allow plant pooling and the market there must allow us to participate as an aggregator.


Who are your customers?

We have a wide range of customers, such as biogas plant operators whose plants we control in response to energy exchange prices, PV project developers, and utilities who commission us with their portfolio management. In the Netherlands, we offer control reserve from lamps in greenhouses. We are in collaboration with the water management association Deich- und Hauptsielverband Diethmarschen to optimize the pumps’ energy consumption in relation to energy exchange prices. We offer other energy companies access to our NEMOCS platform to enable them to create their own virtual power plants.


Would you say that the interconnection of different generating installations can be primarily seen as a marketing strategy for green electricity?

Our pool almost exclusively consists of renewable energy systems. We specialize in providing the system with “green” flexibility. The flexibility arising from exploiting the existing potential of renewables is incredible.


How do the investment options for cogeneration, biogas, photovoltaic and wind power plants differ?

The difference lies in the degree of flexibility offered by each of these types of power sources, as well as the regulatory conditions for each of them. Solar power systems, for instance, are not allowed to provide any control reserve.


How does this interconnection work in practical terms, or in other words, what are the preconditions for the joint control of generating installations?

Our Next Box was created to connect the large number of small and medium-sized systems with each other. It is a remote control unit that links the systems within the Next Pool with our control system. The plant data is encrypted and sent to our control system via a specially secured GPRS connection. The Next Box is designed according to the grid code provided by the transmission system operators to ensure the highest possible level of security. The Next Box is a machine-to-machine component which sends information about the operation of the decentralized systems to the control system. Data is also transmitted in the opposite direction: The Next Box is able to control the startup and shutdown of electricity generation plants, for example. The signal for such an action comes for the algorithm created specially for our central control system. Depending on the type of system, the Next Box and the algorithm are parametrized individually, which allows gas, heating and water storage as well as timetable restrictions to be programmed so that the unit can always operate under optimal conditions, both technologically and financially.


What role do storage systems play in virtual power plants and what types of storage systems does Next Kraftwerke use?

The importance of storage systems is growing steadily. However, they are still expensive, which means that there isn’t much choice on the market yet. Virtual power plants provide opportunities for marketing electrical energy from batteries in different markets in order to boost earnings, which can then be rechanneled into financing aspects. So even though there aren’t many, there are some batteries in our pool. Let me give you two examples: Next Kraftwerke and Jedlix – an electric vehicle aggregator and smart charging platform provider – have launched a joint pilot project which will deliver secondary control reserve through electric vehicle batteries. The project is part of a larger pilot project commissioned by TenneT. The transmission system operator is testing the technical feasibility of secondary control reserve delivered by new technologies.

And then there is the FRESH collaboration project, focused on flexibility management and new ideas for providing control reserve for heavy goods vehicles in ports. Hamburger Hafen und Logistik AG is using automated guided vehicles (AGVs) at the Altenwerder container port in Hamburg for moving shipping containers between the quay cranes and the storage blocks. The fleet of around 100 heavy goods vehicles is being completely converted to vehicles running on lithium-ion batteries. The idea is that vehicles that are being charged or on standby will soon be used to provide control reserve. The primary focus is on the supply of primary control reserve. Next Kraftwerke’s involvement in the project comprises the development of concepts for fleet prequalification and the charging system of AGVs as well as marketing the control reserve power.

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