Virtual Power Plants: Decentralized and Efficient Power Distribution

Virtual Power Plants: Decentralized and Efficient Power Distribution

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  Virtual​ ​Power​ ​Plants:​​Decentralized​ ​and​ ​Efficient Power​ ​Distribution Akshay​ ​Mahajan,​ ​Katarina​ ​Labuguen,​ ​Khalid​ ​Qureshi,​ ​Shafkat​ ​Chowdhury,​ ​Vincent​ ​Yeh Department​ ​of​ ​Electrical​ ​and​ ​Computer​ ​Engineering University​ ​of​ ​California,​ ​San​ ​Diego La​ ​Jolla,​ ​CA,​ ​USA [email protected],​ ​[email protected],​ ​[email protected],​ ​[email protected],​ ​[email protected] Abstract​—Virtual power plants (VPPs) may be used to integrate distributed generation (DG) units into one unified solution for decentralized power generation. As the penetration of DG increases globally, the VPP becomes an essential control and distribution system for the future. However, using this system gives rise to a number of issues within the topic of security, and may possibly leave the grid open to cyber attacks. This is due to VPP’s dependence on Web-connected software and internet of things (IoT) technologies. Other main concerns include cost efficiency, resource management, as​ ​well​ ​as​ ​system​ ​integration​ ​and​ ​control. Index Terms ​-- Virtual power plants, Decentralized power distribution, Optimal energy management, Distributed control, Cyber​ ​security,​ ​Smart​ ​grids I. INTRODUCTION Soaring energy prices and inefficient power flow issues have pushed the electrical power industry to take innovative steps to tackle these issues. Virtual power plants (VPPs) are a relatively new and innovative approach to improving the inefficient distribution and generation of energy resources and redefines the energy flow topology in the existing market. This paper will discuss the definition of a VPP, possible uses for them, as well as how they can improve central grid resilience. In addition, this paper will discuss the energy crisis in Australia and how VPPs may be utilized to strengthen its power grid. Although VPPs are an efficient means to accomplish generation and distribution of energy resources, the network structure of a VPP leaves it prone to cyber security issues and the possible fall-outs of the implementation of a VPP. They also face challenges such as competition with other large utility companies and integration problems, particularly with software. Despite these challenges, VPPs are already being implemented by technology providers and grid operators across the globe, providing tangible benefits to all​ ​parties​ ​involved. II. WHAT​ ​IS​ ​A​ ​VIRTUAL​ ​POWER​ ​PLANT​ ​(VPP)? A virtual power plant uses software and internet of things (IoT) technologies with distributed generators to create one decentralized power station, providing robustness and efficiency. This means a VPP is essentially a group of geographically dispersed generators and batteries, and these generators often come in the form of intermittent and renewable energy resources such as wind farms or home-based solar panels. All of these have their own batteries which are connected to a central station which monitors the entire grid and and controls them to optimize power flow within the grid. For example, when certain areas of the grid are experiencing power flow issues, the VPP can see which areas have excess storage or generation and use them to lighten the stress​ ​on​ ​the​ ​rest​ ​of​ ​the​ ​grid. III. HOW​ ​DOES​ ​IT​ ​WORK? A virtual power plant uses a secured network to interconnect small, disparate energy resources to automatically dispatch and optimize generation and storage of resources [1]. It employs intricate planning, scheduling, and bidding of distributed energy resources (DERs), which mainly contain micro-gas generators (MGGs), wind generators (WGs), photovoltaic systems (PVs), and batteries (BEs) to provide reliable power 24 hours a day [2]-[3]. VPP comprises of an aggregation of customers (i.e. residential, commercial, or industrial) segregated under type of programs​ ​and​ ​locations​ ​in​ ​the​ ​distribution​ ​topology​ ​[4]. Figure​ ​1.​ ​Illustration​ ​of​ ​a​ ​Virtual​ ​Power​ ​Plant
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  A. Grouping​ ​customers​​for​ ​improved​ ​forecasting Participants (customers) with different socio-economic standing and philosophies will respond differently to programs initiated by the central VPP. Therefore, aggregating all of these customers together into one forecast limits the ability for utilities to truly understand which customers may be more reliable in program participation compared to others. Segregation of customers under different programs provide the utility with improved forecast and analytical information about their contribution to the utility [4]. Grouping also enables the utility to assess the customer’s capacity from the same program but a different group structure, which improves the demand response rate. By assigning attributes such as capacity limitation, program execution constraint (where utility cannot shed customer’s usage), customer payments (i.e cost of running the program), opt-out limits, the utilities can therefore determine which VPPs should be called upon​ ​the​ ​based​ ​on​ ​the​ ​utilities​ ​operation​ ​portfolio​ ​[4]. B. Interconnect​ ​of​ ​VPP​ ​with​ ​utility​ ​grid​ ​operations Analytics of substation VPPs is relayed back to the utility for producing forecast of each VPP within the distribution model. This information can further assess the VPPs capacity and demand responsiveness when linked with the Supervisory Control and Data Acquisition (SCADA) or Distribution Management System (DMS) operated by the utility [4]. The utility can then assign a VPP to a feeder at real-time, hourly, or daily depending on the availability of the VPP. When a power flow issue occurs or an outage is located, the SCADA/DMS system could designate the appropriate VPP to help stabilize the load.​[4] Figure​ ​2.​ ​VPP​ ​substations​ ​connected​ ​to​ ​the​ ​grid C. Enhancing​ ​VPP​ ​and​ ​grid​ ​resilience​ ​using​ ​energy​ ​storage Energy storage improves the VPPs responsivity to fluctuating loads and helps provide a buffer to optimize DER. It is a critical component of service delivery by providing load leveling services and bulk storage in order to reduce transmission and distribution losses. Common storage technologies for VPP-based ancillary services include lithium-ion batteries and flywheels [5]. Lithium-ion batteries are installed for large scale storage that improves the resilience of both VPPs and microgrids. Although less flexible, flywheels have extremely long lifespans (i.e., the number of times they can be charged and discharged before the unit breaks down) and can provide the grid regulation services instantaneously​ ​[5]. IV. CASE​ ​STUDY:​ ​AUSTRALIA In recent years, Australia has been facing a number of problems in their power grid such as unreliability, and scarce energy supply. On September 28, the 2016 South Australian blackout occurred when a particularly damaging storm caused electrical infrastructure to fail. As a result, the entire state of South Australia lost its electricity supply except for Kangaroo Island, which had a self-sufficient grid apart from the main grid [6]. This grid shutdown was caused by cascading failures where one damaged element shifted load to another element. This causes it to overload and fail and try to shift its load to yet another element which creates a chain reaction of failures. While the storm was described as a “once-in-50-year” storm, the fact that the entire Australian state (which is over twice the geographical size of California) except for Kangaroo Island lost electrical access shows deep problems in the infrastructure of Australia’s​ ​grid. Since then, the state of Australia’s energy problems have not improved by much. Early in May 2017, the multinational mining giant Glencore stated that Australia is not meeting its energy needs and will face demand destruction in their energy market [7]. Because of a prolonged period of high prices or constrained supply, Australia may receive a permanent loss of demand for energy. For example, Rio Tinto, one of the world’s largest metals and mining corporations, was forced to cut output at the Boyne aluminum smelter by 14% because they were unable to find enough affordable electricity. The company has its own power station which was able to account for 85% of Boyne’s energy consumption, and they had been buying the rest of the energy they needed. However, Boyne stated in January 2017 that power prices have doubled since October 2014 which incentivized them to simply cut production, costing over 100 employees their jobs, costing Rio Tinto over 80,000 tonnes of
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  aluminum exports peryear, and costing Australia permanent loss of​ ​energy​ ​demand​ ​[7]. For a country with a huge amount of natural resources such as gas, coal, and uranium, it seems strange that Australia is having such a difficult time being able to provide enough reliable energy to its citizens. However, while Australia has plenty of resources, too much of it is exported overseas to profit energy companies instead of being used to ensure that there is enough for domestic use [8]. On top of this, Australia has not had the best renewable energy production in the past, with renewables accounting for less than 4% of nationally generated electricity in 2006. Fortunately, Australia has been taking action on this front, and by the end of 2015, Australia’s renewable sources accounted for almost 15% of their national generation and they have a renewable​ ​energy​ ​target​ ​set​ ​for​ ​25%​ ​by​ ​the​ ​year​ ​2020​ ​[9]. Ultimately, some of the major issues that Australia is facing in its energy crisis are the reliability and robustness of their grid and being able to balance the supply and demand of energy. Right now Australia’s infrastructure is not robust enough as illustrated by the 2016 South Australian blackout, and they are not able to provide enough affordable energy to supply their own nation’s demand as illustrated by Rio Tinto’s decision to downsize as a result of energy costs. Therefore, the goal now is to improve the infrastructure of the grid to provide more reliability and to increase energy supply by either drilling for more raw resources, exporting less, or increasing renewable energy​ ​production. V.​ ​​ ​WHAT​ ​IS​ ​THE​ ​SOLUTION? ​ ​​The​ ​VPP​ ​can​ ​provide​ ​reliability​ ​and​ ​stability​ ​to Australia’s​ ​grid​ ​through​ ​various​ ​means.​ ​The​ ​VPP​ ​is​ ​a​ ​viable solution​ ​to​ ​several​ ​of​ ​Australia’s​ ​energy​ ​issues​ ​due​ ​to​ ​its reliability,​ ​cost​ ​reduction,​ ​as​ ​well​ ​as​ ​reduction​ ​in​ ​emissions​ ​and consumption,​ ​thus​ ​leading​ ​to​ ​higher​ ​supply.​ ​One​ ​of​ ​the advantages​ ​of​ ​implementing​ ​a​ ​VPP,​ ​is​ ​that​ ​it​ ​allows​ ​utilities​ ​to aggregate​ ​customers​ ​into​ ​different​ ​segments​ ​which​ ​is​ ​usually based​ ​on​ ​location​ ​or​ ​distribution.​ ​​ ​The​ ​ability​ ​to​ ​differentiate customers​ ​based​ ​on​ ​location​ ​or​ ​distribution​ ​is​ ​useful​ ​in​ ​improving the​ ​reliability​ ​of​ ​the​ ​grid​ ​infrastructure​ ​due​ ​to​ ​the​ ​fact​ ​that​ ​it allows​ ​better​ ​forecast​ ​and​ ​analytical​ ​information​ ​about​ ​the customers​ ​and​ ​groups​ ​[10].​ ​​ ​Better​ ​forecasting​ ​allows​ ​greater control​ ​of​ ​the​ ​grid​ ​in​ ​the​ ​sense​ ​that​ ​it​ ​gives​ ​utilities​ ​the​ ​ability​ ​to optimize​ ​the​ ​grid​ ​network​ ​and​ ​determine​ ​when​ ​to​ ​reduce​ ​peak loads,​ ​generation​ ​costs​ ​and​ ​reduce​ ​emissions[10].​​ ​​In​ ​addition, VPPs​ ​also​ ​have​ ​the​ ​ability​ ​to​ ​react​ ​quickly​ ​and​ ​concisely​ ​to varying​ ​load​ ​conditions​ ​in​ ​real​ ​time​ ​which,​ ​along​ ​with forecasting,​ ​provides​ ​strong​ ​support​ ​against​ ​the​ ​blackouts​ ​and load​ ​problems​ ​in​ ​Australia​ ​[11].​ ​This​ ​can​ ​be​ ​accomplished​ ​by taking​ ​solar​ ​energy​ ​stored​ ​in​ ​batteries​ ​located​ ​in​ ​local neighborhoods,​ ​when​ ​there​ ​is​ ​a​ ​demand​ ​during​ ​peak​ ​demand​ ​time [12].​ ​When​ ​there​ ​isn't​ ​a​ ​​ ​high​ ​demand,​ ​the​ ​VPP​ ​can​ ​instead​ ​take solar​ ​energy​ ​and​ ​store​ ​it​ ​in​ ​the​ ​batteries​ ​[12].​ ​​ ​Essentially,​ ​a​ ​VPP supports​ ​the​ ​grid​ ​in​ ​times​ ​of​ ​instability​ ​and​ ​sends​ ​electricity​ ​to homes​ ​in​ ​periods​ ​of​ ​peak​ ​demand​ ​[10].​ ​​ ​As​ ​discussed​ ​previously, Australia​ ​has​ ​faced​ ​cascading​ ​failures​ ​and​ ​consequently,​ ​there’s has​ ​been​ ​several​ ​blackouts.​ ​In​ ​order​ ​to​ ​solve​ ​this​ ​issue,​ ​it​ ​is important​ ​that​ ​the​ ​operation​ ​of​ ​the​ ​system​ ​is​ ​thoroughly monitored​ ​so​ ​that​ ​when​ ​a​ ​certain​ ​junction​ ​is​ ​problematic,​ ​then​ ​the that​ ​junction​ ​can​ ​be​ ​disconnected​ ​from​ ​other​ ​parts​ ​of​ ​the​ ​grid [13].​ ​Alternatively,​ ​a​ ​safety​ ​margin​ ​for​ ​the​ ​grid​ ​can​ ​be implemented​ ​through​ ​computer​ ​software​ ​in​ ​order​ ​to​ ​ensure​ ​that the​ ​operating​ ​levels​ ​are​ ​at​ ​a​ ​safe​ ​level​ ​[13].​ ​A​ ​VPP​ ​is​ ​ideal​ ​in regards​ ​to​ ​Australia's​ ​cascading​ ​problems​ ​due​ ​to​ ​it’s​ ​ability​ ​to react​ ​quickly​ ​to​ ​load​ ​variations​ ​and​ ​ability​ ​to​ ​operate​ ​the​ ​grid​ ​and distributed​ ​generators​ ​virtually. Although​ ​reliability​ ​of​ ​the​ ​grid​ ​has​ ​been​ ​a​ ​consistent issue​ ​for​ ​Australia,​ ​the​ ​high​ ​cost​ ​of​ ​electricity,​ ​as​ ​well​ ​as​ ​lack​ ​of supply,​ ​have​ ​also​ ​played​ ​an​ ​important​ ​role​ ​in​ ​Australia’s​ ​energy issues.​ ​​ ​A​ ​VPP​ ​is​ ​an​ ​ideal​ ​solution​ ​to​ ​Australia's​ ​problems​ ​​ ​due​ ​to the​ ​fact​ ​that​ ​it​ ​uses​ ​solar​ ​battery​ ​systems​ ​in​ ​order​ ​to​ ​power homes​ ​and​ ​business,​ ​which​ ​not​ ​only​ ​stabilizes​ ​the​ ​grid​ ​during peak​ ​demand​ ​time,​ ​but​ ​it​ ​also​ ​reduces​ ​cost​ ​and​ ​provides​ ​a​ ​surplus of​ ​electricity​ ​[12].​ ​Furthermore,​ ​the​ ​VPPs​ ​main​ ​function​ ​is​ ​to optimize​ ​energy​ ​that​ ​is​ ​being​ ​produced​ ​by​ ​renewable​ ​energy sources​ ​such​ ​as​ ​solar​ ​panels,​ ​and​ ​to​ ​store​ ​that​ ​energy​ ​in​ ​batteries [12].​ ​​ ​This​ ​is​ ​advantageous​ ​due​ ​to​ ​the​ ​fact​ ​that​ ​it​ ​gives​ ​the​ ​option to​ ​decide​ ​what​ ​happens​ ​to​ ​the​ ​stored​ ​energy.​ ​​ ​For​ ​instance,​ ​​ ​the stored​ ​energy​ ​​ ​can​ ​be​ ​used​ ​​ ​to​ ​power​ ​homes​ ​efficiently​ ​through the​ ​VPP​ ​and​ ​consequently​ ​the​ ​price​ ​of​ ​electricity​ ​is​ ​reduced​ ​for the​ ​consumer​ ​[10]​ ​.On​ ​the​ ​other​ ​hand,​ ​the​ ​stored​ ​energy​ ​can​ ​also be​ ​used​ ​to​ ​stabilize​ ​the​ ​grid​ ​in​ ​peak​ ​demand​ ​times.​ ​The​ ​​ ​VPP allows​ ​efficient​ ​control​ ​of​ ​the​ ​power​ ​being​ ​produced​ ​and consequently​ ​​ ​emissions,​ ​along​ ​with​ ​congestion​ ​and​ ​losses​ ​on​ ​the line,​ ​are​ ​reduced.​ ​As​ ​line​ ​losses​ ​are​ ​reduced,​ ​the​ ​amount​ ​of​ ​power loss​ ​decreases,​ ​which​ ​results​ ​in​ ​higher​ ​amounts​ ​of​ ​power available​ ​to​ ​be​ ​used.​ ​​ ​Essentially,​ ​an​ ​implementation​ ​of​ ​VPPs solves​ ​Australia's​ ​lack​ ​of​ ​power​ ​as​ ​well​ ​as​ ​high​ ​electricity​ ​costs. VI.​ ​CHALLENGES​ ​AND​ ​ISSUES Although VPPs have proved to be an effective means of efficiently integrating a variety of DER into the grid, there remains a few issues that may arise in the topics of cybersecurity, regulation, and integration. Because of its reliance on software systems that are connected to the Internet, this cloud-based network of energy resources is especially susceptible to cyber security breaches. In addition, VPPs must confront regulatory issues and competition with larger utility companies. Finally, because of the large network of DER that the VPP must integrate
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  with​ ​the​ ​grid,​​it​ ​may​ ​naturally​ ​face​ ​some​ ​issues​ ​with​ ​integration On December 22, 2015, Ukraine experienced an unprecedented cyber attack on the Ivano-Frankivsk region’s grid control center in Prykarpattyaoblenergo. A total of roughly thirty substations were taken offline, and two more power distribution centers were attacked, taking down an even greater number of substations [14]. In addition, the control centers’ backup power was disabled by the attackers which left the grid operators in the dark, and made it even more difficult to restore power back to its residents. The attack left hundreds of thousands of Ukrainians without power. Although power was eventually restored to the residents of Ivano-Frankivsk within a few hours, not all the control centers were fully operational even months after being hacked. An investigation determined that the hackers rewrote the firmware on 16 substations, and were no longer able to respond to commands sent remotely from the control centers [14]. This meant that the grid operators now had to control the breakers manually. Although the attack offers insight into the security issues that larger smart grids and virtual power plants in particular may face, it is an example of just how vulnerable any cloud connected power distribution system can be - as well as the problems​ ​that​ ​may​ ​occur​ ​with​ ​poorly​ ​secured​ ​control​ ​systems. Because VPPs are relatively new in the power industry, some regulators are struggling with the same issues that affect newer microgrids. Problems such as regulatory issues that deal with the legal use of utility wires as well as payment compensation for power exchange must be heavily discussed with regulators [15]. Although some laws automatically give VPPs access to the utility lines, others may not, which can add to regulation challenges [15]. In addition, VPPs face competition with other large utility companies who dominate the utilities industry,​ ​which​ ​may​ ​further​ ​complicate​ ​the​ ​expansion​ ​of​ ​​ ​VPPs. Finally one of the biggest obstacles that the VPP market faces in pushing for expansion is its software. Because it’s necessary for a number of energy resources to be integrated with one another, the VPPs face issues with software that could handle a large variety of these resources [16]. Unfortunately, current software is not capable of integrating as many resources as desired. V.​ ​THE​ ​FUTURE​ ​OF​ ​VPPS Since​ ​the​ ​2016​ ​blackout,​ ​Australia’s​ ​industry​ ​and regulatory​ ​landscape​ ​has​ ​taken​ ​a​ ​favorable​ ​stance​ ​for​ ​virtual power​ ​plant​ ​enablers.​ ​The​ ​beginning​ ​of​ ​2017​ ​marked​ ​the beginning​ ​of​ ​Audrey​ ​Zibelman’s​ ​term​ ​as​ ​the​ ​CEO​ ​of​ ​the Australian​ ​Energy​ ​Market​ ​Operator​ ​(AEMO),​ ​a​ ​testament​ ​to Australia’s​ ​commitment​ ​to​ ​solving​ ​their​ ​energy​ ​crisis.​ ​Formerly New​ ​York’s​ ​top​ ​utility​ ​regulator,​ ​and​ ​the​ ​founder​ ​of​ ​Viridity Energy,​ ​the​ ​US-based​ ​VPP​ ​software​ ​provider,​ ​Audrey Zibelman’s​ ​tenure​ ​is​ ​attracting​ ​many​ ​VPP​ ​software​ ​companies​ ​to Australia​ ​[18].​ ​A​ ​few​ ​such​ ​companies​ ​include​ ​San​ ​Francisco based​ ​energy​ ​storage​ ​software​ ​provider,​ ​Geli,​ ​and​ ​established German​ ​BEs​ ​manufacturer​ ​and​ ​installer,​ ​SonnenBatterie,​ ​into​ ​the market​ ​in​ ​hopes​ ​of​ ​leveraging​ ​their​ ​well-tested​ ​technology​ ​in​ ​a market​ ​ripe​ ​for​ ​innovation.​ ​Coordination​ ​between​ ​these technology​ ​providers​ ​and​ ​Australian​ ​utilities​ ​and​ ​operators​ ​is already​ ​bearing​ ​fruit,​ ​as​ ​demonstrated​ ​by​ ​AGL​ ​Energy​ ​Limited and​ ​their​ ​current​ ​VPP​ ​pilot​ ​project. In​ ​March​ ​2017,​ ​AGL​ ​Energy​ ​Limited,​ ​a​ ​South Australian​ ​utility​ ​company,​ ​announced​ ​the​ ​launch​ ​of​ ​a​ ​5MW, residential​ ​VPP​ ​in​ ​Adelaide,​ ​the​ ​capital​ ​city​ ​of​ ​South​ ​Australia. Set​ ​to​ ​complete​ ​in​ ​2018,​ ​AGL’s​ ​project​ ​is​ ​intended​ ​to​ ​become​ ​the world’s​ ​largest​ ​commercial​ ​VPP​ ​to​ ​date.​ ​Through​ ​a​ ​partnership with​ ​San​ ​Francisco​ ​based​ ​BEs​ ​control​ ​software​ ​provider, Sunverge​ ​Energy,​ ​AGL​ ​aggregates​ ​5MW​ ​of​ ​capacity​ ​offered​ ​by 60+​ ​intelligently​ ​connected​ ​BEs,​ ​from​ ​1000​ ​homes​ ​equipped with​ ​solar​ ​PV​ ​panels​ ​[11].​ ​Split​ ​across​ ​three​ ​phases​ ​of development,​ ​the​ ​first​ ​phase​ ​of​ ​developing​ ​software​ ​controls​ ​with Sunverge​ ​has​ ​been​ ​completed​ ​as​ ​of​ ​March​ ​2017.​ ​The​ ​VPP​ ​has already​ ​produced​ ​more​ ​than​ ​300kW​ ​of​ ​battery​ ​capacity,​ ​and 200kW​ ​of​ ​solar​ ​capacity,​ ​and​ ​delivered​ ​over​ ​10,000kWh​ ​of electricity-​ ​saving​ ​customers​ ​an​ ​estimated​ ​$500​ ​AUD​ ​on​ ​their yearly​ ​energy​ ​bill​ ​[17].​ ​With​ ​the​ ​tangible​ ​benefit​ ​provided​ ​to​ ​both AGL’s​ ​end​ ​users​ ​and​ ​AGL’s​ ​value​ ​chain,​ ​other​ ​electricity providers​ ​in​ ​Australia​ ​are​ ​eager​ ​to​ ​reap​ ​similar​ ​benefit. CONCLUSION Australian Renewable Energy Agency (ARENA)’s chief executive, Ivor Frischknecht, recently estimated that demand management from VPP technology can potentially supply anywhere from 20-50% of Australia’s current peak demand. With the falling prices of solar and storage, and the global push for renewables, there will be an ever increasing demand from grid operators to gain control and visibility over these assets. It will take the collective effort of grid operators, regulators, technology providers, and prosumers in order to push VPP technology to the forefront. While all parties are some way away from being ready for such a new world, they can see the future lies​ ​in​ ​that​ ​direction. REFERENCES [1]​ ​P.​ ​Asmus​ ​and​ ​B.​ ​Davis,​ ​"Executive​ ​Summary:​ ​Virtual​ ​Power​ ​Plants", PikeResearch,​ ​2017. 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