Virtual Power Plants: Challenges, Opportunities, and Profitability Assessment in Current Energy Markets

Abstract

The arrival of virtual power plants (VPPs) marks important progress in the energy sector, providing optimistic solutions to the increasing need for energy flexibility, resilience, and improved energy systems’ integration. VPPs harness several characteristics to bring together distributed energy resources (DERs), resulting in economic gains and improved power grid reliability. Nevertheless, VPPs encounter major challenges when it comes to engaging in energy markets, mainly because there is no all-encompassing policy and regulatory framework specifically designed to accommodate their unique characteristics. This underscores the necessity for research endeavours to develop more advanced methods and structures for the long-term viability of VPPs. To address this concern, the study advocates for the implementation of a multi-aspect framework (MAF) as a systematic approach to thoroughly examine each aspect of virtual power plants (VPPs). A STEEP (social, technological, environmental, economic, and political) analytical tool is utilized to evaluate the challenges, opportunities, and benefits of a VPP in the existing energy markets. The proposed approach highlights important factors and actions that need to be taken to tackle the challenges related to VPP’ entry into energy markets. This study suggests that further support is required to promote the fast and widespread adoption of long-term VPP implementations. For this reason, a more favourable policy and regulatory framework based on social, technological, economic, environmental, and policy considerations is necessary to realize the genuine contributions of VPPs.