Demand, response and the virtual power plant
If you are involved in IT and the utility sector, how can you not be inspired by the impact of analytics on business and operational process? There is promise and potential at every turn for both the demand and supply side of the business. Analytics will aid flexibility in clear contrast to the more rigid models of the past.
On the supply side, analytics will make an essential contribution to the management of new distributed energy networks, supporting their granular micro-generation composition.
On the demand side, analytics will support the implementation of more articulated demand/response models which will benefit both the utilities and their more energy-intensive customers.
When you see great ideas coming to fruition, the logic and elegance that lie behind a solution can be beautiful – and this is certainly the case for virtual power plants.
The virtual power plant delivers the clear and undeniable shared value which is a hallmark of any great solution:
- A virtual plant contributes to flexibility, aiding the utility in balancing supply and demand
- It delivers direct and quantifiable cost savings to the enterprise customer
- It reduces environmental impact of emissions
But as a business technologist, the thing I love about the virtual power plant, is the indisputable role of IT as an enabler – the fact that without the coincidence of data analytics and inter-industry collaboration, this remarkable development in the utility model would simply not be achievable.
Love the logic!
The virtual power plant is made possible by turning joined-up data into practical action. What’s new is that it is predicated on a degree of openness and collaboration between utilities and their enterprise customers that has not always been evident in the past.
The targets for this new level of collaboration are, for the moment, those enterprises that can tick two operational boxes:
- First, they need to run processes which have a massive demand for electricity. In steel or chemical production, in pulp and paper or indeed in running datacenters, consumption is a major proportion of business overhead. In steel, according to the world-steel organization, for example, it’s typically 20-40%.
- Secondly, the enterprise must be able to offer a degree of flexibility in terms of when power is needed. In other words, can production schedules be designed to take advantage of off-peak energy price incentives?
If both these conditions can be met, then utilities and their enterprise clients can really begin to work to mutual advantage through increased collaboration and planning.
The benefits to utility companies from virtual power plant models are clear:
- Reduce churn among commercial and industrial customers by providing significant reduction in electricity bills
- Improve the utilization rate of actual power plants by encouraging consumption during off-peak hours and flattening the demand curve
- Reduce the cost of grid balancing through improved congestion management.
- Gain the real-time market view needed to identify opportunities relating to plant availability and cost.
Atos is partnering with smart energy management company Energy Pool to promote these innovative approaches to optimized demand/supply for industrial enterprises.
Even though this initiative is still in its infancy, we are already seeing clear benefits for all involved.
Industrial clients are routinely making savings to their overall energy budgets of anything between 2% and 10%. At the lower end, 2% may not seem like a lot, but when energy spend is measured in millions, even a modest percentage saving soon makes a significant contribution to the bottom line.
Benefits are not just to be measured in terms of enterprise cost savings, however.
For the utility provider, this close collaboration and transparency with the enterprise client makes it possible not only to achieve greater accuracy in forecast and planning. It also provides a foundation which enables unprecedented agility in managing unexpected fluctuation in demand.
This takes us right back to analytics: the better the data, the greater the agility and the lower the risk.
Elsewhere we have looked at how openness becomes critical in helping utilities establish more productive and collaborative working partnerships with their clients.
The Flexmart initiative from Atos and Energy Pool is already showing how a creative approach to flexibility management involves the enterprise client as an active contributor to new virtual power plant models.
Considering the pace at which IT and utility models are evolving, we can expect continuing and significant innovation in this area. What is restricted to major enterprise use today, for example, will extend to smaller scale businesses and even domestic customers tomorrow.
Many major enterprises have, of necessity, also invested in the local power resources needed to guarantee continuity in the event of grid outages. We may also begin to ask how these latent resources can also become active components in new data-driven virtual power plants – leading to even higher levels of collaboration between utilities and their enterprise clients.