The Future of Energy is Distributed: An Increased Role for Microgrids and Virtual Power Plants

Source: Bala Vinayagam & Peter Asmus| · SCHNEIDER ELECTRIC · | June 14, 2023

The growth of distributed energy resources (DERs), such as solar photovoltaic (PV) panels and battery storage, is accelerating traction for DER aggregation platforms such as microgrids and virtual power plants (VPPs). Though related, these two concepts are distinct.

Microgrids are a set of resources located within a confined boundary that leverage onsite generation and storage. They generate electricity when the grid goes down, optimize for energy cost savings or provide electricity to regions where a traditional grid network is not in place, such as Africa, Latin America, and parts of the Asia-Pacific region.

VPPs, on the other hand, are a temporary aggregation of DERs that can help balance the larger grid through demand response or frequency regulation. (For more details on the similarities or differences, see this blog.)

Working together, microgrids and VPPs can help deliver significant synergies to create a more reliable and sustainable electricity infrastructure while also delivering immense economic benefits.

Growth of Microgrids and Virtual Power Plants   

The growth of microgrids and VPPs is being driven by several factors, including:

• the increasing and volatile cost of electricity,

• the need to decarbonize the global economy,

• the desire for more energy independence, and

• new technologies that make microgrids and VPPs more efficient and affordable.