Virtual power plants and direct marketing

Energy industry in transition: Why virtual power plants are driving the energy transition

Virtual power plants and the direct marketing of electricity are two central elements of the modern energy industry that are closely intertwined but pursue different functions and goals. While virtual power plants represent a technological platform for efficiently coordinating the production and use of renewable energies, direct marketing focuses on placing the generated energy profitably on the energy markets. This text examines both concepts in detail, describes their role in the energy industry and shows their importance for the energy transition.

Virtual power plants – The digital transformation of energy supply

A virtual power plant (VK) is a combination of decentralized energy generation systems, storage systems and consumers that are digitally networked and coordinated via a central control system. These systems include, among others, wind power and solar systems, biomass power plants, battery storage and flexible industrial or private consumers. The aim of a virtual power plant is to increase the efficiency and flexibility of energy production and use by viewing and controlling the different systems as a single unit.

Through digitalization and automation, a virtual power plant enables precise forecasting and planning of energy production and consumption. In this way, over- and underproduction can be minimized and the energy supply can be stabilized. Virtual power plants not only play a key role in the balancing energy market – where they compensate for fluctuations in the power grid – but also in the spot market, where electricity is traded at short notice.

Suitable for:

• Virtual power plants: decentralized energy, centrally controlled - stable networks through networking - optimizing electricity production and consumption

Direct marketing – from EEG to market integration

Direct marketing refers to the sale of electricity from renewable energies directly on the electricity exchange or to large buyers, instead of through fixed feed-in tariffs, as granted under the Renewable Energy Sources Act (EEG). It was introduced as an instrument to promote the market integration of renewable energies and to allow the operators of such systems to participate more in price developments on the market.

Since the reform of the EEG in 2016, direct marketing has been mandatory for all new systems with an output of over 100 kW. This has led to more and more operators moving from fixed compensation to flexible, market-driven revenue. Direct marketing offers operators opportunities to benefit from high market prices, but also poses risks in the event of price fluctuations. This dynamic requires in-depth knowledge of market mechanisms as well as access to specialized trading platforms.

Synergies between virtual power plants and direct marketing

Virtual power plants and direct marketing complement each other perfectly because they take on different but mutually supporting functions. A virtual power plant serves as a platform on which various small energy producers and consumers can be bundled and coordinated. This creates a larger player in the market that can operate competitively without each individual operator needing in-depth market knowledge.

By using a virtual power plant, smaller operators gain access to direct marketing that would otherwise be difficult for them to access due to technical and organizational requirements. In addition, bundling in a virtual power plant offers the advantage that fluctuations in the production of individual plants can be balanced out, which improves the market position and the stability of income.

Advantages and challenges of virtual power plants

Advantages

• Increased efficiency: Intelligent control allows energy losses to be minimized and system utilization to be optimized.
• Market access for small operators: Operators of small systems benefit from joint marketing without having to actively participate in the energy market themselves.
• Flexibility: Virtual power plants can react quickly to fluctuations in energy demand and production.
• Supporting the energy transition: By integrating renewable energies, virtual power plants make an important contribution to the decarbonization of the energy sector.

challenges

• Technological requirements: Operating a virtual power plant requires a complex IT infrastructure and reliable data connections.
• Regulatory requirements: Compliance with legal requirements and market regulations is a hurdle, especially for smaller operators.
• Economic risks: Fluctuating market prices and dependence on funding mechanisms such as the EEG can affect profitability.

Comparison to other models

feed-in tariff

This traditional model offers operators a fixed remuneration for the electricity fed in, which ensures planning security. However, operators cannot benefit from market price increases here.

Direct marketing

Compared to feed-in tariffs, direct marketing offers the opportunity to benefit from flexible market prices. However, it requires active market participation and cooperation with direct marketers.

Virtual power plants

They combine the advantages of both models: the stability and planning security through bundling as well as the opportunity to benefit from market-oriented prices. This is an ideal solution, especially for small system operators, to remain competitive.

Central building blocks for a sustainable energy future

Virtual power plants and direct marketing are central building blocks for a sustainable energy future. They enable the efficient use of renewable energies and promote their integration into the energy market. With increasing digitalization and increasing demands on grid stability, virtual power plants will continue to gain in importance.

Both concepts are essential for the energy transition. While direct marketing strengthens the economic viability of renewable energies, virtual power plants help to ensure security of supply in a decentralized energy system. Together they create the basis for a sustainable and resilient energy system of the future.

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