Virtual Power Plants and its different functionalities and use cases can help India to leapfrog towards achieving a sustainable and an efficient power system. 

The predominant advantage of a VPP is to be able to provide a more reliable energy supply of the pool of RE generators than the single plants would have. Already today RE generators are bound to pay  Deviation Settlement Mechanism (DSM)  penalties if they do not meet their announced generation. Pooling under VPP can help saving these DSM penalties.

With increased decentralized generation the need for VPP to stabilize the grid is rising. Decentralized Energy Generation (DER) in India has grown and is poised to grow further with government’s initiative like “24 x 7 Power for All by 2022”.  As per a report published by Clean Energy Access Network (CLEAN), DER in India has an estimated market potential of more than INR 6.71 lakh crores (USD 103.3 billion) with solar pumps and solar thermal segments alone having a potential of INR 4.27 lakh crores (USD 65 billion). In terms of captive plants, a larger shift has been observed to distributed  renewable generation, mostly in the form of rooftop solar. With falling prices of solar panels and supporting policies coming into action; industries, commercial buildings, parking lots, bus/ railway stations, schools etc. are utilizing unused rooftops to install solar panels. Many of the institutions have already gone for such installations and with the Government’s aim to achieve 40 GW of solar rooftop by 2022, the installation capacity is yet to increase further. This gives a clear  indication of the transition towards decentralized power generation. Electric Vehicle (EV) uptake in India is also increasing and is expected to grow in the forthcoming years. EVs are also distributed and dispersed in residential area. Increasing decentralization and RE is urging the need of a solution which can control these sources at various levels. A solution to this uncontrollability is the so-called Virtual Power Plant (VPP). 

This report outlines the several views and definitions of  Virtual Power Plants (VPPs). Besides  that, it  describes  benefits  of  VPPs, which  are  underpinned  with  concrete examples. Furthermore an overview about the  VPP market worldwide is given. 

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