Roger Chen, Head of Enel X Taiwan. (Photo: Enel X)
A Virtual Power Plant (VPP) isn't an actual physical power plant but rather an invisible command center emphasizing demand-side management. By employing highly digitized technologies and platforms, distributed energy resources (DERs)[1] —such as rooftop solar installations, wind turbines, battery storage systems, and soon-to-be widespread electric vehicles (EVs) and charging stations—are interconnected, enabling independent resources to be collectively managed and dispatched as if they were a conventional power plant.
"Everyone has heard of Virtual Power Plants but may not fully grasp their definition or the problems they truly solve," states Roger Chen, Head of Enel X Taiwan." A VPP aggregates dispersed energy resources via digital technologies, forming an intangible plant that can be instantly dispatched by the grid. In Taiwan, a densely populated island with high electricity demand, a VPP isn't merely a trendy term—it could be crucial for advancing the second wave of energy transition."
Unlike traditional plants requiring extensive land, new constructions, and fuel, VPPs leverage existing equipment for rapid, flexible "power supply" or "load reduction," responding in seconds to grid frequency and load fluctuations. This accelerates renewable energy integration and enhances grid resilience and reliability. Essentially, a VPP acts as a digital "energy aggregator," invisibly coordinating distributed resources, underpinning the energy transition.
How does a VPP Work? The aggregator is its beating heart
"The core is the aggregator," explains Chen. Distributed resources cannot individually interface with the grid effectively. Aggregators "package" these resources into tradable and dispatchable capacities.
Understanding a VPP's value starts with recognizing aggregators'role. Resources like backup generators, onsite battery storage, and demand-response equipment across users are impractical to individually connect to the grid. Aggregators consolidate these dispersed resources into a unified, market-tradable capacity.
"Our current registered capacity is 211 MW," says Chen. "When Taipower or electricity markets issue dispatch signals, our VPP promptly commands each resource—such as activating backup generators, onsite storage, or temporarily shutting down non-essential loads—and monitors their real-time execution. Unlike traditional plants requiring years of setup, VPPs swiftly and flexibly respond to grid needs, facilitating renewable integration and grid stability."
Looking at APAC countries like South Korea, Japan, New Zealand, and Australia, Chen highlights their significantly larger VPP scales compared to Taiwan. Yet, relative to total electricity consumption (35~40 GW annually, akin to Australia), Taiwan's potential becomes evident.
"Enel X's Australian VPP already manages nearly 1 GW, indicating our ambitious target for Taiwan," Chen adds.
Is Taiwan ready for a capacity market fueled by VPPs?
Internationally, VPP capacities surpass 1 GW—South Korea manages 1-1.2 GW, Japan about 1.6 GW—primarily serving capacity markets. Although Taiwan currently participates in the Ancillary Service Market, the upcoming Reserve Capacity Market will introduce long-term contracts.
"Taiwan's VPP has strong potential for capacity market operations," explains Chen. "Capacity markets involve aggregators committing pre-defined capacities, such as 500 MW to 1 GW, over medium-to-long-term contracts. Rather than constructing large plants, existing resources can aggregate into substantial market capacities. This represents Taiwan's future direction."
Chen continues, "Capacity markets offer stable cash flows, compelling aggregators to consolidate resources effectively. VPPs excel here, as no new plant construction is required to meet large-scale demand."
The tech stack behind real time dispatch
Enel X's VPP instantly responds due to dual Network Operation Centers (NOCs): one in Ireland for global oversight and another in Taipei for local management.
"Upon Taipower's dispatch signals, our Taipei NOC immediately pushes these instructions to 211 MW of resources across various industries nationwide, triggering load adjustments within designated times (10-30 minutes)," Chen explains.
The toughest hurdle: Heterogeneity across sites
The primary challenge in aggregating distributed resources for virtual power plants lies in their diversity and scale.
"Enel X Taiwan currently manages flexible electricity resources from around 160 businesses—including chillers, HVAC systems, backup generators, energy storage systems, and around 1,000 Gogoro battery-swapping stations. These resources span multiple industries such as semiconductors, electronics, healthcare, food, cement, plastics, chemicals, and industrial gases, distributed throughout northern, central, and southern Taiwan, each with distinct response speeds and operational patterns," Chen explains.
To optimize effectiveness in response to Taipower's dispatch signals, Enel X's NOC platform continuously monitors each resource's status and groups resources based on industry-specific characteristics and dispatchability. "Taking Gogoro as an example, nearly 1,000 battery-swapping stations across Taiwan generate roughly 10,000 data points per second, involving complex three-way data exchanges among Taipower, Gogoro, and our systems—equating to nearly 800 million data transactions daily. This requires highly robust platforms, advanced ICT solutions, and data center infrastructure. By clearly understanding each customer'ss unique characteristics and response time, we can maximize market value, ensure grid stability, and provide customers with steady revenue streams. Sustainable success demands a win-win scenario," emphasizes Chen.
No generator? Your chillers and EV can still play
In Taiwan's subtropical climate, users without backup generators commonly possess large chillers with power demands ranging from hundreds to thousands of kilowatts. "When these chillers are operated simultaneously, briefly shutting down half or a third of them raises indoor temperatures by only one or two degrees Celsius, minimally affecting comfort while providing substantial support to the grid," Chen explains. "This approach enables businesses without generators to participate effectively in virtual power plants."
Chen further elaborates that similarly, for residential and electric vehicle markets, Enel X Taiwan is pioneering with approximately 1,000 Gogoro battery-swapping stations as centralized "V1G" resources—temporarily reducing demand during grid imbalances. With the anticipated widespread adoption of four-wheel EV charging stations and the implementation of Vehicle-to-Grid (V2G) technologies, Enel X will utilize its Network Operations Center (NOC) to dispatch fully charged vehicle batteries, swiftly restoring grid frequency stability. Thus, from industrial chillers to everyday electric vehicles, all can serve as distributed resources, collectively forming an "invisible power plant" without requiring new infrastructure, responding more rapidly and flexibly.
Success stories: Micron & Taipei 101
Among many successful cases, Micron Technology notably exemplifies Enel X Taiwan's achievements. "As a leading U.S. memory manufacturer, Micron has closely collaborated with us since last year," explains Chen. "Micron places great emphasis on power reliability. Our technical team thoroughly assessed their facilities to identify resources suitable for energy market participation, crafting tailored load-reduction strategies that ensure uninterrupted operations. Additionally, Micron actively fulfills its ESG commitments by adopting sustainable solutions within its operational practices. Utilizing VPP services, Micron not only helps stabilize the power grid but also facilitates smoother renewable energy integration, demonstrating practical sustainability in energy management."
Another widely recognized example is Taipei 101, which joined Enel X's virtual power plant in 2021. Evaluations indicated significant load reductions could be achieved by selectively shutting down high-consumption equipment in basement parking areas, without impacting building operations or safety. This approach significantly contributes to grid stability, effectively achieving green energy performance at minimal cost and reinforcing Taipei 101's ESG commitments as a landmark.
"Based on these experiences, we recommend enterprises—regardless of size—to establish a top-down Energy Management Team with at least one or two dedicated staff overseeing electricity strategies. These teams should formulate technical and commercial plans for VPP participation. For companies lacking specialized knowledge, external consultants can offer support. By leveraging existing infrastructure without additional investments, companies can generate additional revenue streams, reinvesting these earnings into further sustainability improvements, creating a self-sustaining cycle of sustainable development," Chen advises.
Top-down change: VPP income offsets 10 % of annual power bills
Top-down leadership is particularly crucial in driving energy transition and organizational change. Chen emphasizes that clearly defined goals set by senior management, along with empowerment of departments to collaborate, are essential to prevent stagnation of energy strategies due to inadequate coordination.
"Many enterprises worry about the additional capital investment required for joining a virtual power plant," Chen states. "In reality, companies face energy and carbon-related costs regardless of their participation. Joining a VPP not only enhances power reliability and equipment health monitoring but also generates additional revenue streams. Under ideal scenarios, annual earnings from VPP participation can offset approximately 10% of a company's electricity costs. For instance, with an annual electricity bill of NT$10 million, an additional NT$1 million becomes available for reinvestment into sustainability projects. Additionally, actual electricity reductions from dispatch participation can contribute toward fulfilling the Bureau of Energy's mandated 1.5% annual energy-saving obligation for large consumers."
The next power plant may already be in your building
Chen envisions that between 2025 and 2030, virtual power plants will continue expanding their critical niche in Taiwan's energy market. First, with increasing penetration of distributed energy resources, electricity trading mechanisms will inevitably mature, giving rise to various ancillary services, capacity products, and innovative transaction types, thus significantly enlarging the market scope. Second, Energy as a Service (EaaS) will become as commonplace as ride-sharing and food delivery platforms, integrated deeply into business operations across manufacturing and commercial sectors alike. Energy management, optimization, and trading will become standard operational practices. Lastly, as electric vehicle adoption expands and Vehicle-to-Grid (V2G) technology matures over the next three to five years, EVs will emerge as essential new resources for virtual power plants. When charging infrastructure becomes sufficiently dense, existing EVs and their charging equipment will provide instantaneous grid frequency regulation and load balancing.
Virtual power plants enhance flexibility for every kilowatt, machine, and battery, enabling businesses to become proactive electricity producers and consumers, leveraging existing assets to generate new revenue streams. With market regulations established and technology matured, Taiwan's next generation of power plants might not be traditional coastal facilities but instead dispersed across numerous factory rooftops, office equipment rooms, or even electric vehicles parked along streets.
Chen concludes, "The earlier businesses join, the greater their returns. Once you start viewing energy flexibility as an asset, energy transition becomes not merely a cost, but a new and lucrative business model."
Reference:
[1]From a technical standpoint, solar and wind power typically participate in the grid through mechanisms other than demand response. The scope of virtual power plants is broad, but Enel X Taiwan specifically operates a demand response virtual power plant, which focuses on aggregating flexible electricity usage from commercial and industrial consumers.
This article is republished from EnergyOMNI in collaboration with RECCESSARY. Read the original article.
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