Climate & Environment

Virtual Power Plant (VPP)

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Definition

A virtual power plant is a network of distributed energy resources — rooftop solar, home and grid batteries, electric vehicles, smart thermostats, flexible industrial loads — aggregated and orchestrated by software so that the ensemble operates like a single dispatchable power plant: ramping down demand or injecting power in response to grid signals and prices. VPPs provide balancing, peak shaving and capacity services; deployments (Tesla's South Australia VPP, Octopus's Kraken-managed fleets) demonstrate thousands of devices coordinated in real time.

References

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This reference provides supporting context for how “Virtual Power Plant (VPP)” is defined and used.

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Overview

How it is used

The concept structures demand response markets, distribution system operation, retailer energy-as-a-service models, and grid codes for aggregated resources.

Why it matters

The VPP is the software answer to renewable variability — a power plant built from everyone else's batteries.