China’s move towards a more sustainable energy mix has seen a rise in the construction of virtual power plants. These plants use advanced technologies and software systems to collect data of electricity generated from distributed sources, such as rooftop solar power facilities, power storage systems, and electric vehicles. Unlike conventional power plants, virtual power plants do not generate electricity; instead, they manage the energy flow and optimize the supply of electricity.
State Grid Shanxi Electric Power Co, a major builder of these plants, revealed that fifteen virtual power plants in Shanxi province have completed construction. Their combined daily electricity output of 1.568 million kilowatt-hours could supply power to about 224,000 households during peak time. The company stated that the construction of virtual power plants is crucial for optimizing energy systems and ensuring that the growing demand for clean, reliable, and affordable power is met.
Shanxi’s action plan in June last year to regulate the building and operation of virtual power plants followed by the recent approval from the government for the research of industrial standards for virtual power plants are both steps towards implementing and standardizing these plants. Last year, Shenzhen established a regulation center for virtual power plants, the first of its kind in China. Jiangsu province, Zhejiang province, Shanghai, and other regions have also implemented the practice of virtual power plants.
Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University in Fujian province, said, “Virtual power plants have become increasingly important as a supplement to conventional power plants to ensure the reliability and stability of energy supply, especially in renewable energy systems. Virtual power plants, together with power storage systems, collect energy available from the user end, such as rooftop solar power facilities and supply them to other users in need, which makes them an important part in promoting low-carbon and energy-efficient development.”
As the focus of power generation gradually shifted towards renewable energy resources, such as solar and wind, virtual power plants emerged as a supplement to conventional power plants in the task of allocating power generated from distributed sources in case demand surpasses supply. Estimates from Huaxi Securities showed that by 2025, the market scale of investment and construction of virtual power plants will exceed 30 billion yuan ($4.38 billion).