A virtual power plant is an intelligent grid technology aggregating and managing various distributed energy resources (DERs) such as distributed generators, energy storage systems, controllable loads, and electric vehicles through advanced information and communication technology and software systems.

It is a special power coordination and management system participating in electricity markets and grid operations. The core concept of a virtual power plant revolves around "communication" and "aggregation."

Key technologies include coordinated control, smart metering, and information communication. One of the most attractive features of virtual power plants is their ability to aggregate DERs for participation in electricity and ancillary services markets, providing management and ancillary services for distribution and transmission grids.

Unlike traditional power plants, a virtual power plant is not a physical facility but a smart grid technology. Under the aggregation of virtual power plants, enterprises, residents, and other users can participate in electricity market transactions with higher flexibility. As a critical technology for energy intelligence, virtual power plants have broad application prospects, with global competition intensifying.

Recently, virtual power plant concept stocks in the A-share market have gained popularity among investors. The current wave of interest in virtual power plants stems from news about Tesla's collaboration with Pacific Gas and Electric Company to launch a pilot project.

Encouraged by this news, several A-share listed companies have revealed their involvement in virtual power plant-related businesses and have actively deployed strategies. Behind the popularity of virtual power plants lies the wave of digital transformation in energy systems.

When we think of power plants, we often envision towering chimneys, massive cooling towers, and billowing smoke. However, there are now some power plants around us that neither have buildings nor burn coal or any other fuel yet possess the capability to generate electricity. These are known as virtual power plants. Virtual power plants are not conventional power plants but rather a type of smart grid technology.

Their core idea is to aggregate various dispersed and adjustable power sources and loads from factories, shopping malls, and even residential homes using advanced information and communication technology and software systems, forming a virtual "power plant" for unified management and dispatch.

It's essential to note that virtual power plants do not change the way existing resources are connected to the grid; instead, they act as intelligent "power managers," aggregating, optimizing, and managing resources effectively through communication and innovative metering technologies to create a more stable and controllable "mega power plant."

This enables self-regulation of power generation and consumption, providing integrated services for generation, grid, load, and storage, with these controllable resources participating in grid operation and dispatch through resource aggregation entities. Under the aggregation of virtual power plants, enterprises, residents, and other users can participate in electricity market transactions with greater flexibility.

Large commercial complexes, for example, typically have many air conditioning units, consuming significant amounts of electricity for heating in winter and cooling in summer.

During peak electricity demand periods in summer, if flexible adjustable load demand response is achieved through pre-installed electronic terminals, such as raising the temperature of central air conditioning by 2 to 3 degrees Celsius within minutes, the daily electricity consumption can be reduced by nearly 20%. This not only relieves the burden on the grid but also ensures that mall customers do not feel uncomfortable due to a slight increase in temperature.

Suppose more buildings and factories can be managed in this way. In that case, the untapped potential of existing electricity can be better utilized without building new power plants, thereby ensuring grid security.

Although advanced technology, virtual power plants are not a new concept. Since its inception in 1997, it has attracted attention from several European, North American, and Australian countries. Since 2001, European countries such as Germany, the United Kingdom, Spain, France, and Denmark have begun research projects on virtual power plants, mainly targeting integrating small and medium-sized distributed generation units.

During the same period, North America promoted "demand response" with similar implications. In recent years, countries in the Asia-Pacific region, such as Australia and Japan, have gradually joined the research and deployment of virtual power plants.

As a critical technology for energy intelligence, virtual power plants have broad application prospects, and global competition is fierce, with various parties vying for strategic initiatives. However, regardless of location, virtual power plants are still relatively young.

The path of the energy transition requires joint efforts from governments, enterprises, users, and other stakeholders to actively explore market mechanism construction, business model innovation, core technology research and development, and widespread user participation, facilitating the high integration of energy and information flows and ultimately achieving the efficiency of energy production, trading, utilization, and the sharing of energy infrastructure.