Why is a virtual power plant needed and how does it work?

The official launch of the R8 Virtual Power Plant (R8 VPP) and Demand Response service for customers was made at the end of 2022.

This followed the successful implementation of the service in Estonian market in spring 2022. Our customers earned additional significant revenue while their buildings helped balance the electricity grid.

But why are virtual power plants needed and how does they work?

• All power transmission grids are heading towards the era where digitalization enables consumers to benefit from intelligently controlled energy consumption to help keep the balance of production and -consumption in balance.

• The grid operators compensate consumers for their effort to use less energy as an alternative to increasing production. The reverse applies when the request is use more energy, if there is a surplus that cannot be used. 

• As the Buildings are actively participating through intelligent control of the power grid balancing calls the following the ‘day-ahead’ prices while also having generally reduced consumption, it improves the overall power supply security. Thus, meeting fully the recent EU directives to ensure power security.  

• When consumers and their buildings are helping to balance the energy grid, this normally has an impact on floating rate energy prices. Typically, if the call is to restrict energy consumption prices will be lower the following day.