China’s NDRC and NEA have issued joint guidelines for the orderly development of VPPs
The country plans to achieve over 20 GW of VPP capacity by 2027, expanding to exceed 50 GW by 2030
Provincial governments will be expected to draw plans for VPP development in their respective jurisdictions
Virtual power plants (VPP) are set to be a big thing in China as the government aims to achieve over 20 GW in cumulative capacity by 2027 to ensure a balance between its power generation and consumption. With innovative business models, these applications will be further expanded to over 50 GW by 2030.
The country’s National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) announced these targets in jointly issued guidelines to accelerate the development of VPPs.
The document defines VPPs as a new organizational model that aggregates distributed energy resources (DER) like rooftop solar, batteries, electric vehicle chargers, along with adjustable loads and energy storage using digital and control technologies. As independent operating entities, these can contribute to power system optimization and power market transactions.
China will want its provinces to draft VPP development plans based on their respective local needs. The plans will also include the scale of development and business models to speed up the roll-out of such projects at a large scale.
The guidelines also address energy companies, both upstream and downstream, as well as the private sector, to actively invest in VPPs while prompting provincial governments to facilitate their participation in the development and operation of such projects.
VPPs can balance electricity demand and supply without the need for a physical structure. China is not the only one to see the benefits of this technology. The US currently has 30 GW to 60 GW of VPP capacity on the grid that has been operating with commercially available technology for years, according to the US Department of Energy.
The US now aims to triple this capacity to 80 GW to 160 GW by 2030 to save $10 billion in annual grid costs through avoided generation buildout, delayed power structure investments and reduced operation of expensive peaker plants.