Integration of Renewable Energy Sources Using Microgrids, Virtual by fuf15836


									                                                eeh         power systems

                           Raffael B¨hler

Integration of Renewable Energy Sources
 Using Microgrids, Virtual Power Plants
     and the Energy Hub Approach

                           Semester Thesis

                 EEH – Power Systems Laboratory
         Swiss Federal Institute of Technology (ETH) Zurich

                  Expert: Prof. Dr. G¨ran Andersson
 Florian Kienzle, Spyros Chatzivasileiadis, Dr. Thilo Krause, Mich`le

                       Zurich, March 12, 2010

The amount of generation of renewable energy sources in the European grid
has strongly increased. In 2005 eight times more energy was generated by
RES compared to 1990. In the future the EU wants to promote the in-
tegration of RES. Mainly the use of wind energy and biomass should be
As to date, RES were connected to the distribution grid usually with a ”fit
and forget” approach. Due to the increasing number of RES better solutions
to connect RES are searched. Therefore, virtual power plants, microgrids
or energy hubs could be used. This thesis presents these three concepts and
gives an overview of today’s applications.
In the third chapter ten criteria were established to compare the three con-
cepts. Thereby, it results that the concepts have different key aspects and do
not compete against each other. In the following chapter a SWOT analysis
to each concept is done, to summarize the third chapter and emphasize the
strengths and weaknesses of every concept.
In the fifth chapter attempts to combine the strengths of the concepts are
developed. It results that the multi-energy carrier approach of the energy
hub concept should be used to improve virtual power plants and microgrids.


Die im europ¨ischen Netz erzeugte Energie aus erneuerbaren Energiequellen
(RES) hat stark zugenommen. Im Jahre 2005 wurde achtmal mehr Energie
durch erneuerbare Quellen produziert als noch im Jahre 1990. In Zukunft
m¨chte die EU den Zuwachs von RES weiter vorantreiben. Dabei soll haupt-
s¨chlich die Nutzung von Windenergie und Biomasse erweitert werden.
Bisher wurden RES oftmals nach dem Motto ”fit and forget” im Verteilnetz
angeschlossen. Auf Grund der steigenden Anzahl von RES werden heute
jedoch bessere Integrationswege gesucht. M¨glichkeiten dazu bieten die drei
Konzepte: Virtual Power Plants, Microgrids und Energy Hubs. Die vor-
liegende Arbeit pr¨sentiert diese drei Konzepte und gibt einen Einblick wie
sie aktuell verwendet werden.
Im dritten Kapitel wurden zehn Kriterien aufgestellt, um an ihnen die drei
Konzepte zu vergleichen. Dabei stellt sich heraus, dass die Konzepte un-
terschiedliche Schwerpunkte haben und nicht miteinander konkurrenzieren.
Im darauffolgenden Kapitel wird eine SWOT-Analyse zu jedem Konzept er-
stellt, um die Ergebnisse aus dem dritten Kapitel zusammenzufassen und
   a                a
St¨rken sowie Schw¨chen aufzuzeigen.
     u                           a
Im f¨nften Kapitel werden Ans¨tze entwickelt wie Virtual Power Plants,
Microgrids und Energy Hubs miteinander kombiniert werden k¨nnten, um
die St¨rken der Konzepte zu verbinden. Daraus resultiert, dass der Multi
Energietr¨ger Ansatz vom Energy Hub Konzept auf die beiden anderen
Konzepte angewendet werden sollte, um durch die ganzheitliche Betrach-
tung Virtual Power Plants und Microgrids zu verbessern.


List of Acronyms                                                                  v

1 Introduction                                                                    1
  1.1 Development of Renewable Energy Sources in            the European
       Grid . . . . . . . . . . . . . . . . . . . . . . .   . . . . . . . . .      1
  1.2 Integration of RES in the European Grid . .           . . . . . . . . .      2
  1.3 Objective of this thesis . . . . . . . . . . . . .    . . . . . . . . .      3

2 VPPs, Microgrids and Energy Hubs                                                4
  2.1 Virtual Power Plants . . . . . . . . . . . . . . . . . . . . .      .   .   4
      2.1.1 Applications of the Virtual Power Plant Approach              .   .   5
  2.2 Microgrids . . . . . . . . . . . . . . . . . . . . . . . . . . .    .   .   7
      2.2.1 Applications of Microgrids . . . . . . . . . . . . . .        .   .   7
  2.3 Energy Hubs . . . . . . . . . . . . . . . . . . . . . . . . .       .   .   9
      2.3.1 Applications of the Energy Hub Approach . . . . .             .   .   9

3 Comparison Criteria                                                             11
  3.1 Electricity Market Participation . . . . . . . . . .      . . . . . .   .   12
  3.2 Power System Stability . . . . . . . . . . . . . . .      . . . . . .   .   13
  3.3 Reliability . . . . . . . . . . . . . . . . . . . . . .   . . . . . .   .   15
  3.4 Additional Infrastructure Installations . . . . . .       . . . . . .   .   16
  3.5 Dealing with the Limited Accuracy of Production           Forecasts     .   17
  3.6 Demand Side Management and Plug-in Hybrids .              . . . . . .   .   18
  3.7 Energy Efficiency . . . . . . . . . . . . . . . . . .       . . . . . .   .   20
  3.8 Interaction of Different Energy Carriers . . . . .         . . . . . .   .   21
  3.9 Carbon Dioxide Emissions . . . . . . . . . . . . .        . . . . . .   .   22
  3.10 Application Area . . . . . . . . . . . . . . . . . .     . . . . . .   .   23
  3.11 Summarising Table . . . . . . . . . . . . . . . . .      . . . . . .   .   24

4 SWOT - Analysis                                                                 25

5 Discussion                                                             28
  5.1 Combinations of the Concepts . . . . . . . . . . . . . . . . . . 29
  5.2 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

CONTENTS       iv

Bibliography   32
List of Acronyms

CHP   Combined Heat and Power
DER   Distributed Energy Resources
DG    Distributed Generation
EU    European Union
ICT   Information and Communication Technology
RES   Renewable Energy Sources
TSO   Transmission System Operator
VPP   Virtual Power Plant
WT    Wind Turbines

Chapter 1


1.1    Development of Renewable Energy Sources in
       the European Grid
In figure 1.1 the development of renewable energy sources (RES) in the three
sectors electricity production, transport and heating is demonstrated. It is
obvious that different trends exist in the three sectors. The highest increase
is visible in the electricity production sector. This can be attributed to the
Directive 2001/77/EC on renewable electricity [1]. On the other two sectors
no legally binding rules were established at EU level. Nevertheless, there is
also noticeable progress attributed to the efforts of a few committed Mem-
ber States [1]. This thesis deals mostly with the integration of renewable
electricity production. In the following a closer look to this sector will be

Figure 1.1: The contribution of renewable energy (heat (RES-H), electricity
(RES-E) and transport (RES-T)) 1990 - 2004 (Mtoe). Source: Renewable
Energy Road Map 2007 [1]

CHAPTER 1. INTRODUCTION                                                       2

Development of the New Renewable Electricity Generation in
the EU
The term ”new renewable” includes RES without hydro generation. If we
look at the growth of these sources in figure 1.2, an eight times bigger amount
results in 2005 compared with 1990. The biggest part of this increase can
be attributed to wind generation followed by biomass.

Figure 1.2: Non-hydro renewable electricity generation in EU-25 (1990-
2005). Source: Renewable Energy Road Map 2007 [1]

Scheduled Growth of Renewable Energy Production
In Directive 2001/77/EC all member states defined national targets for the
proportional part of renewable electricity on the overall electricity consump-
tion in their country. If these targets are reached, the proportional part of
renewable electricity on the overall consumption in the EU will be 21% by
2010 [1]. Furthermore, until 2020 it is planned to nearly triple the electricity
output of RES compared to 2004 (compare figure 1.3). Thereby the biggest
potential for growth is forecast to be wind energy, especially offshore gen-
eration. But also biomass should heavily increase, whereas the electricity
generation of hydro units remains at nearly the same level.

1.2     Integration of RES in the European Grid
In the previous section it was demonstrated that the amount of RES in
electricity generation has strongly increased since 1990 and will grow further
in the future. Thereby wind generation is meant to play the most important
part. The accuracy of forecasts for wind speed is getting better and better
but still uncertainties remain. The European transmission grid has to deal
with large unscheduled variability in power generation. Furthermore, in
the lowest distribution levels, small RES are connected. If a lot of them
CHAPTER 1. INTRODUCTION                                                3

Figure 1.3: Renewable growth: Electricity projections by 2020. Source:
Renewable Energy Road Map 2007 [1]

are connected in the same region, they could cause upstream energy flows
instead of the usual flows from high to low voltage levels.
    As to date, small RES were connected usually with a ”fit and forget”
approach [2]. Due to the increasing amount of produced energy they have
to be better integrated into the system.

1.3    Objective of this thesis
This thesis describes three concepts to improve the integration of RES in
the grid: Virtual Power Plants, Microgrids and Energy Hubs. The differ-
ent integration aspects are emphasized. Furthermore, the three concepts
are compared in different criteria and a SWOT-analysis is done. Finally
possibilities to combine the strengths of each concept are developed.
Chapter 2

Virtual Power Plants,
Microgrids and Energy Hubs

In this chapter three concepts to integrate renewable energy sources (RES)
into the energy network are presented. First of all virtual power plants
(VPP) are described, followed by Microgrids and the energy hub approach.
In every section the concepts are introduced, followed by short descriptions
of current projects.

2.1       Virtual Power Plants
The goal of VPPs is to allow DER to access the energy market. Due to the
stochastic variations of produced energy in solar and wind power units, the
risk for a single unit to participate in the energy market is very high. If the
scheduled energy cannot be delivered, the producer has to buy expensive
balancing energy. As the uncertainty is often too high, the unit does not
participate in the energy market or participates only with small amount of
its maximal capacity. Furthermore, the participation in forward or control
energy markets is linked with even higher risks which makes a participation
nearly impossible.
Another problem is that DER are often too small to participate in the elec-
tricity markets. The minimal trading volume of hourly contracts for power
at the EEX1 spot market is 0.1 MW [3]. To participate in the control energy
market a minimal nominal power of 30 MW-50 MW is necessary [4]. To deal
with these circumstances, the VPP approach adds many DER in one cluster
and connects them with an information network. This means that stochastic
variations can be balanced between lots of single units. Therefore, the group
of DER is comparable to a power plant connected to the transmission grid.
Participation in the energy market will be facilitated. Figure 2.1 depicts a
      European Energy Exchange

CHAPTER 2. VPPS, MICROGRIDS AND ENERGY HUBS                                5

schematic composition of a VPP. In [5], p. 13 an illustrating example how
the market access for a cluster of producers instead of a single producer is
facilitated, is calculated.

Figure 2.1: Schematic composition of a VPP. Different types of RES, like
a river power station, a wind turbine, a solar panel and a CHP unit, build
a VPP. To balance the weather dependent power production flexible loads
(FL) and a battery are added. All units are connected with ICT. Thus,
participation on electricity markets is in a similar way possible as for big
power plants.

2.1.1   Applications of the Virtual Power Plant Approach
Different variations of VPP are projected. On the one hand there are groups
of generation units which participate on the energy or control energy market.
On the other hand flexible loads which can sell saved energy are investigated.

Control Energy VPP
Since September 2003, EVONIK Power Saar GmbH has been operating a
control energy VPP with a total capacity of 400 MW. Industrial and com-
mercial power plants offer tertiary control energy to the TSOs in Germany
CHAPTER 2. VPPS, MICROGRIDS AND ENERGY HUBS                                 6

Commercial VPP in Sauerland
Siemens and RWE started the operation of a commercial VPP in Sauerland,
North Rhine-Westphalia, on October 31, 2008. They linked nine hydroelec-
tric facilities with a total capacity of 8600 kW together. In the near future,
CHP units, biomass and wind power plants should be integrated as well [6].

EU-Project Fenix
On October 2005, a 4-year EU-project named FENIX (Flexible Electricity
Networks to Integrate the eXpected energy evolution) started. New com-
munication and control devices were developed to demonstrate the VPP
approach. The goal of this project is to boost DER contribution on the
European power system [7].

Following the slogan: ”We will build Germanys biggest gas power plant”,
the company Lichtblick wants to install 100’000 small2 CHP units in pri-
vate households. All these units are wirelessly linked and controlled from
a dispatch centre. The power production is driven from the heat demand
of the households. To allow the operator enough flexibility, a heat storage
is implemented. Therefore, they can participate on the electricity market.
Lichtblick expects a total capacity similar to two nuclear power plants [8].

      20 kW electrical and ca. 35 kW thermal power
CHAPTER 2. VPPS, MICROGRIDS AND ENERGY HUBS                                    7

2.2        Microgrids
A microgrid is a cluster of local DER and loads in such a way that an oper-
ation within the grid or in islanded mode is possible. Usually it is connected
at the low voltage level but sometimes also at the medium voltage level. The
connected microgrid appears as one node, generating or consuming power
from the grid. To operate in an isolated mode, energy storage devices are of-
ten necessary and the loads are differentiated in reliability classes. In figure
2.2 an example of a microgrid with different generation units and storage de-
vices is illustrated. In addition the loads are classified in different reliability
classes3 .

Figure 2.2: Example of a microgrid with a load classification into three
reliability types. Source:

2.2.1       Applications of Microgrids
In the microgrid project of the EU, seven pilot microgrids are in operation
[9]. Different RES like PV, wind and biomass power plants are integrated.
But often also a diesel generator for electricity back-up is installed. As an EU
project example, the microgrid on the Greek island Kythnos is presented.
Furthermore the Aomori project in Hachinohe, Japan is mentioned.
      Refer to 3.6
CHAPTER 2. VPPS, MICROGRIDS AND ENERGY HUBS                             8

Pilot Microgrid in Kythnos
On the Greek island of Kythnos a single phase microgrid is installed. 12
houses are supplied by 10 kWp of PV, a 53 kWh battery bank and a diesel
generator with a nominal output of 5 kVA. In addition, the system house
is supplied by 2 kWp PV and a 32 kWh battery bank. The different units
are connected over a communication cable and controlled from the system
house. Probably a 2 to 3 kW wind turbine will be integrated in the near
future to minimise the use of diesel fuel in islanded operation [9].

The Aomori Project in Hachinohe
In figure 2.3 an overview of the Hachinohe project is given. In this micro-
grid only RES supply the total demand of around 610 kW. Thereof 150 kW
are weather-dependent generation (PV and WT) and 510 kW are control-
lable digester gas engines. Furthermore, a lead-acid battery system with a
capacity of ±100 kW is installed [10].

Figure 2.3: Overview of the Aomori microgrid project in Hachinohe, Japan
CHAPTER 2. VPPS, MICROGRIDS AND ENERGY HUBS                                      9

2.3     Energy Hubs
An energy hub describes the relation between in- and outputs of energy
flows. In the hub multiple energy carriers like electricity, gas, heat, etc.
can be converted, conditioned and if available also stored. Thereby, a hub
can model a single building or a whole country. Figure 2.4 illustrates a
hospital modelled as hub. Hubs can be connected in a network. Each hub
is described with a coupling matrix which links the inputs and outputs of
one unit. In this way the network is mathematically easy comprehensible
and very adaptive for every possible combination. In figure 2.5 an example
of a network with three energy hubs is presented. Due to the coupling of
multiple energy carriers more degrees of freedom in the control are given
and a holistic view on energy flows is possible [12].

Figure 2.4: The hospital of Baden modelled as energy hub. Electricity can
be generated in the hospital with three diesel emergency generators. In
addition, heat and district heating can be produced with fuel oil, diesel or
natural gas [13].

2.3.1    Applications of the Energy Hub Approach
The energy hub approach is used as a tool to analyse the actual energy
system, to simulate different scenarios for the future and to find optimal
solutions4 how the energy system in 30 to 50 years should look like. New
challenges like plug-in hybrid electric vehicles and prospective generation
and storage technologies are considered [14].

Bern as Energy Hub
In this case study, all generation and energy storage facilities of Bern are
modelled as energy hubs which are connected to a network. Different scenar-
    Concerning reduction of emissions, investment planning or optimal power flows in
multiple energy carrier systems
CHAPTER 2. VPPS, MICROGRIDS AND ENERGY HUBS                               10

Figure 2.5: Example of a network of three energy hubs. They are connected
with a district heating network. In addition, electricity and gas in- and
outputs are presented [13].

ios concerning emissions, new supply possibilities and costs are developed.
The goal is to define a roadmap from today’s to a future energy system with
low emissions.

In another case study, D¨twil in Baden is modelled with eleven hubs. Each
of these hubs has a specific load profile. Defined as hubs are for example a
residential area, a commercial area with a natural gas station and a hospital
[13]. The hospital modelled as energy hub is presented in figure 2.4.
Chapter 3

Comparison Criteria

In this chapter the three concepts of virtual power plants, microgrids and
energy hubs are discussed on a selection of criteria. These criteria comprise
important aspects in relation to the integration of RES in the European
power system. At the end of the chapter a table summarises the importance
of the criteria for the three concepts.

CHAPTER 3. COMPARISON CRITERIA                                              12

3.1        Electricity Market Participation
Electricity market participation deals with the possibility of RES to par-
ticipate in the different electricity markets such as future, spot and control
energy market. The goal is that market incentives help to balance price
peaks. The main problems with the electricity market access for RES are
the nominal power of small units and the stochastic variability of weather
dependent entities.

Virtual Power Plants
Electricity market participation for any DER is the key aspect of the VPP
approach. Dependent on the combination of generators, flexible loads and
storage devices, the participation in different electricity markets is possible.
The bigger the degree of freedom in regulating is, the more possibilities exist
to participate in spot, future and control energy markets. At the moment it
is not profitable for small RES to participate in the market, because most
of the countries in Europe have feed-in tariffs1 which are more attractive.
But often these tariffs decrease yearly with a given percentage dependent
on the technology [15]. So, in the future the participation in the different
energy markets could be essential. One big advantage of a VPP is that the
whole cluster can be managed by one broker or trader, reducing the market
participation costs for a single unit significantly.

Usually a single microgrid is too small to participate in electricity markets.
Including a microgrid in a VPP or a network of many microgrids2 could
allow the access to electricity markets.

Energy Hubs
In the energy hub approach market participation is not explicitly discussed.
Probably an energy hub model could be used to maximise the profit of a
generator, so that a market access for this unit is more attractive.

      Refer to EEG in Germany [15].
      E.g. in a multiagent system [16].
CHAPTER 3. COMPARISON CRITERIA                                                13

3.2       Power System Stability
In [17] the stability of an electric power system is defined as follows:
        ”Power system stability is the ability of an electric power system,
        for a given initial operating condition, to regain a state of oper-
        ating equilibrium after being subjected to a physical disturbance,
        with most system variables bounded so that practically the entire
        system remains intact.”
Thereby three categories of stability are distinguished:
   1. Rotor Angle Stability: Ability of synchronous machines to hold the
      electromagnetic torque and the mechanical torque in an equilibrium.
   2. Frequency Stability: The equilibrium between generation and loads
      must be ensured.
   3. Voltage Stability: Mainly depends on the balance of reactive power
      demand and supply.

Virtual Power Plants
The influence of VPPs on the power system stability depends mainly on
the mix of the integrated units. Through the connection of voltage and
frequency control power electronics, the system stability can be improved.
A VPP which participates in the control energy market may contribute to
improve stability. Otherwise, if a lot of DGs replace big generators, the
power system inertia is decreased. Hence, the rotor angle stability is also
decreased [18]. Generally, system stability is rarely an issue in the VPP

The inertia in a microgrid is very small. If there is a rotating generator in the
system and there occurs an imbalance between the input mechanical torque
and the output electromagnetic torque, a fast deceleration or acceleration of
the rotor will occur3 . But in microgrids it is also possible that all generation
units are connected with synchronised power electronic inverters. In this case
the frequency is independent of rotating masses. Therefore the information
and control system has to react quickly if an unbalance occurs in the system.
If the power supply is too big, the batteries can be charged. Else if the
power consumption is over the supply, shedable loads can be switched off
to restore the power balance [19]. Connecting or disconnecting of loads in
isolated operation can be critical if they are big in relation to the installed
generation capacity (see figure 3.1).
      See swing equation
CHAPTER 3. COMPARISON CRITERIA                                               14

Figure 3.1: Switching-on of a 37 kW air conditioner in an isolated microgrid
at the Aomori project in Hachinohe [11].

Energy Hubs
In the energy hub approach power stability has not been discussed yet. But
the stability of interacting multi energy carriers is an open topic to research.
CHAPTER 3. COMPARISON CRITERIA                                            15

3.3    Reliability
Reliability of electric power systems describes the probability of the system
to supply the loads with a reasonable assurance of quality over a long time
period. Thereby reliability is based on two aspects: adequacy and security.
In [17] they are defined as follows:

   • Adequacy: ”The ability of the power system to supply the aggregate
     electric power and energy requirements of the customer at all times,
     taking into account scheduled and unscheduled outages of system com-

   • Security: ”The ability of the power system to withstand sudden distur-
     bances such as electric short circuits or not anticipated loss of system

Virtual Power Plants
Through participation in the control energy markets VPPs can help to in-
crease the reliability in the whole electric power system. But in a VPP there
could be some critical units like flexible generators or storage devices which
balance the fluctuations of non-dispatchable entities. If a fault occurs in a
unit crucial for the power balancing probably other entities are influenced.
Hence the security of the systems could be decreased.

In the microgrid approach reliability is a key issue. Due to the additional
possibility of operating in an isolated way, a microgrid has an increased
degree of reliability. Whenever a fault occurs in the connecting grid, the
microgrid can decouple and hence stay in operation. This behaviour is
important for critical units such as hospitals and data backup centres. To
improve the security of a microgrid in islanded operation, redundancies for
critical units like backup generators could be included.

Energy Hubs
The energy hub approach can be used to plan an electric power system with
increased reliability. Including storage devices and the possibility to link
different energy carriers can increase the adequacy and hence the reliability
CHAPTER 3. COMPARISON CRITERIA                                             16

3.4    Additional Infrastructure Installations
In this section it is discussed which necessary infrastructure has to be in-
cluded in today’s system to implement one of the three approaches.

Virtual Power Plants
To build a VPP, ICT lines between the different entities is necessary. Usually
the VPP is controlled from a central unit. In addition a connection to the
market over a broker or a trader access is necessary.

A microgrid is usually operated from a control centre, where the use of DG
is optimised. The individual units and loads are connected with the control
centre over ICT. In addition, to allow an islanded operation which is based
mainly on DER, storage devices have to be included.

Energy Hubs
Due to the fact that the energy hub approach is a modelling and planning
tool, a result of a simulation could be, that additional infrastructure should
be integrated in the future. To do a simulation initial values are necessary.
Thereby data from today’s infrastructure could be a good base. Hence some
additional measuring units should be installed in the system, for example
for measuring heat demand.
CHAPTER 3. COMPARISON CRITERIA                                             17

3.5    Dealing with the Limited Accuracy of Produc-
       tion Forecasts
Weather dependent generators like photovoltaic or wind turbines can only
be forecasted with a limited accuracy. But the deviation of the forecasts
can have a strong influence on power production. E.g. the relation between
generated power in a wind turbine and the wind speed is cubic.

Virtual Power Plants
To balance the uncertainties of weather dependent RES in VPP, storage or
enough flexible load or generation capacity has to be included. Thereby it
has to be more attractive for storage or flexible units to participate in a VPP
instead of a direct access at the control energy market. Two possibilities are

   • Few big storage or flexible units: The financial incentives of the VPP
     have to be at least on the level of the control energy market.

   • A cluster of several smaller storage or flexible load units: Due to the
     fact that a small unit does not have enough capacity to participate on
     the control energy market it could be interesting for several units to
     cooperate in a cluster. If their accumulated capacity is big enough for
     the access to the control energy market, again the VPP has to allocate
     at least the same incentive as the control energy market does.

It remains the question if the price for energy in the VPP is competitive on
the energy market. Whereas, the accuracy of the production forecast has a
big influence on the production costs.

Microgrids in islanded operation must have enough storage capacity or some
backup devices like fuel generators, to deal with the variability of weather
dependent units. Furthermore, flexible loads can balance a part of the vari-

Energy Hubs
In simulations of energy hub models historical weather data can be fed in.
This allows developing multiple scenarios whereby e.g. the required capacity
of storage units can be developed [21]. But uncertainties remain, because
weather incidents can only be scheduled for the future.
CHAPTER 3. COMPARISON CRITERIA                                                          18

3.6      Demand Side Management and Plug-in Hy-
Demand side management allows to control the loads by the system opera-
tor. If not enough power is generated in the system, loads can be switched
off. Another way is to manage loads in such a way that operation costs or
emissions are minimised. Hence controlling on the generation and load side
is possible.
The mobile batteries of plug-in hybrids allow additional storage and control
possibilities in the system. To allow an effective use of the storage capacity
and at the same time a comfortable operation for the drivers, demand side
management is indispensable.

Virtual Power Plants
Demand side management can be an important aspect in VPPs. Flexible
loads help to balance weather dependent generation in the VPP or the whole
VPP is built only with demand side management and participates on the
control energy market. Plug-in hybrids are not considered yet, but they
could offer with their batteries an additional support to balance weather
dependent generation.

In islanded operation loads play an important role, as loads can be of the
same scale as generation units4 . Therefore demand side management is
important5 . Loads can be classified in different reliability types like sensitive,
adjustable and shedable. Sensitive loads have the highest importance and
should always be supplied with power. Adjustable loads can be controlled in
a given power interval and shedable loads can be disconnected if not enough
power is generated at the moment. Refer to figure 2.2 for an example to
this behaviour. So, flexible or adjustable loads can help to balance weather
dependent generation and hence reduce the necessary storage capacity. Plug-
in hybrids are a good addition to increase storage capacity in the system,
but are only rarely discussed yet.
     E.g. residential air conditioning units have usually a capacity of 3 to 20 kW. Source:
     As is usually the case in many microgrids, underfrequency relays disconnect the load
in case of power shortage. As soon as the frequency reaches its nominal value again,
automatic switches reconnect the loads with a random delay. The time delay helps so
that the power consumption does not increase stepwise, thus not leading to undesirable
transient effects.
CHAPTER 3. COMPARISON CRITERIA                                           19

Energy Hubs
A paper about demand side management6 in the energy hub approach will
be published soon. In this paper three examples are given how demand
side management could be used to minimise the energy systems operation
costs or the green house gas emissions. Plug-in hybrids have been modelled
as hubs. Thereby aspects like driving with fuel or electricity, different day
schedules or grid ancillary services have been studied [22].

      Written by Peter Ahcin.
CHAPTER 3. COMPARISON CRITERIA                                            20

3.7       Energy Efficiency
The World Energy Council defines energy efficiency as follows [23]: ”En-
ergy efficiency is first of all a matter of individual behaviour and reflects
the rationale of energy consumers. Avoiding unnecessary consumption of
energy or choosing the most appropriate equipment to reduce the cost of the
energy helps to decrease individual energy consumption without decreasing
individual welfare.”

Virtual Power Plants
In VPPs economic efficiency is a more important aspect than energy effi-
ciency. Market incentives should help to balance price peaks, for example
through load shifting from high price hours to lower price hours.

Energy efficiency is a key aspect for microgrids in islanded operation. Due
to the limited generation capacity, an efficient and economical handling with
energy is necessary. The classification of loads7 is one method to improve the
energy efficiency. Furthermore, a simulation in Japan demonstrated that the
total primary energy consumption can be lower when the microgrid reduces
the amount of purchased energy from the grid [24]. This can be explained
with the use of CHP units and the elimination of transmission losses.

Energy Hubs
In the energy hub approach the efficient use of energy is an important aspect.
Due to the consideration of interaction between energy carriers, solutions
with the lowest total energy consumption can be found. Thereby, the trade-
off between cost minimisation and maximisation of energy efficiency has to
be considered [25].

      Refer to figure 2.2
CHAPTER 3. COMPARISON CRITERIA                                                        21

3.8       Interaction of Different Energy Carriers
The view on interaction of different energy carriers allows to optimise the
total energy flows in the system. Coupling of different energy carriers in-
creases the redundancy and can improve the efficiency if synergies can be

Virtual Power Plants
In a VPP the interaction of different energy carriers is only rarely considered.
CHP is an aspect8 , but other interactions are not considered.

In microgrids the view on interaction of different energy carriers is limited
to CHP. Sometimes inside energy flows to generate electricity are also con-
sidered9 .

Energy Hubs
In the energy hub approach the interaction of different energy carriers is
a key aspect. The more couplings that exist in a hub, the more control
opportunities are possible and hence the reliability of electricity production
in a hub increases. For example a hub with electricity and gas grid input, a
wood firing and a solar panel can allocate electricity at the output via the
grid, the solar panel or by generating electricity with wood or gas firing. If
a fault occurs in the grid, the loads can be supplied with power from the
wood and gas generators and the solar panel. Due to the different sources
the reliability of the electricity load supply is increased. But interaction
of different energy carriers is not only an aspect of reliability, but also of
optimising the whole energy flows in the system. For more information on
this topic the reader can refer to [26] and [27].

      Refer to 2.1.1
      Wood-gas circuit to operate gas engines in the Aomori project. Refer to figure 2.3
CHAPTER 3. COMPARISON CRITERIA                                                        22

3.9      Carbon Dioxide Emissions
The question if the concept could be used to reduce the carbon dioxide
emissions is an important aspect in the background of the climate change.
It is important that the emitted CO2 in production and transport of new
infrastructure which could be the result of the implementation of one of the
concepts has to be taken into account for the final CO2 balance too.

Virtual Power Plants
VPP can reduce CO2 emissions indirectly by producing electricity with RES.
In addition CHP could also reduce the amount of emissions. But if in the
VPP fossil generation units are integrated, the CO2 balance could get worse.
A critical aspect concerning CO2 emissions could be, that the small units in
a VPP do not have to buy CO2 certificates10 and hence are not subject to
regulation11 .

In microgrids the CO2 emissions should be reduced, due to less wasted en-
ergy e.g. with CHP [28]. This leads to a lower total energy consumption
and hence to lower emissions. But similar to the VPP approach integrated
fossil fired generators or gas turbines which worsen the CO2 balance have
to be considered. A simulation example in Japan showed, that the CO2
balance under certain circumstances12 can be better when more electricity
is purchased from the grid instead of generated in the microgrid [24].

Energy Hubs
The simulation with energy hubs can be done in a manner where CO2 emis-
sions are minimised. Thereby often a trade-off between reduction of emis-
sions and energy costs results. Refer to [27] for an example to this behaviour.
However it is difficult to have input data because measuring of CO2 emis-
sions is not done in all parts of today’s infrastructure. For this reason,
CO2 emissions dependent on the generation have to be modelled and this
consequently leads to more uncertainties in the simulation.

     Thermal power plants with a capacity bigger then 20 MW have to buy CO2 certificates
in the EU. Refer to
     But probably in the future a VPP has to buy certificates equal to its total capacity.
     Refer to [24]
CHAPTER 3. COMPARISON CRITERIA                                              23

3.10     Application Area
The criterion application area describes the geographical size of the area on
which one of the approaches could be implemented.

Virtual Power Plants
A VPP is imaginable in any size of area in a single country. If the VPP is
located in different countries, problems with cross-border capacities could
occur. E.g. if the VPP has to balance unexpected power for one country
in another country. For this reason a VPP should be located in a single

For reasons of reliability microgrids should be implemented in a small local
area. The longer the line distances in the microgrid, the bigger is the prob-
ability that a fault occurs inside the microgrid and islanding operation fails.
On the other hand, in a microgrid with more units, the redundancy can be
increased. Hence, in the design of a microgrid the application area and the
number of involved units have to be optimised to increase reliability.

Energy Hubs
The application area of an energy hub is not limited. A single hub can con-
tain one building like a hospital or whole countries. In addition networks are
possible. Therefore the energy hub approach is a very flexible and scalable
tool, adaptable for every application area.
CHAPTER 3. COMPARISON CRITERIA                                               24

3.11     Summarising Table
In the following table all analysed criteria are evaluated with the importance
for the three concepts. Three classes are given:

  1. Key aspect: !

  2. Average importance: ∼

  3. Not considered: -

                                                         VPP     MG     EH
  Electricity Market Participation                        !      ∼      ∼
  Power System Stability                                  ∼       !     ∼
  Reliability                                             ∼       !      !
  Additional Infrastructure Installations                 !       !     ∼
  Dealing with the Limited Accuracy of                    !       !     ∼
  Production Forecasts
  Demand Side Management                                  ∼       !      ∼
  Plug-in Hybrids                                         -       ∼      !
  Energy Efficiency                                         -       !      !
  Interaction of Different Energy Carriers                 -       -      !
  Carbon Dioxide Emissions                                ∼       ∼      ∼
Table 3.1: Importance of the analysed criteria for Virtual Power Plants
(VPP), Microgrids (MG) and Energy Hubs (EH). ’ !’ means important as-
pect, ’∼’ medium important and ’-’ means not considered.
Chapter 4

SWOT - Analysis

To summarise the results of chapter 3 a SWOT1 -Analysis for every concept is
presented. The different aspects and characteristics of the three approaches
are emphasised. Thereby a strength for every concept is that with the
integration of RES more ”green” energy is included in the system. At the
same time the threat exist that integration of RES could result in too high
energy prices.

      • Electricity market access for small units.

      • Participation in a VPP is independent of geographical distances.

      • Costs for controlling inside the VPP have to be cheaper than on the
        control energy market.

      • Technical realisation of the necessary ICT and the resulting energy
        price of a VPP are only rarely discussed yet.

      • Market incentives improve the economically efficient use of electricity
        in small units and probably balance expensive peak hours.

      • The potential of industries to participate on the control energy market
        could be capitalised.
      Strengths, Weaknesses, Opportunities, Threats

CHAPTER 4. SWOT - ANALYSIS                                             26

  • Resulting price in the VPP could be too high → not competitive with
    big single units.

  • Feed-in tariffs could be more attractive than the participation in the
    VPP. Hence the VPP is strongly dependent on political or regulatory

  • Improved Reliability.

  • Finds ”the efficient” local solution.

  • Strong social integration of energy production and distribution.

  • With increasing size it becomes more complex and the risk of internal
    faults increases.

  • Improved electricity supply of islands and remote regions.

  • Standardised solution for emergency and back-up devices with inte-
    grated RES instead of fossil fuels.

  • Could help to improve the power supply in less developed countries

  • The reliability in the European power system is already quite good.
    The realisation of microgrids has to be motivated with integration of
    RES → probably the microgrid approach is too expensive compared
    with other possibilities.

  • In islanded operation, frequency problems can occur if big loads in
    relation to the system are connected or disconnected.
CHAPTER 4. SWOT - ANALYSIS                                           27

Energy Hub
  • Very flexible and scalable approach for the modelling of every new or
    existing technology.

  • Holistic view on the energy sector.

  • The energy hub approach has a more theoretical focus. It is a mod-
    elling and planning tool → realisation needs an additional effort.

  • Input data can not be available in today’s system → missing measure-
    ment stations.

  • View on multi-energy carriers could bring new scenarios and synergy

  • Computing time can be too big for complex problems → limitation on
    given scenarios.
Chapter 5


In the first part of this chapter a summarising overview of the results in
the previous chapter is given. In the second part ideas are generated how
the strengths of the three concepts could be combined to more powerful
solutions. Finally a conclusion is presented.

Virtual Power Plant
To allow RES to participate in the energy market, a VPP has to deal with
the limited accuracy of production forecasts. The big number of units at
different places balance uncertainties. In addition adjustable loads and gen-
eration units or storage devices in the VPP are implemented. Therefore,
ICT between the participating units is necessary. Apart from that, a VPP
does not change today’s power system. If a VPP is located in different
countries, problems with the cross border capacity could result.

The key aspect of microgrids is to improve reliability and to allow a more
efficient use of energy. Thereby islanded operation must be possible. Fur-
thermore the energy supply is done with RES mainly. To do this, ICT and
storage units are necessary. In addition, demand side management helps to
balance uncertainties in the electricity production of RES. Due to the small
size of the installed generation capacity, stability e.g. during connecting or
disconnecting of loads, is an difficult task during isolated operation. Micro-
grids allow an efficient use of energy, but the resulting operation costs could
yield problems.

Energy Hub
The energy hub approach is the only concept which explicitly considers the
interaction of different energy carriers. This allows a holistic view on energy

CHAPTER 5. DISCUSSION                                                      29

flows. Due to this aspect, new scenarios could be found. Probably a more
efficient use of energy carriers can be developed under consideration of fac-
tors like CO2 emissions. Anyhow, the energy hub is in an early development
status, hence the concept has to be verified in case studies. The energy hub
approach is a very flexible and scalable modelling, planning and analysing
tool. However, to calculate complex problems without limitation on given
scenarios, computing time could be a challenge.

5.1    Combinations of the Concepts
VPP and Microgrids
A microgrid can be seen as a single node in the grid. Thereby, consump-
tion of power from the grid or reinjection is possible. If the microgrid is in
islanded operation, the power balance at that node is zero. If many micro-
grids are connected with ICT they can work as a VPP. Thereby the market
access for the microgrids is possible. Through the efficient use of energy
and the big number of control possibilities in the microgrids, they could be
a very valuable addition in a VPP. So, the microgrid could replace some
controllable units and storage devices in the VPP.

VPP and Energy Hubs
The study of a VPP with the energy hub approach could lead to the devel-
opment of new implementation possibilities. Probably the view on multi en-
ergy carriers allows to increase the generation flexibility and to decrease the
storage capacity. These possible behaviours are exemplified on the swarm-
energy approach in section 2.1.1.
100’000 small CHP units will be installed in Germany. They are driven from
the heat demand of the households, but have heat storages to allow a flexi-
ble operation. If they are modelled as a network of energy hubs the energy
flows could be studied in a holistic way. The electricity and gas network,
but possibly also an additional district heating network could be considered.
Thereby scenarios could result where the generation flexibility is increased
and storage capacity could be decreased. The district heating network could
also be an addition to supply heat in financially unattractive low-price hours.
Hence, the energy hub approach could determine if the implementation of a
district heating network is economically interesting.

Microgrids and Energy Hubs
Through the consideration of multi energy flows the energy hub approach
could be a helpful addition to improve the reliability and efficient use of
energy in a microgrid. In the energy hub approach both, the electricity and
CHAPTER 5. DISCUSSION                                                       30

the gas network, could be considered. With the coupling over CHP devices
gas can be used to produce electricity. Hence, the reliability of electricity
can be improved if the microgrid is in islanded operation. In addition, the
total energy efficiency could be improved by the consideration of all energy
flows in the system. Particularly a heat network could also be considered.

VPPs, Microgrids and Energy Hubs
The combination of the strengths of all three approaches could be the best
way to integrate RES. VPPs allow the participation in electricity markets.
Microgrids can improve the reliability and lead to an efficient energy use.
The energy hub approach allows a holistic view on the energy flows and
hence can develop optimised scenarios of overall energy consumption. If
the above example of the swarm-energy is extended with the microgrid ap-
proach additional possibilities are possible. If nearby CHPs are connected
in a microgrid, they could be used to allow new possibilities of energy sup-
ply. Probably the emergency electricity supply of critical units like hospitals
or data backup centres could be realised with a cluster of the CHP units
organised as microgrid. In figure 5.1 the example of the CHP network with
additional district heat connections is presented. The yellow square repre-
sents the microgrid which supports the hospital with electricity back-up and

Figure 5.1: Network of CHP units. Due to the holistic view of the hub
approach an additional district heat network could be useful. The consid-
eration of a microgrid gives additional branches of business, like electricity
backup and heat supply for a hospital.
CHAPTER 5. DISCUSSION                                                       31

5.2     Conclusion
Regarding the integration of RES the three concepts follow different ap-
proaches, which do not compete against each other. The highest potentials
for microgrids are on islands, remote regions, in places where high reliability
is demanded, like hospitals, back-up centres or big commercial buildings and
in countries without a meshed grid. VPPs can be used mainly to give flexi-
ble loads and small hydro power plants or maybe other DG units an energy
market access. Weather dependent RES will probably not be competitive at
the market yet. The integration of microgrids in a VPP is already an issue.
Using the energy hub approach to improve VPPs or microgrids has not been
considered yet. Thereby, the holistic view of the energy hub approach could
be a benefit for both, microgrids and VPPs or a combination of them. The
energy hub approach is not focused on a specific problem with a dedicated
solution. Such as dealing with electrical power variability of weather depen-
dant RES through an implementation of a battery bank. It is more to start
with the formulation of a conceptional modelling and analysis framework.
All energy inputs, outputs, flows and conversion possibilities are identified,
and afterwards holistic solutions will be searched. This procedure could re-
sult in new unexpected scenarios. For example, for the above problem, a gas
station could be used as storage device to balance electrical power variability
together with the heating CHP units in nearby households.
All three concepts have in common, that the integration of RES needs ICT
in the distribution grid. Hence, the ”fit and forget” approach is disused and
a new task is to develop adequate ICT.

 [1] Commission of the European Communities. Renewable Energy Road
     Map. 2007.
 [2] D. Pudjianto, C. Ramsay, and G. Strbac. Microgrids and virtual power
     plants: concepts to support the integration of distributed energy re-
     sources. IMechE, 222, 2008.
 [3] EPEX. EPEX Produktbrosch¨re Strom. page 5, 2009.
 [4] M. Schmitt. Virtuelle Kraftwerke - Vorstellung des Konzepts des
     Virtuellen Kraftwerks und Beurteilung des heutigen Entwicklungs-
     standes. 2009.
 [5] D. Pudjianto, C. Ramsay, and G. Strbac. Virtual power plant and
     system integration of distributed energy resources. IET Renew. Power
     Gener., Vol. 1, No. 1, 2007.
 [6] Siemens and RWE Energy. First virtual power plant operated by
     Siemens and RWE Energy on line.
     en/pressrelease, 2008.
 [7] ”FENIX” project web site, available on
 [8] ”LichtBlick” project web site, available on
 [9] ”Microgrids” project web site, available on
[10] H. Iwasaki, Y. Fujioka, H. Maejima, S. Nakamura, Y. Kojima, and
     M. Koshio. Operational Analysis of a Microgrid: The Hachinohe
     Demonstration Project. In Cigre Session C6-109, Paris, France, 2008.
[11] Y. Fujioka, H. Maejima, S. Nakamura, Y. Kojima, M. Okudera, and
     S. Uesaka. Regional Power Grid with Renewable Energy Resources: A
     Demonstrative Project in Hachinohe. In Cigre Session C6-305, Paris,
     France, 2006.
[12] M. Geidl, G. Koeppel, P. Favre-Perrod, B. Kl¨ckl, G. Andersson, and
     K. Fr¨hlich. Energy Hubs for the Future. IEEE power and energy
     magazine, 5(1):24–30, 2007.

BIBLIOGRAPHY                                                              33

[13] 10. Symposium Energieinnovation. Energy Hubs f¨r die urbane En-
     ergieversorgung, 2008.

[14] ”Vision of Future Energy Networks” project web site, available on

[15] Bundestag Germany. Gesetz zur Neuregelung des Rechts der Erneuer-
     baren Energien im Strombereich und zur Anderung damit zusammen-
     h¨ngender Vorschriften. 2008.

[16] A. Dimeas and N. Hatziargyriou. Operation of a Multiagent System for
     Microgrid Control. IEEE Transactions on Power Systems, 20(3), 2005.

[17] P. Kundur, J. Paserba, V. Ajjarapu, G. Andersson, A. Bose,
     C. Canizares, N. Hatziargyriou, D. Hill, A. Stankovic, C. Taylor, T. Van
     Cutsem, and V. Vittal. Definition and Classification of Power System
     Stability. IEEE Transactions on Power Systems, VOL. 19, NO. 2, 2004.

[18] P. Landsbergen. Feasibility, beneficiality, and institutional compatibil-
     ity of a micro-CHP virtual power plant in the Netherlands. Master’s
     thesis, Delft University of Technology, 2009.

[19] S. J. Chatzivasiliadis, N. D. Hatziargyriou, and A. L. Dimeas. Devel-
     opment of an Agent Based Intelligent Control System for Microgrids.
     IEEE, 2008.

[20] G. Koeppel. Reliability Considerations of Future Energy Systems:
     Multi-Carrier Systems and the Effect of Energy Storage. PhD thesis,
     ETH Zurich, 2007.

[21] M. Geidl and G. Andersson. Optimal Coupling of Energy Infrastruc-
     tures. IEEE, 2007.

[22] M. Galus and G. Andersson. Power System Considerations of Plug-In
     Hybrid Electric Vehicles based on a Multi Energy Carrier Model. IEEE,

[23] World Energy Council. Energy Efficiency Policies around the World:
     Review and Evaluation. 2008.

[24] S. Bando and H. Asano. Cost, CO2 Emission, and Primary Energy
     Consumption of a Microgrid. IEEE, 2007.

[25] T. Krause, F. Kienzle, S. Art, and G. Andersson. Maximizing Exergy
     Efficiency in Multi-Carrier Energy Systems. 2009.

[26] M. Geidl and G. Andersson. Optimal Power Flow of Multiple Energy
     Carriers. IEEE Transactions on Power Systems, 22(1), 2007.
BIBLIOGRAPHY                                                         34

[27] M. Geidl. Integrated Modeling and Optimization of Multi-Carrier En-
     ergy Systems. PhD thesis, ETH Zurich, 2007.

[28] T. Yamamoto, T. Takano, Y. Takuma, M. Inoue, and G. Arao. Eval-
     uation of the Reduction in CO2 Emissions by Applying Micro-Grid to
     Home Energy Supply System. Electrical Engineering in Japan, 170(3),

[29] G. Venkataramanan and C. Marnay. A Larger Role for Microgrids.
     IEEE power and energy magazine, 2008.

To top