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A power plant that does not exist

We have been operating a virtual power plant (VPP) in Hungary since 2013. A successful model that we intend to roll out to other countries.

“The story is quickly told. After the Hungarian government decided to discontinue its subsidised tariff for combined heat and power (CHP) plants in 2012, Alpiq immediately stepped in by creating the infrastructure that allows power plants to be pooled,” says Péter Vámos, Head of Origination Hungary, summarising the origins of our virtual power plant (VPP). Currently, Alpiq’s VPP bundles 13 facilities with an installed capacity that is close to that of a smaller CCGT gas turbine. Primarily, Alpiq uses the VPP to offer balancing energy and maintain reserve capacities for MAVIR, the operator of the Hungarian transmission grid. Since 1 January 2013, we have been using the VPP to offer MAVIR automatic frequency restoration reserves (aFRR) and manual frequency restoration reserves (mFRR), and since 2016 also frequency containment reserves (FCR). 

In collaboration with an external engineering service provider, Péter and his team developed their own software that uses algorithms to control the pooled facilities in real time and with maximum reliability. “The main challenge was, and still is, to meet the high standards of the grid operator in terms of response time and accuracy,” Péter explains. After all, what is at stake is the stability of the country’s power system. The cumulative flexibility of the combined heat and power capacities of our VPP is ideally suited for the provision of balancing power. “Since ancillary services in Hungary currently provide attractive financial opportunities the competition is very strong,” Péter says. In spite of the challenging market environment with many competitors, Alpiq in Hungary has succeeded in establishing VPP operations. A team of five at the dispatch centre ensures around-the-clock operation in two shifts. Due to its success, the business model is currently also being rolled out to other CESEE countries where legislations and market opportunities allow that. “Both the grid operator and the facility operators are highly satisfied with our services,” says Péter, visibly proud of his team’s performance and the success of the VPP. New plants can be integrated at any time, and from a technological perspective, the VPP has no upper capacity limits. 

The whole is more than the sum of its parts

A virtual power plant is a pool of smaller power plants, generation units and controllable power consumers. Decentralised generation units are interconnected in such a way that they behave like a single large plant. A VPP allows balancing capacities and energy to be offered on the ancillary services market and electricity to be traded directly on the forward, spot and intraday markets. Alpiq handles both: the Hungarian office sells the capacity and balancing energy to the TSO and Alpiq trades the generated and purchased energy. If the maximum capacity is not contracted by the grid operator, the VPP can also be used for the international portfolio and cross-border trading.

“A VPP acts towards the grid operator as if it were a single large power plant. This means that the grid operator no longer has to individually communicate with a variety of smaller plant operators and control the signals of all the facilities. There is only one contractual partner that bears the responsibility vis-a-vis the grid operator. VPPs offer higher flexibility with lower must-run capacities and thanks to the dispersed asset locations, they also allow the grid operator to decrease network losses.”


Péter Vámos
Head of Origination Hungary