Strengthening Grid Resilience and Green Energy Integration with VPP

By Xin-En Wu, Mei-Hsu Shih

AggrEnergy Inc., focused on energy services, leverages its innovative Energy as a Service (EaaS) model as its core competitive advantage. This model integrates real-time dispatch, machine learning, and AI technologies to establish a comprehensive Virtual Power Plant (VPP) platform, aimed at enhancing renewable energy penetration and grid stability.

AggrEnergy's Chief Strategy Officer, Brian Huang, and CEO, Vincent Chiang, worked together at 3M over a decade ago,. After pursuing different paths in various industries, they reunited at a previous company to develop new business models for energy storage. With the opening of Taiwan's power market, they decided to co-found AggrEnergy, with a primary vision of aggregating distributed resources to achieve a VPP and promote sustainable development.

Huang emphasized the importance during the interview of the amendments to The Electricity Act in promoting Energy Storage Systems (ESS) and Demand Response (DR). He also highlighted the current challenges and provided recommendations for Taiwan's power development in terms of technology and management.

(From left) Vincent Chiang, CEO of AggrEnergy｜Brian Huang, Chief Strategy Officer of AggrEnergy

Addressing Legal Ambiguities in ESS Deployment through The Electricity Act Amendment

The recent amendments to The Electricity Act in Taiwan mark a significant advancement for the energy industry. These revisions specifically emphasize the legal status of Energy Storage Systems (ESS) and Demand Response (DR) measures, addressing previous legal ambiguities and laying a solid foundation for future development.

"Taipower has finally included ESS and DR in the electricity trading platform within The Electricity Act, defining them under 'specific electricity supplier.' This is excellent news because ESS previously had no legal standing. In the past, when we conducted construction in a particular area, local residents or officials would often demand that the responsible authority issue a construction permit. However, since ESS wasn't defined in The Electricity Act, there was no authority to legally process such applications," Huang pointed out the previous challenges.

Huang further explained, "Previously, ESS could only be referenced in the 'Renewable Energy Development Act' and the 'Electric Power Users Equipment Installation Regulations', which lacked the legal weight needed. It was only mentioned in the context of certain large power users or user-side electrical equipment, with no clear regulatory authority overseeing these systems. Now that ESS and DR are defined as 'specific electricity supply' under The Electricity Act, Taipower can legitimately open the power market and reserve capacity to ESS and DR. This is a crucial first step."

Brian Huang, Chief Strategy Officer of AggrEnergy

Tackling Regional Power Supply Imbalance in Taiwan's Grid

Addressing the challenges of regional power supply imbalances in Taiwan's grid, Huang offered insights from an industry perspective. He believes that the supply challenges Taipower currently faces are primarily due to regional transmission bottlenecks. VPP technology, with its faster and more effective deployment compared to traditional power plants, is crucial in alleviating peak demand pressures and enhancing grid stability. The gradual adoption of VPPs by Taipower to address peak demand and increase grid stability also involves the issue of opening up the power market.

"Recently, the Energy Administration released the '2023 National Power Resource Supply and Demand Report,' which highlighted some concerning issues, particularly regional transmission bottlenecks and grid instability. We may not be facing a comprehensive power shortage, but rather regional supply bottlenecks. This calls for the use of Distributed Energy Resources (DERs), such as ESS and DR, to assist traditional generation in stabilizing the grid. As recent reports indicate, we have nearly 13.7 GW of new natural gas power plant projects, many of which face significant uncertainties during environmental impact assessments. If VPPs could be introduced, they would complement these new natural gas power plants, offering faster deployment, lower costs, and minimal environmental impact compared to the 6 to 10 years required for new plant construction. Therefore, it is essential to open the peak pricing power market to allow DERs to play a greater role," said Huang.

Huang emphasized that VPP represents a fully decentralized generation structure, moving away from Taipower's current model of dozens of large generating units to a possible aggregation of three to four hundred smaller units. "As aggregators, we first consolidate these smaller units and then transmit them to Taipower. This structure means that Taipower's communication systems need a more stable and flexible architecture.

"Any anomalies in Taipower's communication system would affect all participants. From my observations, such communication anomalies could occur once or twice a month. Although this may not pose a significant problem for providing ancillary services at present, it could severely impact grid stability if it occurs during peak loads. Taipower must enhance the stability and integrity of its communication systems." Huang noted.

Vincent Chiang, CEO of AggrEnergy

Supporting Grid Stability Through Distributed Energy Resources Ancillary Services

In terms of Reserve Margin, Huang pointed out that Taipower's current Reserve Margin and Percent Operating Reserve indicators do not fully reflect the actual situation. He believes that with the increasing penetration of renewable energy, Taipower will require a larger and more responsive Reserve Margin to address the instability of renewable sources.

Huang also noted that when renewable energy suddenly drops by 500 MW, it presents a significant challenge for Taipower. This is akin to a natural gas unit suddenly failing, requiring Taipower to find alternative energy sources within 10 minutes to fill the gap.

Therefore, Huang emphasized that Taipower needs to increase its technical investments by acquiring more ESS or DR services to handle the uncertainty of renewable energy. This is only in response to fluctuations in renewable energy, as future challenges may include more regional transmission bottlenecks and other power stability issues. "When considering reserve and backup capacity, we should focus on the response capability within a short time frame, as this is crucial for maintaining grid stability."

Regarding the development of Taipower's smart grid system, Huang noted that many data points remain unpublished. He believes Taipower needs to manage and analyze grid data more meticulously, especially concerning regional grid supply and demand balance, to better address future energy challenges.

He also suggested that future grid management should shift from a national perspective to a regional one, due to the significant differences in power demand and generation capacity between the northern and southern regions. This requires more flexible and detailed management approaches.

"There is a regional imbalance in power usage; the north of Taiwan urgently needs to enhance unit resilience. However, as wind and solar power continue to grow, will Taipower's distribution and smart grid framework keep pace with these developments?" Huang stated. AggrEnergy is developing DR services, and if Taipower can provide more precise regional power data, AggrEnergy will be able to tailor its DR services more effectively and align with Taipower's grid conditions, achieving the goal of load-following generation and contributing to a robust and stable energy development in Taiwan.

"I recommend that the revision of The Electricity Act explicitly consider the following points. First, Ancillary Services Trading Platform must adequately consider grid safety by conducting grid security analyses to enhance grid resilience. Second, based on these analyses, national and regional node safety and congestion conditions should be considered, with detailed regulations on unit dispatch formulated by the regulatory authority. Third, the ancillary services platform should base its transactions on system needs and safety planning, with a market fairness mechanism developed in collaboration with market participants, trade associations, and experts," Huang emphasized.