Published on October 20th, 2016 | by Kyle Field0
Next Kraftwerk Reimagines & Redefines The Electrical Grid With Virtual Power Plants
October 20th, 2016 by Kyle Field
The team at Next Kraftwerke (NK) believes it has the keys to the electrical grid of the future — and is well on the way to bringing that vision to reality in the form of what it likes to call a Virtual Power Plant (VPP). Next Kraftwerke’s VPP is essentially a widely distributed network of medium- and small-scale power-producing and power-consuming units that have been provided with some good old-fashioned Internet of Things (IoT) connectivity that allows them to talk with and respond to the Next Kraftwerke control center.
Delivering Flexibility to Grid Operators … For a Price
Linked together, the mass of units can then be leveraged to provide specific deliverables to the larger electrical grid in meaningful ways that can then be traded on various European energy exchanges — like the EPEX and EEX — on wholesale, spot, and intraday markets. Bundling these units together for trading results in revenue which can then be allocated to the specific units that responded to deliver what the exchange needed. To deliver these services, Next Kraftwerke contracts with independent grid operators, independent power producers, and power consumers.
What does this solution look like for a power generator, power consumer, or power storage facility? It’s very straightforward, actually. NK has developed a single box — the Next Box — that it gets installed at the facility to provide a redundant, secure connection to the power generation/consumption/storage facility controls. The box is installed as part of the contract with NK at a cost of around €5,000.
Where Did Next Kraftwerke Come From?
Next Kraftwerke kicked off in 2009 after a team of like-minded world changers met in the Cologne University PhD program and pulled together what they felt was a viable business plan. The group has since evolved into a team of 120 employees led by Hendrik Sämisch, founder and CEO of Next Kraftwerke. He lays out their vision like this:
“We believe it is possible to completely meet the demand for electricity using renewable energy by 2050. We think in bits and watts: By embracing the full potential of digitalization, we connect thousands of energy-producing and energy-consuming units in our Virtual Power Plant. Our concept paves the way for new economic and reliable-energy possibilities, contributing to a democratized energy-world.”
Where the Rubber Meets the Road (aka, How does this thing work?)
You may be saying, “That sounds great, but why does all of this matter … and to whom (because I don’t know what the heck you’re talking about)?”
Let’s look at a specific scenario across a distributed electrical grid to dig into the details a bit further. A wind farm in northwestern Germany is producing has been getting a good rate for the power being generated. Unfortunately, the wind farm is generating too much power — the grid doesn’t need the generation. The NK solution recognizes this and triggers a biomass facility in the Netherlands to ramp down in order to stabilize generation in the regional grid. The biomass facility ramping down (adding value to the grid) allows the wind farm to keep generating during the period of high wind.
Another quick example: If prices for electricity on the grid go up, the VPP can trigger the release of pumped hydroelectric storage to generate power to take advantage of the high rates much faster than the operator of the pumped hydro facility would be able to on its own … or, conversely, when prices drop, the pumped hydro storage facility would automagically start pumping water up into its reservoir to store the cheap power until rates go back up.
Essentially, the Next Kraftwerke solution bundles production and consumption units together into a virtual power plant that allows them to trade the flexibility of the combined units. Flexibility can mean grid frequency regulation, activating frequency control, power storage, raising or dropping power generation quickly in response to grid changes, or raising or dropping power consumption in response to grid changes.
The 3 “Megatrends”
Assuming you’re on board now, let’s dig into a bit about how this solution evolved. The NK team has only been able to develop this solution as a result of 3 “megatrends” that it is capitalizing on — decentralization, liberalization, and digitization. Decentralization was driven by the famous German Energiewende, which singlehandedly took Germany from around 800 energy-generating units to 1.5 million units.
This same shift pushed towards the liberalization of the energy sector. There had previously only been 1 utility, but that has evolved into around 150 providers of electricity today.
Finally, digitization: Adding an internet connection to energy-generating units (EGUs) has enabled the NK team to tap into the potential of each unit remotely. By controlling them, NK can generate real value to the grid, which it can then share with the owners of the units that create the most value.
It sounds like a complex solution, because it is. It’s the next generation of electrical grid and it is being actively utilized today in Germany from the Next Kraftwerke brain center in Cologne. I had the honor of visiting and chatting with their team as part of a media tour hosted and paid for by Clean Energy Wire, an independent non-profit, non-partisan service for journalists and the interested public that aims to support quality journalism about the energy transition in Germany.
The Web Portal
The solution is rolled into a smooth customer-facing web portal that provides insights to customers as to how the solution is working for them and how much cash they get in return. This amount varies by customer and is determined by the amount of value being added to the overall system. For instance, a 500 kW biomass facility that was willing to be completely flexible with 250 kW of its generation could earn €25–30,000 per year.
Obviously, these are just rough estimates (terms, conditions, and actual cash earned can and will vary), but they should at least serve to convey the fact that working with NK can result in some serious cash for flexible generators/consumers/storage system operators.
The Path Forward
Next Kraftwerke is currently working with over 3,500 units (2,000 MW combined capacity!) in Germany, Poland, Netherlands, Austria, and Belgium — with more countries and units coming online just about everyday. They like to think of themselves as the Uber for the grid, and while it may not sound as sexy as Uber to the average power consumer, it’s shaping up to be a critical component of the next-generation (aka renewable) electrical grid. What’s possibly even more exciting is that 97% of the units in the mix are renewable!