Operational experiences

Overview of the characteristics of the operation of a small power plant within the Virtual Power Plant 

Starting in the mid-1990s, energy in Hungary was predominantly produced with gas engines or gas turbines (CHP). The reason that gas engines became attractive was because, in addition to the technology’s energy efficiency, the income that they generated through the Feed-in Tariff System of compulsory off-take ensured return on investments. After January 1st 2010 however, the state-supported Feed-in Tariff System was gradually phased out with regards to gas engines in industrial settings and engines supplying district heating service providers (June 30 2011), thus putting in jeopardy the continued existence of only recently established decentralized energy producers, the operation of gas engines, and their ability to generate revenue and returns.

VPP’s Virtual Power Plant offered a rapid, reliable, and effective response to the situation following to the Feed-in Tariff System , first in Hungary. However, cooperation within the framework of the Virtual Power Plant as well as the necessity of continuously adapting to changing market conditions requires that small-scale power plants take a new approach to operations compared to the feed-in tariff era.

Individual operational experiences in this respect can be summarized as follows:

  1. 24/7 monitoring: VPP’s Virtual Power Plant operates around the clock, every day of the year. Thus, the first and most important difference from operations under the Feed-in Tariff System is that plants have to provide non-stop, 24-hour a day supervision in order to be able to provide quality system-level and market services. At VPP’s Control Centre, there are two dispatchers and one supervisor on active duty at all times.

  2. Smart Unit: Because the small-scale power plants are located separately from one another and are linked to the Virtual Power Plant’s Control Centre through an IT system, each small-scale power plant connected to the Virtual Power Plant has to install a local control system: a Smart Unit. This Unit forwards production and operational data to the Virtual Power Plant and receives instructions from the Control Centre, which it uses to manage the production of plants in keeping with real-time market demands.

  3. Automated production management: The Virtual Power Plant is made up of actual small-scale power plants, but on the market, it appears as a single large plant with a complex schedule. In order to meet this schedule however, it does not always need the production of all the small-scale power plants. For this reason, the Virtual Power Plant manages their production in accordance with real-time market demands. The complex IT structure operating in the background of the Virtual Power Plant automatically adjusts the production of small-scale power plants taking into account local heat and power demands as well as which plants can be operated most economically at that given time. The Virtual Power Plant also allows for dispatchers to intervene manually if necessary.

  4. Real-time energy trading: Another implication of real-time energy trading is that it is not the small-scale power plants themselves who decide how much energy to produce and when. Production is always managed by the Virtual Power Plant in accordance with real-time consumer demand. The Virtual Power Plant’s output is determined in function of real-time consumer demand, the capacity obtained by VPP on the system-level regulating market, whether it is taking part in regulation on that given day, as well as the fluctuating prices on the Hungarian Power Exchange.

  5. Reduced capacity utilization, high capacity fees: Compared to operations under Feed-in Tariff System of compulsory off-take, taking part in regulation results in a lower utilization of small-scale power plants’ capacity (see Figure 1). VPP, by offering high capacity fees and premium energy fees, compensates small power plants for this drop in capacity utilization and also ensures their long-term viability.

  6. Varying load: The new market environment – which has taken the place of the former system of set output requirements – demands a greater level of flexibility from small-scale power plants. Real-time energy trading, simultaneously meeting the needs of multiple markets, and participation in the system-level services market results in a considerable variation in load. A great advantage of decentralized energy production is that gas engines are capable of handling sudden and protracted changes in load, even when changes contrary to the schedule are required in as little as 15 minutes. Figure 2 clearly shows the difference between operations based on set output under the Feed-in Tariff System and operations as part of the Virtual Power Plant.

    When producing energy to meet a varying load, one consequence is that engines are started up several times a day, contrary to under the old system, when they were only started once daily. In order to ensure optimal operations, VPP has implemented a number of improvements since its beginnings. Testing and consultations with gas engine manufacturers showed that frequent engine starts could be a reliable alternative to idling the engines for short periods of time. The engines spent no more than 60 hours/month idling (Figure 3), which has only a minimal impact on engine maintenance costs.



    Figure 4 tracks how, with engine idling, the number of engine starts per day has been declining.

  7. Increase of gradient of gas engines: The gradient of engines, or how quickly they can change loads, was not necessarily used to its full potential under the compulsory off-take system. Not all the engine settings were conducive to making the engine reach its peak output as quickly as possible. In consultation with gas engine manufacturers, VPP undertook a series of tests to see how the gradient of each type of gas engine could be increased and how to reduce their restarting time after a shutdown. With these developments and new settings, VPP has succeeded in making engines react more quickly and accurately to schedules issued by the TSO. Figure 5 shows how engine reaction time has dropped from year to year.


With its solutions and developments detailed above, the VPP Virtual Power Plant is not only the first virtual power plant on Hungary’s energy market, but its performance is currently also one of the most accurate and punctual on the market. Under Hungary’s current free market conditions, VPP’s business and technology model, complex sales and production management services have not been able to bring back to small power plants the revenues and production volumes that they had under the old compulsory off-take system. However, what the company has succeeded in doing is helping small-scale power plants weather these economic difficulties by offering them prices well above market averages, and thus also long-term sustainability.