At a shopping mall in heat wave-hit Jiangsu province, customers recently moved about comfortably as air conditioners continuously readjusted their electrical loads to ensure grid stability during peak hours.

This is a typical scenario demonstrating how a virtual power plant works. With scorching weather lingering and economic activity picking up, virtual power plants are gathering steam in China as it seeks ways to address the increasing electricity demand.

How it works

"Virtual power plants are not really for generating electricity, but are systems for managing energy," said Yang Kun, executive president of the China Electricity Council.

"Installed in heavy power consumers such as factories, they control electrical appliances, including air conditioners and lights. Without affecting normal operations, they help maintain the balance of electrical supply and demand through accurate power management," Yang said.

Traditionally, a city would build more power plants to address power shortages. Although able to increase peak-hour supply, expanded capacity may stay idle during off-peak hours, which can be for extended periods.

A virtual power plant, by comparison, aims at cutting electricity usage when supply is insufficient, thereby stabilizing electricity operations on the demand side.

Yang added that virtual power plants can also play a vital part in China's green energy shift. They facilitate distributed energy resource interconnectivity and maximize the utilization of renewable electricity, amid national efforts to boost clean, low-carbon grid transformation.

China set about piloting virtual power plants in the 2016-20 period and has placed continued efforts on promoting their utilization. For instance, Shanghai launched a project linking commercial buildings around its bustling city center. State Grid's Hebei province subsidiary put a similar program into operation in 2019 to shore up the grid system for the 2022 Beijing Winter Olympics.

What to expect

Although at a preliminary stage of development, virtual power plants are expected to enjoy opportunities from China's carbon-cutting goals and thriving renewable energy industry, said Wang Peng, a researcher at North China Electric Power University.

China has announced that it will strive to peak carbon emissions by 2030 and achieve carbon neutrality by 2060.

Yang said virtual power plants will benefit from the rapid development of electric vehicles, energy storage and microgrids in the country. By aggregating these resources, virtual power plants can get both factories and citizens involved in building an energy-sharing network.

Policy incentives have also fallen into place. In its action plan for peaking CO2 emissions by 2030, the country vows to improve the "comprehensive adjustment capability of the electricity system" and encourage participation of virtual power plants in systemic power adjustments.

Earlier this year, the development of virtual power plants was incorporated into the country's five-year plan for building a modern energy system. It is also featured in the energy development outlines as well as carbon-neutrality schemes of over 10 provincial-level regions, including Beijing, Tianjin and Shanghai.