1

AbstractThe future share of distributed generation units is

likely to increase due to political requests as well as to politically
driven subsidies in European and international energy supply
systems. This increase implies a rising impact of the distributed
generation units as well as of distributed storages and concepts of
load management for supply companies. Most of the units are
currently subsidized by governmental feed-in tariffs. As these
subsidies are retrogressive, the necessity of evaluating small
generators as part of the supply system arises. One option of
market participation for dispersed generation is the aggregation
in terms of a "virtual power plant", thus representing one single
generation or demand unit for the market. In this paper, differ-
ent distributed generation, storage and load management options
are presented and an optimization method for simulating a vir-
tual power plant in different markets for electrical energy is
introduced in order to demonstrate the benefits of such a con-
cept. The optimization method is then applied to an exemplary
scenario of a local utility company by aggregating the existing
distributed units in one virtual power plant.

Index TermsDistributed Power Generation, Virtual Power
Plant, Power Generation Planning, Load Management, Cogener-
ation, Thermal Storage Systems, Smart Grids
I. MOTIVATION AND STATE OF RESEARCH
ISTRIBUTED generation units have been proven to be
highly relevant in future energy supply systems, as can be
deduced from various capacity forecasts. According to [1] the
expected capacity of the distributed generation will rise to
more than 40 GW in Europe until 2020.
1
Distributed genera-
tion in this context includes regenerative energy sources as
well as small combined heat and power (CHP) generation
units ranging up to a typical capacity of 20 MW. Due to the
increasing interconnection with information technology, that
is, using so called smart metering technologies, the demand
for energy is also an integral part of distributed generation
systems and can be controlled by using demand side manage-
ment (DSM). Additionally, small energy storages whether for
electricity or for thermal energy are to be included in the sys-
tem, thus providing additional flexibility in distributed genera-
tion systems. Most of these technologies are subsidized by
governmental laws with a feed-in premium, especially in Eu-
rope (see [2], [3]). As most of these premiums are decreasing
over time, distributed units have to participate in the markets
for electrical energy in the future. For this participation, dif-
ferent options can be considered. The combined optimization
of small generation units and storages by a central entity, the
so called energy management system (EMS), at different mar-
kets forms a virtual power plant (VPP) which offers the oppor-

1
The given values do not include renewable generation yet.
tunity of reaching necessary minimum capacities for market
participation in e.g. day ahead or system reserve mar-
kets (Fig. 1). Transaction costs for market participation can
also be reduced.


Fig. 1: Principle of a virtual power plant with EMS

Distributed units and VPPs already have been subject of re-
search in different works with varying contexts. Numerous
researches, such as [4] or [5], focus on the implementation and
real-time operation of EMS for a short time frame. The opera-
tion of single generation technologies or marketing alterna-
tives respectively (see [6]) and grid integration of dispersed
generation (see [7] or [8]) have been widely analyzed as well.
Evaluation of integrating a VPP into an existing portfolio and
simulation of the achievable economic benefits arising from
combined marketing alternatives in a longer time frame has
not been treated sufficiently yet. With this in mind, the present
paper analyzes different technologies of distributed generation
as well as small energy storage systems and application of
DSM (Section II.B). Moreover, marketing options for VPPs
are presented (Section II.C). Following, an optimization meth-
od for the energy generation and trading planning of conven-
tional and distributed units, participating in different markets
for electrical energy is introduced in Section III. In Section IV,
the proposed method is applied to a realistic scenario of a
regional utility company in exemplary investigations. Finally,
the main findings of the paper are summarized (Section V.).
II. SYSTEM MODEL AND ANALYSIS
A. System Components
In this work focus is set on the portfolio of regional supply
or public service companies. Portfolios of such utility compa-
nies usually comprise conventional, large generation units as
well as distributed generators and energy storage options
which are operated in order to cover the aggregated custom-
ers demand for electricity and heat respectively. The system
components considered in this paper are shown in Fig. 2.
Hence, the field of observation includes electrical as well as
thermal loads, wherein the thermal load may be differentiated
in physically independent thermal nodes. Moreover, conven-
tional generation as well as cogeneration units, renewable
energy sources and heat generators are considered. Addition-
ally, the system components are completed by storage systems
for electricity or heat. Restrictions regarding the electrical grid
Virtual Power Plant Market
EMS
Dispatch Optimization and Economic Evaluation
of Distributed Generation in a Virtual Power Plant
A. Schfer, Graduate Student Member, IEEE and A. Moser, Member, IEEE
RWTH Aachen University
Institute of Power Systems and Power Economics

D
2
are not considered, neither are limitations arising from for
example district heating networks .

Fig. 2: System Components

B. Marketing Alternatives of Virtual Power Plants
In general, a variety of different marketing options for VPPs
are possible. In this work, focus is set on the following three
applications. The marketing alternatives are described in the
context of the German regulatory regime, but can also be ap-
plied to other countries with slight modifications.

1) Optimized Load Coverage - Participation in Day Ahead
Markets
The main task of the considered system of a regional supply
company is the coverage of the given load in terms of both
electricity and thermal energy. In order to do so, a cost-effi-
cient coverage is obviously worthwhile, reducing generation
costs and finally end-customers prices. The VPP consisting of
different distributed generators, storages and load management
can be used in order to reduce generation costs. Therefore, the
VPP is to be integrated with the total generation system and to
be operated with the objective of efficient load coverage.
Moreover, by aggregating the different units, necessary mini-
mum capacities for participation in spot markets, especially
the day ahead market exhibited by the power exchange, can be
reached. Hence, additional revenues can be obtained by taking
part in the market for electrical energy. This mode of opera-
tion is especially feasible for units, such as older regenerative
generation units, which cannot participate in fixed feed-in
tariff systems subsidized by the government. In order to allow
incorporation of this marketing alternative, day ahead markets
must be modeled in the optimization method as well as the
participation of the VPP.

2) Participation in Markets for System Reserve
In addition to the day ahead markets, the possibility of par-
ticipating in markets for system reserve is given. System re-
serve is necessary in order to maintain frequency control in a
given control area. Thus, the transmission system opera-
tor (TSO) is responsible for contracting system reserve prod-
ucts. The four German TSOs offer participation in three dif-
ferent markets for system reserve [9].
2
Due to the requirements
regarding the minimum capacity to be provided and minimum
provision time, only the market for tertiary reserve is taken
into account as a marketing alternative for VPPs.
The tertiary reserve market in Germany is organized by six
different products, each representing four subsequent hours of
the day, for which the reserve capacity has to be provided [9].
Minimum capacity is 5 MW. This capacity may also be

2
The markets differ regarding the technical requirements of the participat-
ing units as well as the time within which the reserve energy has to be provid-
ed and for how long the reserve energy must be provided at most.
reached by pooling several small units so that the concept of
the VPP gives distributed generation units the possibility of
participating in this market. In conclusion, markets for system
reserve offer additional revenues for distributed generation
units, but due to product and technical limitations, only the
market for tertiary reserve is to be considered in the optimiza-
tion method.
3) Avoiding of Load Peaks Reduction of Capacity Fees
All units of the VPP as well as the other components in-
cluded in the considered system are connected to the electrical
grid. Usage of the grid is remunerated by grid fees for the
corresponding grid operator. This fee consists of a so called
energy fee and a capacity fee. While the energy fee is paid for
each kWh transmitted by the grid, the capacity fee complies
with the highest load in one single hour extracted by the utility
company from the grid. Therefore, it is paid in /kW and
amounts to 30 /kW [10]. Local generation units as well as
storages and load steering can be used in order to lower the
maximum load and thus reduce the capacity fee. The main
principle of this operation mode is shown in Fig. 3.

Fig. 3: Reduction of load peaks by using virtual power plants

It is essential that all of the participating units are locally
concentrated and not geographically widespread, as they have
to be connected to the same grid, in order to reduce the refer-
ring fee. In order to achieve the most efficient operation of the
portfolio, all of the marketing alternatives must be considered
in the optimization of the contribution margin at the same
time.
C. Modeling of System Components

1) Thermal and hydraulic generation units
Conventional thermal and hydraulic units might also be part
of the portfolio considered. Modeling of these components is
standard procedure in energy generation and trading planning
whilst the respective models using dynamic programming and
network flows / successive linear programming are also ap-
plied in this work [11].

2) Cogeneration Units
The system considered has an electrical, but also a thermal
load to be covered. CHP units can produce electrical energy
and heat at the same time by using either natural gas or an-
other primary energy source with a high efficiency of up
to 90% [12]. However, the ratio of heat to power is restricted
by the operating diagram of each unit. A typical operating
diagram for a modulating CHP unit is given in Fig. 4 with

and

representing the minimum and maximum elec-

trical power output and

and

the referring minimum

and maximum thermal output. It is obvious that due to the
operating diagram a constant ratio of heat and electrical power
must be maintained. Hence, the model for conventional ther-
mal generation units has to be extended by a two-dimensional
operating diagram in order to allow representation of CHP
Capacity
Fees
Therm. Storage
E
l
e
c
t
r
i
c
i
t
y
T
h
e
r
m
a
l
N
o
d
e
1
Renewable
Generation
Day Ahead
Market
Reserve
Markets
Conventional
Generation
Storage
Electrical Load
CHP CHP CHP
Thermal Storage Therm. Generation
Thermal
Load
Thermal
Load
T
h
e
r
m
a
l
N
o
d
e
N

Minimum
Power of
the VPP
MWh
h
Load Curve without Virtual Power Plant
Load Curve using Virtual Power Plant for Peak Load Reduction
G
r
i
d
L
o
a
d
Billing Period
Reduction of load peak
}
3
units. Additionally, each CHP has to be connected to one
single thermal node and the referring thermal load.
Fig. 4: Exemplary operating diagram of a CHP unit

3) Renewable Generation Units
Renewable generation units comprise several generation
technologies. In this work, only photovoltaic cells, wind tur-
bines, biomass plants and run-of-river generation are consid-
ered. Herein, biomass plants are modeled as conventional
generation units with a limited number of full-load hours of
5000 h/a due to primary energy restrictions. Run-of-river gen-
eration is modeled analogically to large scale hydraulic stor-
ages, with consideration of the fluctuating inflows and the
limited storage capacity. Photovoltaic cells and wind turbines
represent intermittent energy generators. Hence, the intermit-
tent character of these technologies has to be considered as
well as the minimum power output of these units. Dynamic
programming is applied with the adjusted maximum power
output of each unit for each single hour depending on the solar
radiation or the wind speed, respectively. For all of the renew-
able generation units, the ability of participating in the market
for system reserve is assumed, when integrated in a VPP.

4) Thermal Energy Storages
As each CHP unit is connected to a certain thermal load, the
units would be in a heat-operated mode with only very limited
flexibility without additional arrangements. In order to in-
crease the flexibility and allow participation of
CHP units in the day ahead or system reserve market, thermal
energy storages are introduced into the model. Each thermal
energy storage system is connected to one thermal node and
provides the ability of decoupling heat generation and con-
sumption, thus increasing the units degrees of freedom in
operation. Technically speaking there is a number of options
possible with regards to storing thermal energy [13].

Fig. 5: 3-layer model for thermal energy storages

However, in terms of feasibility and for small-scale applica-
tions, only sensible heat storages, especially hot water storag-
es, are considered. Hence, one focus of this work is set on hot
water storages. In contrast to hydraulic storages, losses are not
negligible in thermal energy storages and can amount to
7%/day and must be modeled accordingly [14]. A layer model
is chosen for simulating the energy flows and losses in the
storage [14], [15] (see Fig. 5). The model represents a linear
optimization problem, in which thermal energy can be stored
by shifting it along the arcs from one layer to another and
between the time intervals. This model can be solved by ap-
plying adjusted network flow programming [16], [17].


5) Demand Side Management
DSM describes the adjustment of the load by reducing, in-
creasing or shifting consumption from one time interval to
another. Thus, the load curve can be flattened in order to gain
a more steady utilization of generation units or decrease sup-
ply costs. The potential for DSM has been analyzed in several
papers and could be determined to up to 14% of the total
load [18], [19]. In Fig. 6 a run-of-day schedule of the potential
load management depending on the actual load is given.

Fig. 6: Potential of DSM in different economy sectors

Load management cannot only be applied for reducing sup-
ply costs, but is also possible to provide additional system
reserve. Moreover, DSM can contribute to reducing load
peaks by shifting consumption to adjacent time intervals.
Thus, DSM can participate in all three marketing alternatives
of VPPs. For modeling DSM it is assumed that load can be
influenced continuously. Hence, a linear optimization model
according to [20] is chosen.
III. OPTIMIZATION METHOD
Generally, planning of energy generation and trading is a
highly complex optimization problem including not only non-
linear and integer decisions, such as minimum power output of
power plants, but also inter-temporal time dependencies, that
is, under consideration of storage systems or energy con-
straints.
Objective function of the optimization is the minimization
of the total costs. Costs occur due to generation costs of ther-
mal or CHP units buying at the day ahead market or capacity
fees, whereas revenues can be realized by selling at the day
ahead or system reserve market or by feed-in tariffs. Con-
straints are the technical ones from the single sub-systems as
well as the coverage of both electrical and thermal consump-
tion for each thermal node and system reserve, if applicable.
Closed-loop solving by application of Mixed Integer Quad-
ratic Programming with commercial solvers to large problems
like energy generation and trading planning usually leads to
very long, hardly manageable computing times and demands
regarding main memory [21]. In contrast, decomposition
methods are practically approved and offer manageable times
of computing and good precision by dividing the actual main
problem into smaller sub-problems, which can be solved iter-
atively by coordinating the individual solutions [22]. All non-
Equation of Continuity
X
t,in
X
t+1,Layer
Losses
X
t,Layer+1
Time

2
T

1
n
1
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Drain
Source

0%
5%
10%
15%
1 3 5 7 9 11 13 15 17 19 21 23
Haushalte Gewerbe Industrie
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P
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Time
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Households Industry Commerce
E
l
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w
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Thermal Power
4
linear characteristics and integer decisions of each of the dif-
ferent components and markets can also be considered in this
approach. For the decomposition approach, a Lagrange Relax-
ation is applied, splitting the problem into sub problems of the
referring system components, such as thermal and hydraulic
plants. The method described is based on the tool presented
in [11] and [23]. In order to model distributed units and VPPs,
the method is extended by the demand for thermal energy and
CHP units as well as by the explicit modeling of intermittent
generation units. Moreover, the DSM is added to the method
as well as the consideration of capacity fees (cf. Fig. 7).

Fig. 7: Optimization Method for Energy Generation and Trading

3The Lagrange Relaxation is applied as an iterative optimi-
zation. Herein, the whole problem is divided into sub-
problems of the different system components according
to Fig. 7. Hence, each sub-system can be optimized separately
with the best fitting optimization algorithm, such as dynamic
or quadratic programming. Capacity constraints can be con-
sidered implicitly by limiting the maximum supply from the
day ahead market in this stage of the optimization.
In order to gain compliance with the cross-system con-
straints of the electrical and thermal loads and system reserve,
these constraints are coordinated by Lagrange multipliers.
Electric load and system reserve are coordinated by the La-
grange-coordinators

and

in each time interval t. For each

thermal node i compliance with the load constraint is ensured
by the multiplier

. The referring constraints are relaxed into

the objective function and multiplied with the Lagrange-coor-
dinator. Thus, non-compliance of the constraint is penalized
and deteriorates the modified objective function. After each
iteration the load and reserve constraints are balanced and the
referring Lagrange-coordinators are updated using a sub gra-
dient method in order to gain convergence towards the opti-
mum [22].
4
After the methods stage of decomposition of the
whole optimization problem, it cannot be ensured that all
cross-system constraints are in compliance for each time inter-
val of the given period. Hence, in a final closed-loop formula-
tion (Hydrothermal energy dispatch) the start-up decisions
from the decomposition are taken into account, thus eliminat-
ing all integer decisions and transforming the problem into a
continuous quadratic problem. Following this, the entire sys-
tem with all markets and components is solved by quadratic
programming. All of the distributed components have been

3
With LP for Linear, QP for Quadratic and DP for Dynamic Programming
4
I.e.,

is increased if

exceeds the current power output of all gen-

eration units in time interval t in order to give a higher incentive for pro-
ducing electrical energy.

and

are updated accordingly.

considered at this stage whilst the optimization of the capacity
fees is also formulated explicitly as an additional constraint.
Results of the optimization method are the total costs of the
system. Moreover, the hourly dispatch for each generation and
storage unit as well as the commitment of DSM can be deter-
mined.
IV. EXEMPLARY INVESTIGATIONS
A. Data Model
In order to show the additional value of integrating distrib-
uted units into an existing portfolio, different investigations on
the realistic portfolio of a close to reality regional utility com-
pany are conducted. The chosen portfolio represents a typical
German local supply company which is suitable for the im-
plementation of a virtual power plant. Moreover, the genera-
tion stack includes conventional plants as well as CHP and
renewable units. This variety provides the opportunity of ap-
plying all of the described marketing alternatives and allows
deduction of benefits arising from different combinations of
distributed units. The year 2010 is simulated in an hourly time
frame. Hence, all of the market prices as well as feed-in time
series refer to this year based on the data given in [9], [24].
The main task is to cover the given hourly consumer load
which amounts to a total of 1,200 GWh/a with a peak load of
225 MW [25]. The conventional generation stack as well as
the distributed units are shown in Table I. For the renewable
energy sources an immediate participation in the day ahead
market without additional feed-in premium is applied.

TABLE I
SUMMARY OF THE SYSTEM CONSIDERED IN THE INVESTIGATIONS [26] [28]
Units Key factors
Conven-
tional Units
- Combined-Cycle Gas Turbine with

- Two gas turbines with

and

CHP - Local district heating, two thermal nodes each covered by a
CHP unit with

- Micro-CHP with an aggregated capacity of

- Aggregated thermal consumption
Renewable
Energy
Sources
(RES)
- 12 biomass power stations, aggr. capacity of

- 3 small run-of-river power stations, aggr. capacity of

- Photovoltaic units, modeled aggr. with a capacity of

- 10 wind turbine power stations, modeled individually, aggre-
gated capacity

DSM - Consideration of load steering with daily and seasonal pro-
file, max. shifting capacity of 14% of the load, cf. [18]

Besides covering the load with the existing generation units,
it is possible to buy or sell electrical energy at the day ahead
market. Moreover, participation in the market for tertiary
reserve is possible. Feed-in of CHP units is not only remuner-
ated by the revenues from the market, in addition a govern-
mental premium (5.11 ct/kWh) is paid for each kWh [29].
B. Schedule of Investigation
In order to show the additional value of a VPP in a portfolio
and the benefit of different control strategies, several investi-
gations are conducted. The investigations successively in-
crease the units participating in the VPP and cover different
marketing options. A total of nine simulations are accom-
plished. The first investigations only consider participation in
the day ahead market (Investigation 1 4). Within this part,
the VPP initially (Investigation 1) only consists of the conven-
Hydrothermal energy dispatch
Determination of start-up decisions
Lagrange-coordinators ,
Renewables
DP,
Network Flow
Thermal
storages
Network Flow
Hydraulic
units
Network Flow
Reserve
markets
QP
Day ahead
market
Analytical
Thermal
units
DP
CHP
DP
DSM
LP
Input data
- Generation units and storages: Technical, economic parameters, feed-in time series for
renewables, parameters for remuneration model of renewables
- Market data: Hourly prices for day ahead and tertiary reserve market
- Load: Time series of electrical load and thermal load for each node,
parameters for DSM
Output data
5
tional portfolio, whereas the CHP and renewable energy
sources are optimized individually. Moreover, CHP are opti-
mized in a heat-operated mode, directly following the given
hourly demand for heat in the referring thermal node with no
thermal storages considered. The renewable energy sources
are simulated under a direct marketing regime, obtaining the
revenues from the spot market. In the second step, the CHP
are included in the VPP and optimized with a power-operated
mode (Investigation 2). Subsequently, the VPP is again in-
creased by also including the renewable energy sources in the
VPP and the combined optimization so that all generation
units are participating in the VPP and covering the demand
cost-efficient (Investigation 3). In Investigation 4, additionally
DSM is included in the portfolio, leading to an increased de-
gree of flexibility. In order to show the potential for additional
revenues of the combined market participation, the same in-
vestigations are conducted including the tertiary reserve mar-
ket (Investigations 5 8). Obviously reserve marketing is not
possible for the units not included in the VPP in each stage of
the simulation. Finally, in Investigation 9, the additional value
of including capacity fees of 28.9 /kW in the objective func-
tion of the optimization is evaluated [10].
C. Results
In order to determine the additional value of VPPs as well
as of combined participation in different markets, the total
costs for covering the given load are evaluated. For reasons of
comparability, the costs of all units of the portfolio are consid-
ered rather than only the costs of the units included in the
optimization of the VPP. The resulting costs for Investiga-
tions 1 - 4 are shown in Fig. 8. In the first investigation, not
including any of the distributed units in the VPP, total costs
for load coverage of 40.84 million Euros per year (Mio. /a)
are calculated. It can be observed that the costs for generation
are the main component of the total costs. In Investigation 2
the advantage of a power-operated mode of CHP including
thermal storages becomes obvious, as the total costs can be
decreased by 0.34 Mio. /a. The cost reduction is mainly driv-
en by an increased operation of the CHP resulting in higher
CHP premiums and reduced day ahead market costs, whereas
the generation costs rise slightly.

Fig. 8: Resulting cost components in Investigations 1 - 4

Integration of renewable energy sources in sole day ahead
marketing has no significant impact on the total costs. This is
obvious, as direct marketing of the renewable energy sources
is considered. Thus, the day ahead market decouples the dif-
ferent system components, as no system-coupling constraints
can be observed. Hence, the integration of the renewable units
does not lead to a reduction in the overall costs, but different
operation points of the plants can be observed, resulting in a
changed cost structure with higher participation in the day
ahead market. The increased flexibility of the load, provided
by a consideration of additional DSM, leads to an additional
cost reduction of approximately 1 Mio. /a. Thus, the total
cost reduction of integrating the distributed units in the portfo-
lio as a VPP amounts to 1.4 Mio. /a or 3.5 %/a, respectively.
The total costs resulting from the simulation of additional
participation in the tertiary reserve market for the VPP are
pictured in Fig. 9, with the total costs of Investigation 1 in
comparison. The positive effect of additional reserve market
participation is obvious even in the case of single optimiza-
tion, in which none of the additional distributed units can
participate in the market for system reserve.

Fig. 9: Resulting cost components in Investigations 5 8

Two major effects can be observed. At first, it can be
shown that all stages of integration of distributed units now
lead to reduced total costs. Moreover, the integration of re-
newable energy sources has an impact, since the tertiary re-
serve market provides a system coupling and the units can
give a contribution to the total portfolio. In addition, the gen-
eration costs are increased, mainly due to participation in
negative reserve markets, but hardly any energy has to be
bought from the day ahead market thus resulting in negative
cost components (equaling earnings) in Investigations 5 8.
The total savings amount to 2.5 Mio. /a or 6.1 %/a in Investi-
gation 8 compared to the base case of Investigation 1. Hence,
the VPP proves to be worthwhile in cases of combined spot
and reserve market participation.

Fig. 10: Resulting cost components in Investigations 8 - 9


Investigation 9 is conducted in order to show the benefits
arising from the consideration of capacity fees in the optimiza-
tion. Apart from this fee, Investigation 9 resembles Investiga-
tion 8. In Fig 10 the resulting costs are shown in comparison
-5
0
5
10
Investigation 1 Investigation 2 Investigation 3 Investigation 4
Generation Costs Day Ahead Market
CHP Premium Total Costs
Mio.
a
T
o
t
a
l

C
o
s
t
s
40
45
-5
0
5
10
Investigation 1 Investigation 5 Investigation 6 Investigation 7 Investigation 8
Generation Costs Day Ahead Market CHP Premium
Tertiary Reserve Total Costs
Mio.
a
T
o
t
a
l

C
o
s
t
s
40
45
-5
0
5
10
15
Investigation 8 Investigation 9
Generation Costs Day Ahead Market CHP Premium
Tertiary Reserve Capacity Fee Total Costs
Mio.
a
T
o
t
a
l

C
o
s
t
s
50
40
6
to the values obtained in Investigation 8. For reasons of com-
parability, the capacity fee has been calculated ex-post for
Investigation 8, thus not constituting part of the optimization
itself. The results show that the highest load peak occurring
can be reduced significantly from 219.2 MW to 141.6 MW by
including the referring fee into the optimization. Here, not
only the generation units but also DSM has a major contribu-
tion to the reduction. The savings over compensate the de-
creased earnings from CHP premium, day ahead market par-
ticipation and tertiary reserve marketing by far, leading to a
saving of 1.77 Mio. /a compared to Investigation 8 with ex
post calculated capacity fees. Compared to Investiga-
tion 1, 9.1%/a can be saved.
V. CONCLUSION
Distributed generation will become a significant component
of energy systems in the future. This increase, in combination
with reducing feed-in tariffs, implies the need for new mar-
keting options of distributed units. In this paper, the aggrega-
tion of small generation and storage units as well as concepts
for DSM to one single entity, a VPP, have been proposed. For
marketing options, the participation in day ahead or system
reserve markets and the avoidance of load peaks could be
identified. In order to show the benefits of integrating a VPP
in the portfolio of a local utility company, an optimization
method for energy generation and trading planning has been
extended by the consideration of small generation units, stor-
ages, DSM and the referring marketing options.
Exemplary investigations show the additional benefit of
considering small generation and storage units as VPPs. Cost
reductions of up to 9.1%/a can be observed when applying all
of the proposed market participations. Of particular note is the
fact that the combination of different marketing options turns
out to be promising, whereas single spot marketing has only
minor effects on the total costs. Moreover, the change from
heat-operated to power-operated CHP units and the integration
of the load as an active part by means of DSM have a signifi-
cant impact on the costs. Hence, VPPs can contribute to an
efficient and sustainable future energy supply.
VI. REFERENCES
[1] AT Kearney, 2020: Megatrends in der Energiewirtschaft, 2007 [Online]
Available: http://www.atkearney.de/
[2] Federal Ministry for the Environment, Nature Conservation and Nuclear
Safety, Act on granting priority to renewable energy sources (Renewable
Energy Sources Act EEG), Berlin, 2012.
[3] Public Utilities Commission of the State of California, Energy Division
Resolution E-4298, 2009.
[4] Werner, T.G.; Remberg R., Technical, economical and regulatory as-
pects of Virtual Power Plants, Electric Utility Deregulation and Restruc-
turing and Power Technologies, 3
rd
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VII. BIOGRAPHIES
Andreas Schfer was born in Darmstadt, Germany in
1983. He studied Electrical Engineering and Management
at RWTH Aachen where he graduated in 2009 (Dipl.-
Wirt.-Ing.). He gained practical work experience in in-
ternships in Germany and Canada. Since November 2009
he is member of the academic staff of the Institute of
Power Systems and Power Economics at RWTH Aachen,
Germany. He is head of the research group Power
Generation and Energy Trading. Andreas Schfer is graduate student mem-
ber of the IEEE.

Albert Moser was born in Linz am Rhein, Germany. He
received Dipl.-Ing. degree in electrical power engineering
and Ph.D. degree from RWTH Aachen University, in
1991 and 1995 respectively. From 1997 to 2000 he was
product developer for TSO applications with Siemens AG
in Nuremberg, Germany, and Minneapolis, USA. From
2000 to 2009 he was head of business development and
clearing & settlement at European Energy Exchange in
Leipzig, Germany. Since 2009 he is full professor and head of the Institute of
Power Systems and Power Economics at RWTH Aachen University. Prof.
Moser is member of the IEEE.