Advancing Virtual Power Plant Operations for Sustainable Energy Development

By Xin-En Wu, Mei-Hsu Shih

e-Formula Technologies (hereafter referred to as e-Formula), founded in 2007, is committed to providing a diverse range of services, including energy management and storage solutions, IoT integrated solutions, cloud data center planning and construction, and high-end information and communication equipment maintenance. The company places a strong emphasis on improving energy efficiency, using energy-saving technologies to help clients achieve carbon neutrality and sustainable development goals. e-Formula is also the first company in Asia to obtain energy-saving insurance. Its comprehensive energy management system offers a one-stop solution that encompasses energy-saving, carbon management, and green energy integration services. In collaboration with multiple ERP companies and accounting firms, e-Formula provides carbon verification services, helping clients meet RE100 commitments and ESG carbon neutrality goals.

Peter Chang, Chairman of e-Formula Technologies

The Energy Market Must Align with Sustainability Goals

"When discussing the energy market, it must be closely aligned with the goal of planetary sustainability. Without the objective of earth's sustainability, the demand for energy transition would be minimal. In other words, without the goals of carbon neutrality and net-zero emissions, there would be no need for energy transition. Therefore, we should view issues from this broader framework to set our targets and not deviate from our original intent," said Peter Chang, Chairman of e-Formula Technologies, as he explored the direction of the energy market from a global sustainability perspective.

Chang believes that cost and business opportunities are closely linked, and it is unrealistic to rely solely on the government or Taipower to solve energy issues. The development of the energy transition market should be driven by demand, combining market needs with technological innovation. Only then can the sustainable development of the energy transition market be truly advanced.

He also noted that smart energy is becoming crucial in the trend toward distributed energy. The digital transformation of energy is inevitable; while energy itself is not a new technology, integrating various technologies to enhance energy efficiency is currently the most valuable aspect. Through digital transformation, energy resources can be better managed, and energy usage efficiency can be improved.

Enhancing Behind-the-Meter Equipment to Boost Energy Efficiency Potential

"If Taiwan can enhance behind-the-meter equipment (such as Virtual Power Plants and demand response) upgrades and system optimization, achieving 15% energy savings is not difficult!" stated Chang. He explained that e-Formula primarily focuses on EPC (Engineering, Procurement, and Construction) projects, particularly in energy-saving EPC. Through energy-saving technologies, e-Formula has found that some companies can achieve 10% to 15% energy savings, representing significant baseload power resources. He also discovered that improving behind-the-meter power quality has great potential, enhancing efficiency by 8% to 12%. By increasing efforts in behind-the-meter equipment upgrades and system optimization, Taiwan's overall energy-saving potential is substantial. Achieving 15% energy savings is feasible and holds significant implications for Taipower and energy policy advancement.

A more rational approach is needed to address energy issues, solving them simultaneously from both demand and supply perspectives to achieve sustainability goals. "Front-of-the-meter operations are Taipower's responsibility, while behind-the-meter is the responsibility of electricity users," Chang said. He believes that reliance solely on Taipower to meet demand is insufficient; demand-side usage patterns must also be considered. Only then can Taipower effectively implement integrated resources planning (IRP) emphasized by advanced countries, rather than passively meeting all demand with 100% power supply. In other words, many demands are controllable and manageable; the cost of demand response is often far less than the expense of building power plants.

Chang noted that government agencies, such as the Ministry of Economic Affairs (MOEA) and the Industrial Development Administration, currently offer subsidies for replacing outdated equipment and optimizing systems. By improving behind-the-meter power quality and updating energy-consuming equipment, such as optimizing circuit planning, a 15% energy savings can be quickly achieved. This is highly significant for Taipower and can be more directly effective than constructing hydrogen or nuclear power facilities.

"However, when discussing these issues, we often forget that we should consider behind-the-meter distributed power resources from a 'sustainability' perspective. Ideally, we should evaluate long-term effects from the viewpoint of overall societal benefit. Instead, discussions frequently focus on individual short-term interests or rights, which is unfortunate," Chang lamented.

Power Dispatch and Innovative Solutions for Virtual Power Plants

Besides emphasizing that improving behind-the-meter power quality has tangible energy-saving benefits, Chang also discussed the critical aspects of power dispatch for Virtual Power Plants (VPPs) and virtual grids. "The economic logic of energy storage is about storing excess and cheap electricity to be used during peak periods when demand is high and electricity is expensive. However, this has nothing to do with 'energy saving,' because whether it's solar, wind, or traditional generators, the total amount of electricity generated remains unchanged. Even with the operation of VPPs using energy storage systems, the total energy output remains constant. This differs from improving behind-the-meter electricity efficiency. In other words, enhancing behind-the-meter total electricity efficiency by 10% would be meaningful for energy conservation. Hence, we need to focus not only on supply but also on demand, which is currently problematic."

Chang stated, "When discussing power dispatch, our goal is cost-saving. But is current power dispatch really saving costs? If it doesn't, then discussions about VPPs or renewable energy are diverging from viable business models, because power dispatch is essentially a business model. Its only incentive is the ability to store cheap electricity and use it when prices are high. However, the biggest issue Taiwan faces is that electricity prices are too low, so there's no incentive. Additionally, storage costs are too high. Effective power dispatch, especially behind-the-meter dispatch, can address Taipower's peak load and congestion problems in certain areas."

To solve these issues, he also supports introducing innovative concepts such as Vehicle-to-Grid (V2G) or Vehicle-to-Home (V2H). V2G involves regulatory issues both behind and in front of the meter. Taipower approaches this mainly from a risk management perspective, but from a benefits perspective, Taipower should consider finding solutions to mitigate the losses it has already incurred. e-Formula focuses on behind-the-meter operations, which can solve Taipower's supply and demand problems without involving V2G. V2H could be the initial step. This approach can help customers save money and is also significant for Taipower.

Chang gave an example, if Tesla sells electric vehicles and informs customers that buying an EV comes with a charging station, and tells them that the charging station allows charging at night and discharging during peak periods, then customers can achieve cost savings on their electricity bills.

For most people, purchasing energy storage equipment is a major undertaking due to issues like land use, fire safety regulations, and public perception. In areas with concentrated power loads, such as densely populated urban areas, it's often not feasible to deploy or promote such installations. That's the core issue. If automakers tell EV owners that their charging stations can charge cars during off-peak night hours and then use the stored energy when they return home in the afternoon, avoiding higher peak-time electricity costs, customers will feel they are benefiting. This makes the EV not only cost-effective for transportation but also for saving on electricity bills.

Chang remarked, "It's like the example of mobile phones and cameras, which used to be separate devices but are now integrated, and we feel we've gained something. Power dispatch works similarly. The combination of energy storage and electric vehicles can help customers save money at home. This is a simple yet crucial logic. We need to change people's habits so they feel that doing this provides more benefits. This doesn't necessarily require Taipower to invest money; it just requires good policies. For example, the earlier-mentioned behind-the-meter EV demand response operations are very important."

He added, "We have now integrated several behind-the-meter VPP-related industries, allowing them to earn some income through behind-the-meter demand response participation. For us, focusing on behind-the-meter power dispatch collectively results in significant revenue. I hope the TAEDT can also collaborate and divide the work to jointly promote behind-the-meter power dispatch, thereby realizing the initial goal of sustainable development. This way, during off-peak periods, there will be entities storing electricity, and during peak shortages, there will be entities discharging and selling electricity, truly achieving Taipower's intended 'power dispatch' objectives."

Chang emphasized that when discussing energy transition, the business model cannot be overlooked, as the lack of incentives makes it challenging to achieve even the most noble ideals or goals. Power dispatch and energy efficiency are urgent issues. The government must optimize the demand side from an energy-saving perspective while also using power dispatch to help Taipower address supply and demand discrepancies during peak and off-peak periods. These policy measures are already being implemented abroad, and both emphasize that the prerequisite for energy transition is digitalization and sustainability. This 'dual-axis transformation' is similar to carbon emission management.

"Behind-the-meter carbon emission management is also crucial as it can address issues of internal government integration. We can assist in integrating the work of the MOEA and the Environmental Protection Administration (MOENV) while providing services, which is essential to achieving net-zero carbon emission goals," Chang noted. He reminded that the development of the energy market requires consideration of multiple factors, addressing both demand and supply sides simultaneously. By encouraging more prosumers and flexumers to participate in behind-the-meter VPP business models, Taiwan's power market can achieve true sustainable development.