Flex›Virtual Power Plant

Virtual Power Plant

A virtual power plant (VPP) is a cloud-based system that aggregates and coordinates distributed energy resources — batteries, solar panels, EV chargers, heat pumps, backup generators, flexible industrial loads — to operate as a single dispatchable power plant in electricity markets. VPPs are the technological realization of Aggregation.

How it works

A VPP combines three layers:

  1. Physical resources — distributed assets behind customer meters (residential batteries, commercial HVAC, industrial processes, EV fleets)
  2. Digital platform — communication, monitoring, optimization, and market interface software
  3. Market participation — the VPP bids into Balancing Markets, Flexibility Markets, wholesale markets, or provides services under contracts

The VPP operator (an aggregator) uses forecasting and optimization algorithms to decide in real time which resources to activate, balancing grid needs, market prices, and individual customer constraints (e.g., “my EV must be charged by 7 AM”).

VPPs and flexibility

In the Flexibility taxonomy, a VPP is a delivery mechanism rather than a flexibility type:

  • It can provide Demand Response (reducing consumption)
  • It can dispatch Energy Storage (charging/discharging batteries)
  • It can manage distributed generation (curtailing or increasing solar/CHP output)
  • It can combine all three in a single optimized portfolio

This makes VPPs particularly powerful for value stacking — the same portfolio serving multiple markets and products. The Network Code on Demand Response‘s Table of Equivalences formalizes this by allowing prequalification for one product to count toward others. (Source - NC DR Proposal (ENTSO-E and EU DSO Entity, 2024))

EU context

The Clean Energy Package does not use the term “virtual power plant” but establishes the legal foundations that enable them:

  • Independent aggregators can operate without supplier consent (Directive Art. 13)
  • Aggregated demand response and storage participate on equal footing with generation (Regulation Art. 3(j))
  • The NC DR’s Service Providing Group (SPG) concept is the regulatory equivalent of a VPP — CUs aggregated across multiple connection points into a single market-participating entity

Swedish VPPs in practice

CheckWatt AB is the leading Swedish home BESS VPP, operating across Sweden and Finland as of early 2026 (Source - CheckWatt Website (2025-2026), Source - CheckWatt Website (2025-2026)):

  • 15,000+ customer sites; ~100 MW FCR-D capacity (summer 2024, = 1/5 of Swedish FCR-D market); 10,000 sites connected by summer 2024
  • Active markets: Sweden (primary), Finland (via partner Solarvoima); delivering FCR-D, FCR-N, mFRR (from May 2025), FFR (larger sites); aFRR not yet active despite barrier removal Jan 2025
  • Revenue performance: 2.5× vs basic price arbitrage in SE3; 4.0× in Finland (H1 2025, 10 kW/10 kWh battery)
  • Two operating modes: CheckWatt Optimized (ancillary services + local flex + self-consumption, recommended) and CheckWatt Savings (self-consumption only)
  • Customer connection via CM10 hardware gateway; EnergyInBalance customer portal; B2B2C installer-network distribution
  • Fee structure: €5/month fixed + 20% performance fee (10% CheckWatt + 10% installer/support)
  • Simultaneous participation in TSO ancillary services (FCR-D/N, mFRR), DSO local flex (Effekthandel Väst, E.ON Switch), and behind-meter optimization from the same portfolio

Other active Swedish/Nordic aggregators running VPP-like portfolios include Flower Infrastructure Technologies (home batteries), Ingrid Capacity, and Capalo AI. These together constitute the current practical VPP landscape in Sweden. See Aggregation for the full aggregator-as-infrastructure analysis and the BSP structural barriers that constrain VPP scale.

Data gaps

  • VPP technology platforms — CheckWatt CM10 is known; other platforms (Flower, Ingrid Capacity, Capalo AI) not yet documented
  • Revenue models and market participation breakdown by Nordic VPPs (what share of revenue from TSO vs DSO vs wholesale)
  • Comparison of VPP regulatory treatment across EU Member States