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Virtual power plants: accelerating smart ASEAN cities' electrification ambitions and sustainability goals

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By Alex Hong

· 11 min read


The development of smart cities has accelerated dramatically in recent years around the globe, and the Association of Southeast Asian Nations (ASEAN) is no exception. The necessity for sustainable energy systems has been more critical as urbanisation and energy consumption keep growing. In order to fulfil both of these objectives, Virtual Power Plants (VPPs) have become a promising alternative that can assist ASEAN cities in electrifying their cities while also achieving their sustainability goals.

Virtual Power Plants (VPPs) are a cutting-edge technology that has been created to overcome the difficulties involved in integrating renewable energy sources into the power grid. VPPs, or virtual power plants, are software-based cloud-based power plants that combine and manage the output of numerous small-scale distributed energy resources (DERs), including rooftop solar panels, energy storage systems, electric vehicles, and demand response initiatives.

In response to the rising need to strike a balance between the erratic nature of renewable energy sources and the stability and dependability of the power grid, the concept of VPPs initially surfaced in the early 2000s. However, the idea of VPPs was not technologically and financially viable until the emergence of cloud computing, sophisticated analytics, and the Internet of Things (IoT). A flexible, scalable, and adaptive platform that can maximise the usage of DERs, balance supply and demand, and guarantee grid stability was able to be created because of the convergence of these technologies.

As a vital enabler of the shift to a decentralised and carbon-free energy system, VPPs are now gaining ground. VPPs provide a number of economic, environmental, and social advantages in addition to their technical advantages. For instance, they can lower electricity prices, improve the grid's resiliency, lower greenhouse gas emissions, and enable customers to engage in the energy market.

VPPs have the potential to be significant in helping smart ASEAN cities realise their aspirations for electrification and sustainability. ASEAN cities may employ VPPs to optimise the usage of DERs, increase the efficiency and flexibility of the grid, and improve the reliability and affordability of electricity thanks to their tremendous potential for renewable energy, smart grid technology, and digital infrastructure. This study intends to offer policymakers, investors, and stakeholders information and recommendations on how to fully utilise VPPs in smart ASEAN cities by analysing the technological, economic, and legal aspects of VPPs.

Virtual power plants and sustainability in smart ASEAN cities

Smart ASEAN cities are densely populated communities that have embraced cutting-edge technology to improve sustainability and foster economic growth. To achieve their goals of electrification and carbon footprint reduction, these cities must overcome formidable obstacles. Most ASEAN cities currently rely a lot on conventional energy sources, like coal and gas, which are not only expensive but also unsustainable.

VPPs, or virtual power plants, have become a viable option for smart ASEAN cities. VPPs are networks of distributed energy production facilities, such as solar and wind turbines, that are linked to a centralised administration platform. The management system makes it possible to optimise both the production and distribution of electricity, effectively transforming the VPP into a single, well-organized power plant.

VPPs provide a number of advantages for smart ASEAN cities. They firstly enable energy efficiency by making it possible to track and manage energy usage in real time. This guarantees that energy is dispersed and used efficiently, minimising waste and saving money. In addition, VPPs offer significant cost advantages over conventional power sources. VPPs use renewable energy sources, therefore their running costs are far lower than those of conventional power plants. Thirdly, by encouraging the use of sustainable energy sources, VPPs aid in the reduction of carbon emissions.

The adoption of VPPs in smart ASEAN cities can significantly contribute to the attainment of sustainability objectives and electrification aspirations. The sustainability and carbon footprint of smart ASEAN cities can be improved by lowering their dependency on conventional power sources. Additionally, by reinvesting the cost savings from VPPs into other sustainability programmes, these cities may further their commitment to sustainable development.

Analysis of virtual power plants in smart ASEAN cities 

On sustainability and electrification in smart ASEAN cities, virtual power plants could have a huge impact. VPPs can help to optimise energy supply and demand, increase energy efficiency, and lower carbon emissions by aggregating and managing dispersed energy resources. A more dependable and adaptable power grid can be achieved by utilising VPPs, which can help boost the energy system's flexibility and resilience.

However, there may be a number of difficulties with adopting VPPs in smart ASEAN cities. One of the biggest obstacles is the requirement for cutting-edge infrastructure and technology, such as smart metres, sensors, and communication networks, to manage distributed energy resources efficiently. Utility companies, government agencies, and IT companies must all work together and invest a lot of money to do this.

The complexity of the legislative and policy frameworks of smart ASEAN cities is another difficulty. New market mechanisms and business models are frequently needed for VPPs, and they may not be effectively supported by current legislation. The implementation of VPPs may also be hampered by the lack of uniformity and consistency among the ASEAN nations.

Despite these difficulties, deploying VPPs in smart ASEAN cities has enormous potential. For instance, VPPs can improve energy security, lessen reliance on fossil fuels, and open up new possibilities for the growth of renewable energy sources and involvement in the energy market. Additionally, VPPs can assist in enhancing remote or underserved communities' access to energy, which is essential for reaching universal electrification goals.

Overall, the analysis points to the potential importance of virtual power plants in helping smart ASEAN cities electrify and achieve sustainability goals. To overcome the difficulties and take advantage of the potential afforded by this cutting-edge technology, several stakeholders—including regulators, utilities, and technology providers—must work together in concert for the effective deployment of VPPs.

Case studies of virtual power plants in smart ASEAN cities and around the world

Virtual power plants have already been installed in a number of smart cities throughout the globe, offering successful case studies that can be used to smart ASEAN towns. One such instance is Copenhagen, Denmark, which has created a virtual power plant made out of wind turbines, solar panels, and combined heat and power plants. The city's CO2 emissions have been cut by almost 140,000 tonnes annually because of this VPP.

In order to regulate energy usage in smart cities, virtual power plants (VPP) are becoming more popular as a viable and effective alternative. Numerous projects in ASEAN are looking into how VPPs might be used in smart cities. A few examples of VPP use in ASEAN smart cities are provided below:

  • Singapore: In partnership with SP Group and the Energy Market Authority (EMA), Singapore is exploring the usage of VPP in a residential neighbourhood. The VPP system enables the locals to keep track of and control their electricity usage while reselling any extra energy to the grid. The project attempts to decrease energy use and carbon footprint while giving residents control over their energy use.
  • Malaysia: To evaluate the viability of VPP in regulating the energy demand in a smart city, the Malaysian government initiated the Sustainable Energy Development Authority (SEDA) VPP pilot project in 2020. The pilot project, which is being carried out in Malaysia's administrative capital of Putrajaya, intends to combine renewable energy sources with energy storage technologies to more effectively manage the country's energy needs.
  • Philippines: To construct a VPP system in the city of Iloilo, the Philippine government is working with the business sector. In order to provide residents with a steady and dependable power supply, the project attempts to merge renewable energy sources with energy storage devices. The VPP system will also allow locals to sell excess energy back to the grid, boosting sustainability and energy efficiency.
  • Indonesia: The Palangka Raya Smart City project, which includes the deployment of a VPP system, was introduced by the Indonesian government in 2018. The VPP system combines renewable energy sources with energy storage devices in an effort to optimise energy demand and supply. Smart grids and smart metres are also being implemented as part of the initiative to better track and manage energy consumption.
  • Vietnam: Working with Siemens, the Vietnamese city of Da Nang is investigating the usage of VPP in a residential neighbourhood. The VPP system optimises energy demand and supply while enabling tenants to monitor and control their electricity consumption. The initiative seeks to increase sustainability and energy efficiency while lowering energy use and carbon impact.
  • Australia: Another successful VPP is located in the city of Adelaide, Australia. The project utilizes rooftop solar panels from approximately 1,000 households and a 4.3 MW battery storage system to supply energy to the grid. This VPP is projected to reduce electricity prices for participating households and decrease carbon emissions by approximately 5,000 tons per year.

The effectiveness of these initiatives can be evaluated by keeping an eye on the local cities' energy consumption trends and carbon footprints. It is crucial to remember that VPP system adoption in smart cities is still in its early phases and needs more testing and analysis. However, the incorporation of VPP systems in smart cities offers a promising means of enhancing sustainability and energy management.

Effect of VPP's deployment on green hydrogen energy ecosystems

For establishing sustainable energy and net-zero emissions economies, green hydrogen is largely viewed as a possible answer. Virtual Power Plants, or VPPs, can significantly contribute to the general acceptance of green hydrogen as a renewable energy source.

VPPs make it possible to distribute electricity produced by individual units intelligently, reducing the strain on the grid when demand is at its highest. In a sustainable energy system, this technology can be utilised to maximise the generation and consumption of green hydrogen. For instance, extra hydrogen generated when demand is low can be kept in tanks and utilised when demand is high, increasing the total effectiveness and utilisation of the hydrogen.

Additionally, VPPs can assist in integrating renewable energy sources, like wind energy, into the generation of hydrogen. As a result, the process of producing green hydrogen would be much more environmentally friendly.

In general, green hydrogen as a sustainable energy system might gain a lot from VPPs. By permitting intelligent power distribution from individual units and facilitating the incorporation of renewable energy sources into hydrogen production, they can increase the overall efficiency and utilisation of hydrogen while lowering greenhouse gas emissions.

Critical success factors to consider for VPP’s adoption in ASEAN

Virtual Power Plants (VPPs) have attracted a lot of interest as a crucial tool for increasing the use of sustainable energy in the ASEAN area. There are numerous important success elements that must be taken into consideration for the VPPs to be implemented successfully in ASEAN. Here, we go over the financing, laws, and regulations required to promote the growth of VPPs in ASEAN.

First off, the breakeven point must be taken into account for VPPs to be successfully adopted. The breakeven point marks the point at which all of the VPP's revenues are equal to all of the costs associated with setting up and running the VPP. Making ensuring the VPP's breakeven point is reachable and that its cost structure is optimised are crucial for achieving a positive return on investment. This can be accomplished by maximising the VPP's asset mix and achieving a balance between the revenue generated by the VPP and the costs associated with setting up and running it.

The second important criterion for the introduction of VPPs in ASEAN is money. To fund the construction and operation of the requisite energy assets, such as solar panels, wind turbines, and battery storage systems, VPPs must make large upfront capital investments. Government grants, subsidies, and private financing are all possible sources of funding for VPPs in the ASEAN region. Finding funding solutions that are appropriate for each VPP's unique needs and making sure the financing arrangements are long-term sustainable are crucial.

Last but not least, laws and regulations are essential success elements for the development of VPPs in ASEAN. By fostering a positive business climate and lowering entry barriers, clear and supportive rules can aid in the development of VPPs. The introduction of net metering regulations, for instance, would permit VPP operators to resell extra electricity produced by the VPP to the grid. As a result, VPP operators may receive financial incentives to deploy more VPPs. In addition, regulations can support the growth of new energy markets that let VPPs engage in energy trading, including demand response.


In conclusion, virtual power plants offer an environmentally friendly way for smart ASEAN cities to achieve their goals of electrification and sustainability. VPPs have the potential to increase the grid's reliability while also reducing costs, reducing carbon emissions, and improving energy efficiency.

The advantages of VPPs cannot be disregarded despite the difficulties involved in implementing them, such as regulatory obstacles and financing restrictions. VPPs can have a substantial impact on energy systems in smart cities, as shown by successful case studies from around the globe.

Therefore, more studies and applications of VPPs in smart ASEAN cities are required. Smart ASEAN cities can meet their electrification and sustainability goals while improving the quality of life for their residents by utilising cutting-edge technologies and stakeholder participation.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Alex Hong is a Director at AEIR (Singapore), part of Sync Neural Genesis AG, spearheading innovations in wireless energy. He serves as the Ambassador of Southeast Asia for the Global Blockchain Business Council and chairs blockchain initiatives at the Global Sustainability Foundation Network. Appointed as LinkedIn’s Top Voices (Green) since 2022, Alex is a leading ESG thought leader. Additionally, he is the Chief Sustainability Coordinator at YNBC, advisory board member for the Green Computing Foundation and the European Carbon Offset Tokenization Association (ECOTA) Expert.


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