Evaluation of economic benefits of virtual power plant between demand and plant sides based on cooperative game theory

As most distributed energy resources (DERs) are accessible in urban areas, interest has increased in regards to evaluating the potential advantages from introducing virtual power plants (VPPs) comprised of DERs into such areas. A VPP provides a solution for improving an energy self-sufficiency rate, as an alternative to expanding the capacity of a conventional power plant (CPP). This research proposed a comprehensive method for analyzing the feasibility of using a VPP to benefit both the plant and demand sides. First, the energy-saving potential of a VPP composed of a photovoltaic (PV) and energy storage system (ESS) was explored, based on historical monitoring data in a Japanese smart community called Higashida District (with a size of approximately 1.2 km2). Second, the economic performance of the VPP was evaluated based on a payback period and total life cycle cost analysis. Then, considering the imbalance of the benefits between the demand and plant sides, cooperative game theory was applied to explore the cooperation potential. The influence of government subsidy policies on both the plant and demand sides was a simultaneous concern. Finally, the profit of the alliance, comprising both the demand and plant sides was allocated, based on the Shapley value. This study highlights the excellent energy-saving potential from implementing a VPP. The results show that there is substantial economic cooperation potential between the demand and plant sides. In addition, both the plant and demand sides have better profits in cooperative games than with non-cooperation. This research provides policy guidance for the Japanese government to promote VPPs in the future, and provides a solution for coordinating the profit allocations of the plant and demand sides.