Virtual power plants achieve arbitrage through demand response in the electricity spot market

Virtual Power Plants (VPPs) not only provide flexible regulation capabilities for the power system, but also gain profits by participating in the electricity market. VPPs purchase electricity in the market and sell electricity to aggregated resources. VPPs earn the difference between the purchase cost and sales revenue. The arbitrage principle of VPPs in the electricity spot market is analyzed. The difference between the purchase price and retail price provides the possibility for VPPs to gain additional revenue. A method of using prices to incentivize aggregated resources to adjust electricity consumption to achieve arbitrage is proposed. The example analysis proves the effectiveness of the proposed method. Both VPPs and aggregated resources can gain additional revenue.