Addressing Energy Efficiency with Virtual Power Plants

The People’s Republic of China has tapped virtual “efficiency power plants” (EPPs) in order to meet energy efficiency targets and promote stable economic growth.

EPP is a concept which facilitates aggregate savings that is almost equal to the productivity of a physical power plant. The energy savings it offers cancels out the need to build an actual power plant, thus an EPP can be virtual, (i.e, it does not have to be actually present). Apart from the energy it saves, an EPP costs much less than an actual power plant. It doesn’t use fuel, nor does it emit pollutants in the air. Visualizing the EPP as an energy efficiency mechanism may be difficult at first, but in Guangdong, PRC, the EPP was applied concretely through retrofitting of industrial equipment that saved energy equivalent to a 100 megawatt (MW) power plant.

Guangdong’s experience in using EPPs shows that incentives are critical to entice investments and participation in energy savings practices. Tariff adjustments, tax incentives, rebates and subsidies, and even credit and lending can be used to help increase the production and use of energy efficient light sources, machines, and technologies, both in the home and in business establishments. However, champions who can push the use of EPPs are needed, to help influence policy and practice, and to raise awareness on its benefits.