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Virtual Power Plant (VPP)
European Union Electricity Market Glossary





"Under a virtual power plant or VPP scheme the incumbent party is obliged to sell some of his generation capacity to third party market participants (e.g. new entrants). The buyer of the VPP contract has the option to consume power of his VPP against the agreed virtual production cost, but not the obligation and hence the contract can be seen as a call option. VPPs have been imposed by competition authorities in Europe both as a remedy in merger cases and to address dominance."


Commission Staff Working Document, Accompanying the document Report from the Commission, Interim Report of the Sector Inquiry on Capacity Mechanisms {C(2016) 2107 final}, 13.4.2016 SWD(2016) 119 final, p. 29



Last Updated on Wednesday, 22 June 2016 20:11


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