Best Practices in Virtual Power Plants: European Insights for Romania
Best Practices in Virtual Power Plants: European Insights for Romania
In the electricity transmission systems, there is an increasing need for flexible assets to balance the grid (ancillary services), ie assets that can be commanded to increase/decrease its power generation within minutes. As Romania intensifies its energy transition, one solution is proving to be particularly effective at unlocking flexibility, stability, and financial returns from distributed assets: the Virtual Power Plant (VPP).
Across Europe, aggregators are bringing together everything from combined heat and power plants (CHP) to battery storage, biogas, greenhouses, and even small hydropower plants, helping each asset play a strategic role in the energy system. By aligning their generation/consumption with TSO’s needs in real time, these assets don’t just balance the grid—they create entirely new revenue streams. The European experience offers valuable insights as Romania builds its own framework for flexibility markets.
CHP plants have already demonstrated their potential to provide reliable thermal energy, especially in urban and industrial contexts. But their value multiplies when they are aggregated into a VPP. In countries like Germany and the Czech Republic, many CHP operators participate in balancing markets, delivering services like automatic or manual frequency restoration reserve (aFRR or mFRR). These services are well-compensated. For instance, in Central Europe, participation in the ancillary service (AnS) market can yield revenues of up to €150,000–€300,000 per MW per year, depending on volatility and market tightness. When added to revenues from heat and electricity sales, these earnings significantly improve a project’s ROI. With the right controls and coordination, CHP operators no longer need to choose between delivering heat or responding to market signals—they can do both, maximizing efficiency and revenue.
Importantly, the Czech Republic offers a compelling benchmark: over 50% of ancillary services are now provided by aggregators. This demonstrates not only the technical feasibility but also the systemic importance of aggregators in stabilizing modern power systems. It reflects a clear shift toward distributed flexibility being important for grid resilience.
Hybrid projects combining Battery Energy Storage Systems (BESS) and gas turbines are becoming increasingly relevant across Europe. This setup offers both rapid response and sustained energy delivery, perfectly suited for the ancillary services market. The key advantage lies in the hybrid nature of the asset: the gas turbine delivers power when needed, while the battery can respond in milliseconds to grid signals. In today's flexibility markets, a well-optimized hybrid system can earn between €250,000–€350,000 per MW annually across multiple services, from frequency regulation to peak shaving.
What’s more, Europe is preparing for a massive build-out of BESS capacity. Markets such as Germany, Italy, and the UK are driving gigawatt-scale investments, spurred by capacity mechanisms and flexibility needs. However, monetizing these assets requires full-stack optimization—from precise forecasting of market price and real-timedispatch to multi-market bidding strategies. Without aggregation and sophisticated software, many BESS projects risk falling short of their revenue potential.
Another category of VPP participants gaining traction are agricultural and industrial consumers.
In the Netherlands and the Czech Republic, greenhouses equipped with CHP units and responsive controls are using their inherent flexibility to support the grid. For example, by shifting lighting or heating loads by just a few hours—without impacting crop yields—greenhouse operators can participate in demand response programs and earn supplemental income. Depending on the size of the facility, annual revenues from ancillary services or demand-side flexibility can reach €80,000–€120,000, sometimes more during high-stress periods on the grid. Importantly, this income comes without needing to install major new infrastructure—just smarter controls and an aggregator that can orchestrate participation.
Biogas and small hydro installations offer similar opportunities.
What sets these assets apart is their dispatchability. A biogas plant with the ability to store feedstock can choose the optimal time to generate electricity, aligning with market price peaks or grid needs. In Germany, biogas plants participating in balancing markets or energy trading through aggregators earn an additional €100,000–€140,000 annually per MW on top of their feed-in tariffs. Small hydro operators, while less flexible, benefit from their consistency and reliability—traits that make them highly valued in certain balancing products. For operators struggling with low wholesale prices, aggregator participation often makes the difference between viability and stagnation.
What’s clear from across Europe is that technical readiness is only half the equation.
The other half is market access—and this is where aggregators play a transformative role. By handling the complexity of bidding into multiple markets, forecasting flexibility potential, and ensuring compliance with system operator requirements, aggregators lower the barrier to entry for smaller or non-traditional participants. They also help optimize operations, ensure accurate metering, and reduce risks related to penalties or market volatility.
Romania is now poised to benefit from this model. With the right regulatory support—particularly around metering infrastructure, prequalification for ancillary services, and standardized contracts—the country can unlock its own reservoir of flexibility. Municipalities operating CHPs, farms running on biogas, and industrial sites with embedded generation or storage all stand to gain from participating in a VPP. And it’s not just about money. It’s about resilience, decarbonization, and smarter use of existing infrastructure.
Aggregation is more than a market strategy—it’s a collaborative effort to build a grid that is cleaner, smarter, and more inclusive. The revenues are real. The technology is proven. And the time is now.