Virtual Power Plant

The proliferation of distributed energy resources (DER) on the grid is making these resources more accessible, affordable and controllable thanks to changing markets, technology advancements, communications and controls.

Many of these power-generating or load-reducing resources are on the distribution system, often behind the customer’s meter. To learn how these resources can serve customers’ needs and help us manage peak demand, we are exploring new load management tools for residential and business customers. For example, commercial and industrial customers could sign up for a program that allows their utility to install load management equipment on the customer’s side of the meter.

By allowing the utility to lower their energy use during peak demand times, participating customers can save energy and reduce peak demand. There is no disruption of service and minimal operational impact to the customer, who is compensated for participation.

To advance this new approach to optimizing the electric network, AEP is forming strategic partnerships with leading-edge technology companies to transform the grid to be the conduit for multi-directional electricity and information flows the energy company of the future will require.

Specifically, AEP has partnered with Innovari, an energy management technology company, to develop solutions that allow us to begin managing the distribution grid differently. By managing a customer’s energy use, the Innovari platform allows us to dispatch load as a resource into the grid. Managing distributed energy resources connected to the distribution system as a virtual power plant can delay or eliminate the need to build new central generation, substations or transmission. Indiana Michigan Power Company and Appalachian Power Company are currently working with Innovari on AEP’s first deployment of the energy management platform.

As energy management technologies such as the Innovari platform and distributed resources such as microgrids integrate with the grid, energy will begin to flow not just from energy company to customer but also from customer to energy company and, eventually, from customer to customer. This blurring of lines from the way the grid historically has operated requires utility involvement, especially if we want to provide universal access to clean energy and technology solutions. To shape the energy company of the future requires collaborating with regulators and technology developers, as well as educating consumers about the financial benefits of taking an active interest in the grid. AEP is on this path, and while we have made progress, the pace and scale of change has to be balanced with what customers can afford.

Credit Electric Power Research Institute


Microgrids, local energy grids that have the ability to operate autonomously from the traditional grid, provide clear benefits to customers who need uninterrupted, reliable, secure energy. These small grids are ideal for college campuses, military bases, and other facilities that protect the public.

AEP Ohio has proposed to install microgrids in Ohio in a case pending before the Public Utilities Commission of Ohio (PUCO). AEP Ohio expects that locations for microgrids may include critical community assets such as fire and police stations, medical facilities, social service agencies, and emergency shelters, among other locations.

While the exact specifications of each microgrid would be determined by the particular characteristics of the load that would be served, it is anticipated that a typical microgrid would consist of smart controls, a battery storage system, and a small-scale photovoltaic (i.e. solar) generation system.

Utility microgrids offer numerous customer and societal benefits, including improved resiliency and reliability for critical infrastructure, clean energy generation and reduced emissions, and ancillary services.