Opportunity Assessment of Virtual Power Plant Implementation for Sustainable Renewable Energy Development in Indonesia Power System Network

Abstract

Renewable energy sources have become one of the important roles for sustainable energy development. One of the promising mechanisms to deploy renewable energy is through a Virtual Power Plant (VPP), which can integrate various distributed renewable energy resources into a single controllable and deployable entity. This paper examines the opportunity for VPP adoption in Indonesia, which investigates the minimum implementation criteria, provides a gap analysis for VPP implementation, and proposes recommendations for VPP implementation in Indonesia. The implementation criteria are obtained from the literature review, including the lessons learned from other countries, and categorized into four aspects: regulatory, technical, economic, and social. The gap analysis is performed by evaluating the current state of Indonesia’s utility network in correlation with the VPP minimum implementation criteria and then provides a scoring matrix for each criterion. Lastly, the recommendations are arranged to narrow these gaps, organized into ten key focus points, and divided into four phases, initiation, preparation, piloting, and deployment, across a ten-year timeframe.

1. Introduction

Climate change driven by significant greenhouse gas emissions has triggered the global energy transition, which the Paris Agreement was supposed to address [1]. In furtherance of the objective of zero carbon emissions by 2050, the energy transition is accelerating the shift from fossil energy to renewable energy (RE) sources [2]. In other words, the energy transition decarbonizes the energy sector to mitigate climate change by cutting carbon emissions using more sustainable and environmental energy sources. Moreover, deploying renewable energy resources will bring a strong foundation for sustainable energy development. Therefore, RE technology is a potential key solution for accomplishing energy transition ambitions.

The integration of RE in Indonesia, particularly solar energy, remains insignificant [3]. One of the reasons is the need for the Indonesian power grid to be more ready to integrate variable RE. This condition requires the network to have a sufficient spinning reserve to handle the variability. Otherwise, network congestion and outages are inevitable. Therefore, both technical and non-technical efforts are required to deal with the problems arising from RE variability.

Solar energy adoption is predicted to increase as the cost of rooftop solar photovoltaics (PVs) decreases [4]. This condition will culminate in the emergence of distributed energy resources (DERs), such as PVs, energy storage systems (ESSs), and electric vehicles (EVs), into the power grid. The integration of distributed energy resources (DERs) changes the network characteristics from unidirectional to bi-directional operation, which will raise issues for the Indonesian power system operator, requiring a more flexible power system [5]. Thereby, the power system operator must support efforts to enhance the uptake of RE in Indonesia, which entails efforts to resolve power system issues caused by RE’s increased presence.

Adopting a VPP is a potential solution to the issues mentioned earlier, and it can bring significant support for sustainable energy development. A VPP is an aggregation/collectivity system of various types of generating components, storage systems, and loads that aims to increase the power system’s efficiency and reliability and can facilitate power trading [6]. Furthermore, a VPP provides capabilities to optimize DER settings to solve RE integration issues, such as curtailment, in the power system [7].

On the other hand, the digitalization transformation of the Indonesian electricity infrastructure has reached the deployment phase of Advanced Metering Infrastructure (AMI), which offers customers and the utility operator two-way communication capabilities [8]. The presence of AMI in the power system serves as a precondition for implementing a VPP in Indonesia.

Similar assessments for the VPP implementation potential have been studied in the literature [9,10,11]. Fadli et al. [9] described the challenges and opportunities for the VPP implementation in Indonesia that specifically addressed an efficient distributed renewable energy deployment. In Ref. [10], a multi-aspect framework (MAF) was proposed to examine the opportunities and profitability of VPP implementation, and the results showed the required and essential factors that must be completed for the VPP implementation. On the other hand, the benefits of multi-energy VPP implementation in a regulated market were assessed in Egypt with the objective of economic and energy efficiency [11]. This study contributes to the following: Assess the gaps in VPP implementation in Indonesia, identify and evaluate the different aspects and compare them to their ideal condition, and recommend focus points to shorten the gaps in VPP implementation.

2. Fundamental Concept of Virtual Power Plant

2.1. Definition and Classification of VPP

The literal definition of a VPP is an “imaginary” power plant. This entity can supply electrical energy but does not have a physical unit akin to conventional plants. The term virtual comes from the terminology used in the digital world, a digitally replicated version of an entity that can provide the same function as a replicated system without having the same physical form. Dr. Shimon Awerbuch introduced the terminology of VPP in 1997, using “Virtual Utility” [12]. Initially, virtual utilities facilitated small-scale and geographically dispersed power plants to provide and supply electricity to consumers. These small-scale and scattered power plants are known as Distributed Generation (DG), previously known as Distributed Utility (DU). Since then, other studies have contributed to the maturation of the basic concept of a VPP, although until recently there was no clear definition of VPP [13].

In recent years, the essence of the VPP definition has included the following terminologies: DER aggregation, the cloud-based Energy Management System (EMS), and the utilization of Information and Communication Technology (ICT). As a result, the VPP is characterized as a system that combines and coordinates the activities of many geographically distributed parties capable of supplying energy on a small scale, interacting via ICT, and is administered by an EMS, as represented in Figure 1. The VPP Control Center (VPPCC) manages a VPP and communicates with parties within its purview, such as the DG, BESS, EV, and loads. The VPPCC also communicates with grid operators and the related parties. In the liberalized electricity market, a VPP is integrated into the wholesale market through communication with the Independent System Operator (ISO) in conducting energy trading transactions.

A VPP is a concept that involves a collection of DERs with a large adoption of RE sources, flexible loads, and ESSs controlled by a single EMS. ICT will accompany the VPP to form a single “virtual” power plant that works independently in forecasting, planning, monitoring operations, and coordinating the power flow between its components. From the perspective of a load control center, VPPs, together with conventional power plants (CPPs), participate together in fulfilling the power required by the load in accordance with the data flow provided by the load control center, as shown in Figure 2. Hence, the generators are operated through the generation control (GC) that receives commands from the load control center. Similarly, the VPP components are operated through the VPPCC, which also receives commands from the load control center. Hence, this allows for the VPP to minimize generation costs and greenhouse gas production, improve power quality, maximize profits, and, most importantly, open trade opportunities in the electricity market. The VPP operates by scheduling and monitoring the performance of its components and coordinating its operations to minimize generation costs and greenhouse gas production or increase profits in the electricity market [13].

In general, a VPP can be classified into a technical VPP (TVPP) and commercial VPP (CVPP) [14]. A TVPP is responsible for the balancing and operation of DERs, which focuses more on power system management. At the same time, a CVPP is responsible for and participates in energy trading and has economic objectives.

The primary purpose of a TVPP is to comprehensively define system calculations, technical applications, storage, and optimization. A TVPP guarantees that the VPP is operated effectively and safely while considering its physical constraints and services. A CVPP’s purpose is economic optimization, encompassing financial risks such as cost, maximizing revenue for electric energy exchange, connecting the economic paradigm with intelligent grid services, and regulating trade on a VPP.

In practice, nations with liberalized energy market principles have implemented a CVPP. A CVPP will address how VPP prosumers interact with one another, partnership agreements with system operators, mutual agreements between various VPP stakeholders, and energy marketing issues. A CVPP conducts bilateral contracts with DER units and consumers or prosumers. This contract information will be sent to a TVPP to consider the amount of power delivered according to the agreement. Alone, small-scale DER units cannot participate in the energy market. Thus, a CVPP will make these units visible and enable them to participate in the electricity market.

2.2. Comparison of VPP with Other Energy Management Concepts

The Virtual Power Plant concept intersects with other energy management concepts in the electricity world, such as the Distributed Energy Resources Management System (DERMS) and Microgrid (MG). According to [15], a DERMS is a utility enterprise-owned and -operated system that allows for monitoring, management, coordination, and optimization of various DERs owned by utilities, customers, or third-party aggregators to support grid operations and participation. Furthermore, a DERMS is a utility-owned business utility solution in the energy market, while a VPP is a commercial solution operated by various third-party DER utilities or aggregators. On the other hand, the MG is a cluster of loads and micro-sources that operate as a separate system that can operate in an islanded or grid-interconnected system. In contrast, a VPP combines multiple sites, technologies, and assets integrated using specialized software and hardware to form a virtual energy network that can be controlled while maintaining independence. Resources in an MG are often geographically grouped, but resources in a VPP might be scattered. A comparison between the VPP concept and other energy management concepts, such as the DERMS, MG, and CPPs, is provided in some literature [6,13,16] and is briefly summarized in

Table 1. Basic comparison of VPP with DERMS, Microgrid, and CPP.

Comparison	VPP	DERMS	Microgrid	CPP
Definition	DG aggregation to be able to operate like a single power plant	DG aggregation to be able to operate like a single power plant	Generation and load cluster like a power system	Single power generation entity
Physical/Geographical Boundary Requirement	Unnecessary	Unnecessary	Unnecessary	Clearly defined
Components	DG, flexible loads, BESS, EV, and VPPCC	DG, BESS, and DERMS	DG, flexible loads, BESS, EV, and MGCC	Generators with certain types of energy sources
Players	Aggregator, grid operator, DER provider, and ISO	Aggregator, grid operator, DER provider, and ISO	Aggregator, grid operator, DER provider, and ISO	Utility company or Independent Power Producer (IPP)
Functional Focus	DG management in groups and participating together in the energy market	DG management in groups for operational ease	Independent energy management in its own cluster	Power generation
Application	Energy capacity provider and ancillary service	Energy capacity provider and ancillary service	Energy capacity provider	Energy capacity provider and ancillary service
Association with Grid	Grid-connected, and two-way power, data, and cash flow	Grid-connected, two-way power and data flow, and one-way cash flow	Grid-connected or islanded, and two-way power, data, and cash flow	Grid-connected, two-way data flow, and one-way power and cash flow
Topology	Using utility networks (distribution and transmission)	Using utility networks (distribution and transmission)	Generally using distribution networks	Using utility networks (distribution and transmission)
Energy Market	Tends to be more optimal in a liberalized market	Can be implemented in a non-liberalized market	Can be implemented in a non-liberalized market	Can be implemented in a non-liberalized market
Expansion Flexibility	Flexible	Flexible	Flexible	Less flexible

.

2.3. VPP Applications and Benefits

A VPP can generally function as a conventional generator, such as energy arbitrage/capacity service and ancillary service providers. Apart from that, a VPP also provides other functions, such as a capacity mechanism and a flexibility market [17], as shown in Figure 3. A VPP can operate like a single power plant, especially regarding the supply–demand balance, through the load control center and can interact and coordinate with VPP operators in planning and scheduling power plants that operate to meet loads, including VPPs. Thus, a VPP can increase the power system’s flexibility, reliability, quality, and stability. In addition, the VPP topology is not limited to geographical conditions. With the right management system, the VPP can provide other services (grid services), such as minimizing network losses, voltage and frequency regulation, load shifting, and congestion management in power distribution.

2.3.1. Capacity Service Provider

A VPP can participate in energy supply service activities according to the size, capacity, and component composition. Thus, a VPP can assist with portfolio management activities or may prefer to operate as an independent entity in the wholesale market. In addition, VPPs, most of whom are also electricity consumers, can change their production/consumption profile to optimize their contracts with electricity suppliers. Each of the possible VPP applications as a capacity service provider is described as follows:

• Portfolio management. A VPP can be used as the documentation/track record of the energy production/consumption of an organization, or what is known as a management portfolio, which is useful in balancing energy use and electrical energy production.
• Wholesale market trading. A VPP can be applied to the electric energy market by participating in the same way conventional power plants are. A VPP can send electrical energy according to a predetermined schedule, either in the forward market (long-term transactions), day-ahead market, or intraday market.
• Contract optimization. A VPP can be an energy contract optimizer between consumers and electrical energy providers. The reason is that a VPP can play a role in managing the production/consumption of electrical energy from customers to negotiate contracts optimally.

2.3.2. Ancillary Service Provider

The function of a VPP as an ancillary service can be provided if users of the electric power system network can be controlled according to particular needs. The VPP can manage its operations through storage management and flexible load settings. Each of the possible VPP applications as an ancillary service provider are described as follows:

• Assistance services for Transmission System Operator (TSO). This service includes frequency and voltage regulation, congestion management, and black start services because the VPP controls the demand or power supplies and generates units that can be started without assistance, which can be applied when a black-out occurs.
• Assistance services for Distribution System Operator (DSO). The DSO is responsible for ensuring reliable and efficient distribution grid operations. The DSO can incentivize VPPs that limit electricity demand or power supplies to a pre-agreed load value or supply level or even provide returns to VPPs that maintain an atypical grid usage profile. Thus, periods with a high load demand can be shifted toward off-peak times locally. In contrast, periods with high supply can be shifted toward peak load times, resulting in load balancing in the distribution system. DSOs can incentivize this behavior through a price-based approach. However, DSOs lack a price-based elaboration system. Thus, DSOs must primarily organize their networks locally through bilateral contracts, which may include VPPs as additional targets. An ancillary service market can be utilized to streamline incentive-based mechanisms.

2.3.3. Other VPP Functions

As the population of DERs increases, the current structuring of energy markets may not be sufficient to ensure the efficient and safe operation of the power system in the future. Therefore, a VPP can also create two opportunities that can provide more value, namely, the following:

• Capacity mechanism. This function is defined as additional mechanisms that influence the installed capacity of generators for long-term generation needs to meet peak load requirements. Current capacity mechanisms may generally focus on conventional generation and demand response. However, because a VPP can provide electrical power generation capacity and load reduction, a VPP has the potential to participate in various capacity mechanisms in the future.
• Flexibility market. This type of market is considered to be one in which flexibility units are traded, and the products are characterized according to technical parameters, such as the maximum capacity and frequency of plant activation. It is quite attractive for all entities in the electricity market that are required to optimize scheduling and dispatch across their portfolio and for grid operators that need to attract flexibility for services, such as TSOs and DSOs.

The benefits of a VPP can be divided into three aspects [18], namely, technical, economic, social, and policy, as illustrated in Figure 4. Technical elements include benefits in providing flexibility, reliability, quality, stability, and minimizing network losses. Moreover, the economic factor is related to reducing the energy and efficiency costs, opening new businesses, increasing the value of DER assets, and deferring the investment needed to build new infrastructure due to load growth requirements. Meanwhile, in social and policy aspects, a VPP can provide benefits to maximize the penetration of RE to reduce CO₂ emission levels and build energy security. Incorporating RE generators in the VPP framework can assist government efforts to increase the renewable energy ratio in the energy mix. In addition, dependence on fossil fuels may change, enhancing energy security.

2.4. Components of VPP

A VPP is a system that integrates various types of small-scale and distributed energy resources. This system is composed of three main component categories, namely, DER, VPPCC, and ICT, as shown in Figure 5.

2.4.1. Distributed Energy Resources (DERs)

DERs are sources of electricity supply or load on a relatively small scale and separated by location/geography, which can be utilized to meet the availability of the electricity supply, such as the DG, ESS, EV, and demand response. While the DG, ESS, and EV can be obviously considered as a source of energy supply, the demand response can be regarded as a negative energy source, which means it can be managed to satisfy the balance between the supply and demand in the power system.

2.4.2. Virtual Power Plant Control Center (VPPCC)

A vital component of a VPP is the control system, which operates to manage and interact with the DER portfolio within the VPP in real time and has a control algorithm according to the function of the established VPP. A VPPCC is an intelligent system managed by the VPP operator or aggregator [19]. Consequently, a VPPCC is the core component of a VPP that manages the VPP as a whole through an optimal energy management mechanism, including communicating with parties working with the VPP or partners.

2.4.3. Information and Communication Technology (ICT)

ICT serves as a communication medium between the VPP and other parties; communication shall be made available on the DER side, including at customer sources. In addition, the VPPCC shall have capabilities for forecasting purposes, such as generation, load, and weather forecasting. ICT shall meet specific standards to maintain the security and reliability of the whole system. The scalability of the VPP is highly dependent on the standardization of communication and the interoperability of various solutions in the same grid involving multiple actors and the complex interactions between them [20].

2.5. VPP Implementation around the World

VPPs have been widely implemented worldwide, especially in Europe, where DER and ESS aggregation allow for VPP participation in wholesale, balancing, and flexible markets. The aggregator provides consumers and DG with the necessary technology and control, acting as the responsible party in the electricity and flexibility markets. It means small-scale flexibility resources that cannot participate can offer flexibility to the system operator.

The implementation of a VPP has generally been carried out in the United States and European countries, most of which adhere to liberalized energy market schemes. However, some countries with regulated energy market schemes, similar to Indonesia, have begun to implement demonstrative projects for VPP implementation. China is an example of a country that has implemented a VPP but is still limited to the TVPP concept, which is still in the business model exploration stage. State-owned utility companies operate most of the electricity generation and distribution in China, and the government sets electricity prices and controls the energy market. The China VPP aggregates and controls the solar PVs, ESSs, and EVs to provide grid services, such as frequency regulation and peak shaving. China is actively drafting national-level policies for VPP implementation that could be an essential catalyst for VPP development.

Another example of VPP implementation in a country with a non-liberalized energy market scheme is India. A VPP pilot project was launched in 2018 by the state-owned utility company Power Grid Corporation of India Limited (PowerGrid) in Puducherry. The VPP aggregates and controls the solar PVs, BESSs, and EVs to provide grid services, such as frequency regulation, peak shaving, and load balancing. These instances demonstrate that a VPP could be implemented even in nations with non-liberalized energy systems, mainly by state-owned corporations.

Table 2. Summary of VPP global implementation.

Project Name	Location	Year	Capacity and Quantity Description	Reference
POSYTYF Project	Spain, France, Switzerland, Germany	2020–2023	2446 MW (Type I—Isolated with Storage), 21,512 MW (Type II—AC Interconnected— Northern Europe); PV, Wind, Thermal, Hydro	[21]
ConnectedSolution: National Grid and Eversource	Massachusetts, USA	2019–now	310 MW; 34,105 Consumers	[22]
Resilient Homes: Green Mountain Power	Vermont, USA	2019–now	60 MW; 269,000 Consumers	[23]
AEMO VPP Demonstrations	Australia	2019–2022	31 MW/8 DERs (PV, BESS, DR); 7150 Consumers	[24]
MERLON	Spain, Austria, Ireland, UK, Netherlands, Greece	2019–2022	250 kW (Güssing/Strem, Austria); 574 Consumers	[25]
Simply Energy VPP	Australia	2018–2023	6 MW BESS + 2 MW DR/1200 DERs; 700,000 Consumers	[26]
COMPILE	Slovenia, Spain, Croatia, Portugal, Greece	2018–2022	13.4 MW/77,000 DERs (Crevillent, Spain); 9 kW/150 DERs (Lisbon, Portugal); 60 kW (Križevci, Croatia); 14,315 Consumers (Crevillent, Spain); 400 Consumers (Lisbon, Portugal)	[27]
MUSE-GRIDS	Italy, Belgium, Ireland, Spain, Greece, Netherlands, Denmark, Israel	2018–2022	33.8 MW (Osimo, Italy); 65 kW (Oud-Heverlee, Belgium); 30,216 Consumers (Osimo, Italy)	[28]
Consolidated Edison	New York, USA	2018–2020	100–300 MW/1000 DERs (PV, ESS); 3,300,000 Consumers	[13]
AGL VPP	Australia	2017–2022	5 MW/1000 DERs (PV, BESS)	[29]
EU-SysFlex	Germany, Italy, Finland, Portugal, France, Estonia	2017–2021	Specific data are not available	[30]
inteGRIDy	UK, Italy, Romania, Greece, Spain, Portugal, France	2017–2020	28.8 MW/417 DERs (San Severino, Italy); 7900 Consumers (San Severino, Italy)	[31]
WindNODE	Germany	2017–2020	Peak Load: 16 GW; Installed Renewables: 33 GW (2018); 16,200,000 Consumers	[32]
Shanghai Huangpu District VPP Project	People’s Republic of China	2016– unknown	50 MW + 10 MW of DR + 2 MW of Frequency Regulation; 300 Consumers (Buildings)	[33]
South Australia VPP	Australia	2016–2019	250 MW/1000 DERs (PV, BESS); 50,000 Consumers	[34]
SmarterEMC2	Italy, Greece, Turkey, UK, Portugal	2015–2017	Specific data are not available	[35]
PowerShift Atlantic	Canada	2010–2015	17.3 MW; 1400 Consumers	[36]
Smartpool	Germany	2009–now	12,294 MW/15,346 DERs (PV, Wind, Hydropower, Bioenergy)	[6]
Web2Energy	Germany	2009–2015	40.5 MW/16 DERs (CHP, PV, Wind, Biogas, Hydropower); 200 Consumers	[13]
Edison Project	Bornholm Island, Denmark	2009–2012	125 MW/52 DERs; 27,000 Consumers	[37]
FENIX	UK, Spain, France	2005–2009	1000–1,000,000 DERs (μ-CHP, PV, Wind); 169,000 Consumers	[38]

displays a summary of some VPP implementations across the world.

3. Method of Gap Analysis for VPP Implementation

3.1. VPP Implementation Criteria

The VPP implementation criteria are based on the minimum requirements for a VPP to be implemented at least on a pilot project scale. The determination of the minimum criteria is obtained and analyzed from various implemented VPP projects worldwide [39]. In summary, the aspects of the implementation criteria are depicted in Figure 6 [40]. The implementation is divided into four aspects, namely, legal, technical, economic, and social. Each aspect can be further detailed into several points, such as the presence of DER regulations, VPP regulation, and VPP business schemes that belong to the legal aspect; the existence of the DER (DG, ESS, and DSM), VPPCC, and ICT that belong to the technical aspect; the permission for power export and the availability of the business model that belong to the economic aspect; and, lastly, the concern of the social aspect.

3.1.1. Legal Aspect

The legal aspects are related to changes in the regulations regarding the new regulations needed, such as supporting rules in the construction of RE plants, greenhouse gas emission limits, the priority utilization of RE plants, and prosumer regulations. The criteria for legal/regulatory aspects in the VPP are “compulsory”.

3.1.2. Technical Aspect

The technical aspects are related to VPP component technology. To be able to build and develop a VPP, a system must fulfill the minimum VPP components that must be available.

• The DER components that must be available in a VPP can consist of a DG, an ESS, and a DSM. The DG in the VPP can be RE, and a non-RE-based VPP can be implemented if at least two optimally operated DER units can be combined to form a dispatchable electrical energy-producing entity. For this basis, an ESS is generally necessary to deploy a VPP, especially if the type of DG available is a variable type of generation (compulsory). An ESS can be disregarded, however, if the available DG is already dispatchable (such as biomass, wind, or MHP). As such, the DSM can be optional; its existence will give greater operational flexibility to the VPP.
• A VPPCC, in a more straightforward context, can be considered an EMS equipped with communication, monitoring, control, and optimization features and is an entity that must be available to implement a VPP (compulsory). The VPPCC must be able to communicate with grid operators or load control centers in the power system in addition to communicating with VPP parties, such as DER owners, ESS providers, or DMS participant customers.
• ICT enables communication between the VPPCC and VPP parties, system operators, and policymakers (ISO). In addition, ICT can provide forecasting and scheduling functionalities by exploiting various algorithms and historical data, such as load profile data, generation profile data, or weather profile data that influences VPP operations. ICT is compulsory in the implementation of a VPP.

3.1.3. Economic Aspect

The economic aspect relates to changes in the economic system concerning the liberalization of the energy sector, including establishing electricity markets, the DSM and DR, tariff systems, the time-of-use pricing of electrical energy, developing regional energy markets, and outage charges. In addition, adopting a VPP requires the development of a new business model concept that accommodates methods for tender mechanisms, access to market information, subsidies, incentives, and penalties. The economic aspect criteria in the VPP are compulsory.

One of the factors determining the VPP’s business model is the state of the national electricity market. This VPP business model must meet several criteria to be suitable for the national electricity market, as follows.

• Allowing IPPs and consumers to participate in the energy market.
• A profit-sharing system or incentive and punishment system for the IPP, consumer, or associated VPP operator.

According to [41], VPP pooling should be profitable in standalone operations for parties operating DER units. The impact of this consideration depends on price-based mechanisms. RE support schemes also influence decision-making. For instance, feed-in tariffs make DG units produce as much output as possible without considering grid and market realities. Another factor that may interact with the incentives of units to participate in the VPP is the dynamic pricing of energy and the grid.

Alternatively, an incentive-based approach could encourage the formation of a VPP, as a DER is better suited to deliver services such as the grid and energy when aggregated, as discussed earlier. These schemes are also less constrained by the regulatory framework but need more effort to qualify for economic viability due to various restrictions in the current Indonesian electricity market, which neither facilitates (e.g., high-entry restrictions in the wholesale market) nor allows for VPP participation (e.g., reserve capacity requirements). Furthermore, some markets still require development, such as flexibility markets. Some of these restrictions are built into the regulatory framework, leading to negative business cases where the actual value of the VPP flexibility cannot be captured or determined.

3.1.4. Social Aspect

The social aspects are related to changes in the social system, including changes in energy consumer behavior, higher ecological awareness of the community, the formation of cooperation networks based on local energy sources such as energy cooperatives and clusters, and the need to maintain energy security.

3.2. Weight of Compulsoriness for VPP Implementation Criteria

The VPP implementation criteria can be further analyzed to determine the compulsoriness or the necessity of such criteria in enabling the VPP. In this work, the Analytic Hierarchy Process (AHP) is applied to develop the weight of compulsoriness for each criterion [42]. The process is as follows:

• Each criterion is compared with the other based on the necessity. If one criterion is more compulsory than the other criteria for the VPP implementation, it will be given a mark of one. Otherwise, it will be given a mark of zero.
• If two criteria are both compulsory, they must be assessed based on the existence of alternatives that may replace them. A criterion that has an alternative is regarded as less compulsory.

For example, the existence of ICTs is considered the most essential criterion compared with the others. ICT is the main backbone for communication and optimization in a VPP. In addition, it has no alternative replacement for the ICT. The business model and schemes are the following mandatory criteria because they define the interest of the VPP actors, whereas the DER and VPP regulations can temporarily use the existing regulations, especially during the early stage of the VPP implementation.

Another example is the VPPCC. The VPPCC is less compulsory than the ICT, the DER, or the regulations because the role of the VPPCC can be provisionally taken over by the utility operator, and it is not necessarily that the VPP must be an independent entity. As for the DERs, such as the DG, ESS, and DSM, they can be exchanged with each other so that their compulsory level is lower than any of the regulations, the VPPCC, or ICT.

The summary of the normalized weight of compulsoriness for the VPP implementation criteria is presented in Figure 7, which is consistent with the study in [41]. Hence, the order of necessity of the VPP implementation criteria is the availability of ICT, presence of business schemes, business model, VPP regulations, permission of power export, DER regulations, existence of the VPPCC, the DER (DG, ESS, and DSM), and social aspects.

3.3. Current Electricity Status in Indonesia

Indonesia’s electrical power system is operated by a utility operator responsible as both a transmission and distribution system operator (TSO/DSO) and a market operator. It is a single entity tasked with producing, trading, and distributing electricity throughout Indonesia. This business model also includes selling electricity from private producers through the IPP scheme, supplying electricity to the utility, and distributing it to customers. The utility sells electricity to customers through a distribution network in this business model.

On the other hand, in the business model implemented by Indonesia’s power system operator, there is also a power export scheme for the prosumers. When a prosumer has a rooftop PV or other RE-based generation, the consumer can supply excess power to the grid. The utility buys excess power from consumers through the power export scheme. Currently, the existence of the prosumers in Indonesia is still limited, and even though the existing regulation allows for the energy export to the grid, it is still not economically attractive. The average load factor (LF) varies from 0.3 to 0.6 for residential and commercial customers and from 0.7 to 0.9 for industrial customers [43].

Indonesian society’s electrical energy usage behavior tends to be inefficient and undirected. Many people have yet to understand the importance of using energy wisely and responsibly, so there is often unnecessary usage and over-consumption. Rooftop PVs are getting prominence in Indonesia to supply their local household’s electricity demand and save energy bills. However, several obstacles, such as high initial costs and unfavorable regulations, continue to deter consumers from installing rooftop PVs. Hence, efforts are required from several stakeholders to overcome these barriers and accelerate the installation of distributed rooftop PVs.

3.4. Gap Analysis for VPP Implementation in Indonesia

A gap analysis identifies and evaluates areas where a task differs from its ideal state. Indonesia’s power system’s readiness for the VPP implementation is evaluated by comparing its current condition with the minimum criteria [9]. When adopting a VPP in Indonesia, a gap analysis will assist in determining what is needed and what can hinder the streamlined implementation process. It is particularly relevant when finding efficient and effective ways to overcome emerging obstacles. In preparing the gap analysis, the minimum requirements for VPP implementation must be satisfied by comparing it to the present situation in Indonesia.

The summary of the gap analysis in VPP implementation in Indonesia is shown in

Table 3. VPP implementation readiness score in Indonesia.

Criteria	Current Status (1: Exist; 0: Not Exist)	Weight (%)	Weighted Score (%)
Legal: DER Regulations	1	9.09	9.09
Legal: VPP Regulations	0	12.12	0
Legal: Business Schemes	0	15.15	0
Technical: DG	1	6.06	6.06
Technical: ESS	1	4.55	4.55
Technical: DSM	0	3.03	0
Technical: VPPCC	0	7.58	0
Technical: ICT	1	16.67	16.67
Economic: Power Export	1	10.61	10.61
Economic: Business Model	0	13.64	0
Social Aspects	0	1.52	0
Total		100	46.97

and visualized in Figure 8. Using the performance criterion scores assigned to the ranking matrix, the essential criteria for implementation, a VPP is evaluated according to the level of necessity. The gap analysis scoring matrix indicates that VPP implementation is achievable if the implementation criteria score is 100%.

The existing conditions in Indonesia are currently at a score of 46.97%. The ICT for power systems has increased rapidly in Indonesia through AMI implementation, which increases the potential for VPP deployment. The government has also released the regulation and mechanism for DER and power export, which may enable the pilot project for a VPP. The availability of small-scale rooftop or ground-mounted PVs and other small-scale plants, along with ESS and VPPCC technologies, has also expanded rapidly. VPPs can be deployed in Indonesia in several ways, including in a pilot phase. During this period, an AMI implementation program has been established, which means it can support VPP implementation in Indonesia.

4. Recommendation for VPP Implementation in Indonesia

4.1. Guideline and Timeline for VPP Implementation in Indonesia

According to the results of the gap study, Indonesia’s energy grid is halfway behind the minimum requirements for adopting a VPP. The availability of legislation and business models for VPP operations is among the most necessary to prepare and will take significant time. Technical criteria, such as the requirement for the DER, ESS, and VPPCC, can be satisfied rather quickly due to the availability of these products in the market. In addition, when regulations, business models, and VPP components are available, evaluating the level of maturity of the VPP implementation in Indonesia will require time [10].

The VPP implementation guidelines in Indonesia can be divided into four phases organized into ten focus points. The timeline for VPP implementation in Indonesia is estimated to take approximately ten years to reach the deployment phase. The period is estimated based on the typical period for regulation development and other technology pilot projects in Indonesia. The proposed implementation plan for VPP implementation in Indonesia is shown in Figure 9.

4.2. Proof of Concept Implementation

The PoC can be implemented by involving entities under the utility operator’s authority. It is to facilitate the implementation of the PoC by minimizing the technical and economic effects that may occur during the implementation of the PoC without involving consumers. The operator can utilize its geographically spread facilities as DER sites and deploy the VPPCC in an easily accessible area for reviewing and monitoring the implementation of the PoC.

The PoC implementation of a VPP intends to demonstrate the viability of a VPP and focuses primarily on introducing the technologies utilized in VPP operations. Hence, vendor engagement is a vital aspect of the VPP implementation PoC. In addition, the VPP implementation PoC does not need to involve business schemes and financial transactions between VPP operators and DER owners.

4.3. Pilot Project Recommendations

When rules and business plans are recognized and enforced by law, pilot projects on a small or medium size can be implemented. This project aims to analyze the performance of the VPP, including its technical and business strategies. The power system’s capacity and the installed VPP’s capacity differentiate small-scale and medium-scale systems. A basic power system prerequisite for the pilot project includes the availability of DERs that are prepared to participate in the VPP and a communication infrastructure that the VPP can utilize. As the VPP implementation plan progresses, small- and medium-scale pilot project locations can be selected. Indeed, adjustments will be made during the implementation phase depending on the readiness to implement the VPP in different regions.

5. Conclusions and Further Study

This paper examines the VPP concept in depth and assesses the implementation opportunity in Indonesia to support sustainable energy development in the future. A VPP enables energy providers, whether small-scale IPPs or prosumers, to overcome changes in energy supply and demand, which can be perceived as a single dispatchable and controlled plant. In a centralized energy market system like Indonesia, VPP operations can focus on technical objectives. The power system operator acts as a TVPP operator that aggregates DERs to make it easier to control and optimize the adoption of RE-based generation.

Given the gap analysis findings, VPP implementation in Indonesia can be conducted at the pilot project stage because the minimum conditions for VPP implementation have been generally met. The applicable minimum regulation is MEMR Regulation No. 26/2021, which addresses rooftop PV operations and business mechanisms. In addition, using AMI that has commenced deployment, ICT can be utilized during the pilot phase of VPP implementation.

Furthermore, based on the study’s findings in the gap analysis, recommendations for implementing a VPP in Indonesia can be prepared and structured into ten focus points separated into four phases over ten years. Specific regulations governing VPP operations and other regulations related to DERs, power export procedures, and VPP operational business schemes are essential parts of the VPP implementation strategy in Indonesia. Additional technical concerns, such as the market availability of the DER, ESS, VPPCC, and ICT, can be fulfilled relatively quickly due to the market availability of these technologies. Furthermore, VPP development in Indonesia will begin with a PoC, followed by a small-scale pilot project, a medium-scale pilot project, and, ultimately, an entire deployment. The pilot project should be situated in a region with favorable circumstances, such as municipal regulations and policies encouraging the adoption of RE-based power plants, RE-rich distribution networks, and access to interoperable ICT networks to facilitate communication between parties.

In addition, according to the evaluation of the VPP concept in Indonesia, further study is required, including the following:

• Study the development and planning of VPP implementation policies in Indonesia. In the initial years of VPP implementation, this study is essential for establishing legal standing for VPP operations in Indonesia, covering business schemes, developers, operators, and other supporting regulations intended for VPP operations.
• Study of the development of road map implementation for a VPP in Indonesia.