Differences:
1) Core construct and purpose
- Microgrid: A physically bounded local power system designed primarily to supply a local load, with emphasis on local demand satisfaction.
- VPP: A cloud-based aggregation of distributed energy resources operated as a single portfolio by a central controller, intended to behave like a conventional power plant with higher flexibility.
2) Locality and geographical coupling
- Microgrid: Resources are located within the same local distribution network and coordinated locally.
- VPP: Resources are not necessarily in the same local network and can be coordinated over a wider geographical area.
3) Market interface and operational role
- Microgrid: Primarily oriented toward serving local consumption.
- VPP: Acts as an aggregator and intermediary between distributed resources and the wholesale electricity market, enabling participation in electricity trading through aggregation.
4) Scale and installed capacity
- Microgrid: Typically small installed capacity, from a few kilowatts to several megawatts.
- VPP: Can achieve much higher aggregated power ratings due to combining many assets across locations.
5) Flexibility model and customer involvement
- Microgrid: Consumption is mainly treated as the demand to be met locally.
- VPP: Consumption is treated as a flexible resource via demand-side management and load shedding, and that flexibility can be used in market participation.
6) Asset portfolio and control stack
- Microgrid: Local set of DERs coordinated to meet local requirements.
- VPP: Heterogeneous portfolio that may include dispatchable units, controllable DERs such as fuel cells and micro-turbines, non-controllable DERs such as PV and wind, plus storage and backup generators, coordinated using forecasting and optimization supported by ICT and IoT.
Bottom line
- Microgrids focus on local networked resources meeting local load requirements.
- VPPs focus on wide-area aggregation with centralized coordination and market-facing operation, including trading and flexibility provision.
