Blog post cover illustration How we built a virtual power plant
13 May 2024

How we built a virtual power plant

How Codeborne helped Alexela to transform Estonia's energy scene with Smart Electricity, an innovative virtual power plant that promotes smarter energy use

In the face of market conditions that are always changing, Alexela and Codeborne have joined forces to launch Smart Electricity (Tark Elekter), a new virtual power plant service in Estonia. This makes energy more efficient for producers and consumers, creating a greener, more sustainable infrastructure.

What is a virtual power plant?

A virtual power plant (VPP) is a network of decentralized energy resources – like solar panels and home batteries – that operate together as a single power plant. These resources can supply or store electricity for the grid, particularly during periods of high demand. As more and more people start using solar panels and batteries to generate and store their own energy, they can also contribute to the grid. Connecting hundreds or thousands of these units together forms a powerful tool that helps balance supply and demand on the grid without the need for traditional, fossil fuel-based power plants.

Energy experts see VPPs as crucial for reducing reliance on fossil fuels and supporting the broader shift towards electrifying various sectors. VPPs are a great way to provide a backup during peak times and also offer financial benefits to participants who contribute their excess energy to the grid.

In essence, VPPs help maintain grid stability, prevent power outages, and promote cost savings across the board thanks to advancements in technology like efficient inverters and economical battery systems. They enable even small-scale energy producers to have a significant impact on the overall energy system, contributing to a more sustainable and resilient energy future.

Alexela VPP infrastructure
Alexela VPP infrastructure

About Alexela

AS Alexela, the biggest fuel station network in Estonia, has grown into a major player in the energy sector with a total turnover of over 200 million Euros. It’s not just its network of service stations that makes Alexela stand out. The company is also at the forefront of developing new energy solutions, including electricity generation, shale oil production and pioneering the use of liquid gas as vehicle fuel.

The company’s big project to build an LNG terminal in Paldiski shows how committed it is to making Estonia’s energy infrastructure stronger. With over 500 people working for it, Alexela is not only a big local employer but also a key player in promoting Estonia’s energy independence and environmental sustainability. Thanks to these efforts, Alexela is playing a big part in reshaping Estonia’s energy landscape.

The challenge: unpredictable energy prices

Like many countries, Estonia has to deal with significant energy price volatility due to varying weather conditions and market dynamics. Traditional energy systems often struggle to adapt quickly enough, leading to inefficiencies and increased costs for consumers. Alexela saw this and came up with a new way to help its customers manage and even make money from these changes

Co-created solutions: the Smart Electricity service

At the heart of Smart Electricity is a vision that Alexela and Codeborne have been working on together. It’s about transforming how energy is managed in a dynamic market. This solution leverages a virtual power plant designed to provide financial incentives to customers who contribute to this innovative energy solution.

Alexela and Codeborne worked closely together to create a digital ecosystem that integrates seamlessly with Alexela’s existing infrastructure. Together, we developed Smart Electricity, a platform that functions as a virtual power plant. It uses real-time data to intelligently manage electricity production, storage, and consumption, ensuring the system is perfectly aligned with the needs and capabilities of Alexela’s service network.

Additionally, the Smart Electricity is designed to:

  • Give customers a way to earn money: Users of the Smart Electricity benefit financially through incentives that reward them for their contributions to the grid, making it a profitable as well as an environmentally friendly choice.

  • Keep energy security in mind: The Smart Electricity is designed to ensure that customers’ energy security isn’t compromised when they’re participating in the energy market. The system keeps the battery’s ability to provide backup power during outages, so that customer participation doesn’t affect their personal energy resilience.

Key features of Smart Electricity:

  • Automated management: The smart algorithms figure out when energy production is at its highest and lowest, so we can make the most of it and save money for the customer.
  • Real-time data integration: Smart Electricity makes energy usage changes based on the latest weather and market prices, so you can be more in control of customers’ energy use.
  • User-centric design: Users can easily monitor their energy usage, make adjustments, and see monetary savings.

How does Smart Electricity stand out in a crowded market?

In a market full of different energy solutions, Smart Electricity stands out from the crowd thanks to its free offer to customers and its innovative approach to energy management. Here’s why Smart Electricity has the edge:

  • Personalised energy management

Smart Electricity is all about personalised energy management. Standard solutions tend to be one-size-fits-all, but Smart Electricity uses advanced analytics to understand and predict individual energy needs. This personalised approach not only enhances efficiency but also ensures that each customer enjoys optimised energy usage that aligns with their specific habits and lifestyle. This results in more meaningful energy savings and a more intuitive user experience.

  • Strategic business impact

It’s a smart move by Alexela to offer Smart Electricity for free. It’ll help them keep their current customers happy and attract new ones. It might make energy costs more volatile, but it puts Alexela in a good position in the competitive market. By focusing on customer engagement and satisfaction, Alexela is seen as an innovator and is more likely to stay in business by adapting to changing consumer expectations and energy regulations.

  • Advanced technological integration

What makes Smart Electricity special is how it works with existing energy systems and uses real-time data to manage energy flows in a smarter way. This goes beyond just automation— it also includes predictive features that not only respond to immediate energy needs but also anticipate future energy demands, keeping an optimal balance between production and consumption.

The impact: enhanced control and savings

Since its introduction, Smart Electricity has changed how Alexela’s customers interact with the energy market. Users have reported up to 30% savings on their monthly electricity bills by taking advantage of lower energy prices during peak production periods. The service also helps people use their own energy more effectively and become more independent of the traditional power grid.

The technical edge: seamless integration and scalability

Smart Electricity is designed with an emphasis on seamless integration and scalability, so it can be easily adapted not just for individual homes but also for larger complexes and businesses. This adaptability is crucial for meeting the diverse needs of Estonia’s energy landscape and encouraging wider adoption.

Looking ahead

As we continue to enhance the Smart Electricity service, our focus remains on expanding its capabilities and reach. By developing more sophisticated predictive analytics, we’ll be able to further optimise energy management. The growing user base will make a bigger impact on the service, contributing to a more stable and sustainable energy market in Estonia.

In conclusion, the partnership between Codeborne and Alexela on the Smart Electricity service shows how visionary tech solutions can lead to significant improvements in energy management. It’s a great example of how new ideas can meet current consumer needs and help us move towards a sustainable energy future.

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How we built a virtual power plant

How Codeborne helped Alexela to transform Estonia's energy scene with Smart Electricity, an innovative virtual power plant that promotes smarter energy use