Shanghai spearheads advanced digital electricity management ecosystem

Amid sustained summer heatwaves and soaring electricity demand, Shanghai's virtual power plant (VPP) network has set a national record by achieving a measured peak response capacity of 1.65 million kilowatts, making the metropolis the first city in China to cross the 1.6-gigawatt threshold in flexible load regulation.

Unlike conventional brick-and-mortar power stations, a VPP operates as an advanced digital management ecosystem. It aggregates, coordinates and dispatches decentralized power generation, battery storage and flexible user-side loads across the city to shave peaks and fill valleys on the grid.

For instance, when power supply tightens, commercial buildings and industrial facilities enrolled in the VPP can remotely raise indoor air conditioning temperatures by just 1C. This rapid drop in electricity load frees up power capacity for the broader grid, effectively acting as an "invisible" peaking power plant without burning fossil fuels.

Beyond building loads, electric vehicles are increasingly serving as mobile power banks in this ecosystem. State Grid Shanghai Fengxian Power Supply Co has pioneered using EVs instead of diesel generators during older neighborhood grid upgrades, providing temporary power while reducing carbon emissions. Similarly, State Grid Shanghai Changxing Power Supply Co launched a vehicle-to-grid (V2G) pilot on Chongming Island, dispatching nearby EVs via a mini-program to quickly stabilize local voltage. Both initiatives effectively reward participating car owners with carbon points and charging discounts.

The system's agility has been put to rigorous tests throughout the ongoing summer peak demand season. During a major grid load spike earlier in July, State Grid Shanghai Municipal Electric Power Co swiftly initiated a citywide VPP dispatch, initially mobilizing 318,600 kW of flexible load to tame a midday surge.

By the afternoon of that peak-demand day, the aggregated response hit a record 1.6477 million kW, successfully passing the grid's extreme peak-shaving stress test.

According to State Grid Shanghai Electric Power Co, the city's VPP network has evolved significantly from the traditional "next-day response" model to an agile "hour-level response".

The time from dispatch command to execution has shrunk dramatically, boosting operational efficiency by more than eightfold year-on-year, with a full-process response precision rate averaging 89 percent, it said.

This breakthrough caps four consecutive years of rapid capacity expansion. Since 2023, Shanghai's maximum measured VPP capacity has surged through four distinct milestones: from 320,000 kW to 710,000 kW, then 1.16 million kW, and now nearly 1.65 million kW.

"As an effective technical tool to enhance grid flexibility, optimize distributed energy coordination and promote clean, efficient power system operations, virtual power plants are still in their early stages of development and application," said Peng Yuehui, deputy director of the scientific and technological research institute at North China Electric Power University.

"Coordinated efforts from multiple stakeholders are required to make these digital 'invisible power plants' a core pillar for modern power system construction and inject fresh momentum into green, low-carbon energy development," he said.

Shanghai's milestone aligns with broader national decarbonization efforts. Under its action blueprint for the 15th Five-Year Plan period (2026-30), State Grid Corp of China has prioritized deep coordination between power sources, grids, loads and storage, actively accelerating VPP construction to ensure clean, flexible and resilient power supply nationwide.

To anchor this transition, the State-owned utility giant is upgrading its grid infrastructure to support a massive influx of distributed renewables. The company targets green power to account for more than 30 percent of total electricity generation within its operating areas by 2030.

Concurrently, it is heavily promoting electrification across the industrial, construction and transportation sectors, aiming for electricity to make up 35 percent of all end-user energy consumption by the end of the decade.

As China navigates the complex transition toward its carbon peaking and neutrality goals, Peng notes that digital innovations like virtual power plants will serve as a crucial bridge.

By transforming passive electricity consumers into active grid participants, these smart systems are laying the groundwork for a highly adaptable energy network capable of perfectly balancing intermittent green power with surging economic demand, he said.