January 23, 2018 / 5:25 PM / a year ago

Next Kraftwerke to grow power aggregation scheme in Europe

BERLIN (Reuters) - Next Kraftwerke, a German power plant aggregator, hopes to repeat in 2018 the 50 percent increase in capacity it achieved last year, adding more green power producers at home and in neighbouring countries to its network.

Cologne-based Next brings together power plants that run on biogas or wind to create a volume of output large enough to be used on the lucrative market for balancing power supplies.

This market helps electricity grid managers smooth out sudden peaks and troughs of renewable power supply and so manage the shift from fossil fuels towards low-carbon power systems.

“We grew the portfolio by 50 percent in 2017 and now have four gigawatts (GW) of capacity under contract,” Next Kraftwerke co-founder Jochen Schwill told Reuters in an interview.

“It would be great to reach 6 GW in 2018,” he said.

That is the capacity of half a dozen nuclear power plants, illustrating the business’s growing scale.

Next, a so-called virtual power plant (VPP) operator, was especially successful last year in Italy, France, Poland and the Netherlands, where, as in Germany in recent years, traditional utilities are moving away from centralised power generation, creating opportunities for VPP providers, he said.

Next is Germany’s largest VPP by number of plants it has pulled together, currently around 5,000.

VPPs have helped rein in the cost of the shift to more renewable power for customers. Renewable energy production is more volatile than coal and nuclear power generation, potentially raising the cost of managing electricity networks as power cannot be stored easily for long periods.

There are several dozen VPPs in Germany and technology companies such as Siemens (SIEGn.DE) and Bosch [ROBG.UL] have also developed VPP software.

Schwill said flexible supply and demand management was also becoming more important across Europe to make up for falling generation volumes from conventional power plants that are shutting down amid competition from green power.

“We can close the volatility gap,” he said.

Thanks to VPPs’ flexibility, German balancing costs, which end-consumers pay as part of their bill, were cut by two thirds between 2011 and 2017 to 200 million euros (175.67 million pounds) a year, Schwill said, citing official data.

Dutch energy company Eneco last year became a 34 percent shareholder in Next, which was venture capital funded at its start in 2009.

Next’s sales rose to 380 million euros in 2017 from 280 million 2016, Schwill said, adding the company was profitable.

Editing by Mark Potter

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