A virtual power plant is a cluster of distributed generation

Distributed generation

Distributed generation, also called on-site generation, dispersed generation, embedded generation, decentralized generation, decentralized energy or distributed energy, generates electricity from many small energy sources....

 installations (such as microCHP

MicroCHP

Micro combined heat and power or micro-CHP is an extension of the now well established idea of cogeneration to the single/multi family home or small office building.- Overview :...

, wind-turbines

Wind power

Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....

, small hydro

Small hydro

Small hydro is the development of hydroelectric power on a scale serving a small community or industrial plant. The definition of a small hydro project varies but a generating capacity of up to 10 megawatts is generally accepted as the upper limit of what can be termed small hydro. This may be...

, back-up gensets

Engine-generator

An engine-generator is the combination of an electrical generator and an engine mounted together to form a single piece of equipment. This combination is also called an engine-generator set or a gen-set...

 etc.) which are collectively run by a central control entity.

The energy crisis in America has opened up the door for innovative companies to enter an arena that has only been available for utilities/multinational billion dollar companies until now. With the deregulation of markets around the United States, the wholesale market pricing used to be the exclusive domain of large retail suppliers; however local and federal legislation along with large end-users are beginning to recognize the advantages of wholesale activities.

Energy markets are those commodities markets that deal specifically with the trade and supply of energy.