Abstract This paper forms a Virtual Energy Storage System (VESS) and validates that VESS is a cost-effective way to provide the function of energy storage through the utilization of the present network assets represented by flexible demand. As a solution to convert to low carbon cities, a VESS is firstly modelled to store and release energy in response to regulation signals by coordinating the demand response (DR) from domestic refrigerators in London and the conventional flywheel energy storage systems (FESS). The coordination of DR and FESS mitigates the uncertainties of DR and reduces the capacity of costly FESS. The VESS is applied to provide ancillary services to the power system and contributes to the reduction of carbon emission through the replacement of spinning reserve capacity of fossil fuel generators. Case studies were carried out to validate and quantify the capability of the VESS to vary the stored energy in response to grid frequency. Economic benefits of using VESS for frequency response services were firstly estimated and a potential saving of £91m-£103m is expected.
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