By commandeering smart thermostats and water heaters and sipping power from in-home EV chargers, virtual power plants are being formed across the country. Here's how they work and how they help green energy efforts.
You already know that a smart thermostat can help you save energy in your home and that an electric car can cut down on planet-warming greenhouse gas emissions. But you might not know that these pieces of technology can also help support the shift to greener energy by linking up to something known as a virtual power plant (VPP).
What is a virtual power plant?
As its name implies a VPP is more of a concept than a physical structure. The idea is to leverage existing technologies used by residents such as smart thermostats and solar power storage batteries known as distributed energy resources or DERs. These resources can be called into service to not only supply energy to power grids when needed, but also reduce the demand for electricity during peak demand times, effectively freeing up more energy for use.
How are virtual power plants being used?
Consultancy firm ScottMadden reports that according to an analysis from researchers Wood Mackenzie, there are already over 500 VPPs in operation across North America.
In Hawaii for example, a company known as Shifted Energy installed smart water-heater control modules inside over 3,000 households on the islands of Maui and Oahu. The modules learn how a household uses the water heater, then it turns it on and off to not only save the family money, but to also lessen the load on the main electrical grid as needed. This is part of a process known as "demand response." The modules also monitor the water system to detect leaks or other inefficiencies that might be wasting consumers' money.
In another effort to take maximum advantage of the energy saving potential of smart devices, in November of this year, Texas power company NRG announced a partnership with VPP company Renew Home to deploy smart thermostats to hundreds of thousands of customers. The goal is to help consumers ease off a power grid that is being tested repeatedly by extreme weather. Renew Home says the capacity of the project will be equivalent to the output 294 wind turbines or of 12 gas-powered peaker plants, power-generating facilities that only come online when demand exceeds grid capacity.
Renew Home was created when Google's Nest Renew merged with OhmConnect, a free service that monitors utility company outputs and alerts users to cost fluctuations. Google invested $100 million into the newly formed entity, showing just how important VPPs are becoming.
Battery boost
Meanwhile, in North Carolina, utility operator Duke Energy launched a pilot program as part of its PowerPair initiative, which allows the company to access the solar storage batteries of its customers 18 times between December and March, nine times between March and September, and nine other independent times. In return, customers get a monthly or a one-time credit from the company. Tapping into the power stored in these batteries when needed can support the grid during peak hours and North Carolina is just one of a growing number of states where such programs are being put into place.
Even Tesla has gotten in on the action through a partnership with South California Edison that gives Powerwall users the chance to support the local energy grid during emergency electric events. The initiative is called the Emergency Load Reduction Program which lets owners of Tesla's in-home battery volunteer to support the grid during times when the local grid needs emergency support. Participants receive $2 for each kWh their Powerall delivers during an event.
In San Francisco, clean-power pioneer Ava Energy is also looking at how electric car charging can help support the grid by remotely managing in-home chargers. If, for example, a user won't need their car fully charged until morning, the company can manage charging remotely to shift its charging schedule out of the peak dinnertime hours to another part of the night, when prices are also cheaper for consumers.
Can VPPs really make a difference?
The short answer is, more than most of us realize.
The US Department of Energy estimates the current VPP capacity in the United States as somewhere between 30 to 60 GW. But, says the DOE, if that figure could grow to 80 to 160 GW, it could account for 10-20% of the peak load by 2030.
In terms of cost, an analysis done by The Brattle Group says that residential DERs could provide peak power at a net cost 40-60% cheaper than traditional alternatives like utility level battery storage systems or natural gas peaker plants. That, says the consultancy, could result in savings of between $15-35 billion over traditional peak-power supply options along with "over $20 billion in additional societal benefits – such as those related to emissions and resilience – over 10 years."
As countries shift away from reliance on fossil fuels and their residents boost their uptake of smart devices, solar energy systems, and electric vehicles, bringing more VPPs online certainly makes a lot of practical – and financial – sense.
To learn a bit more about VPPs, check out this enlightening video of a conversation between Brattle's Ryan Hledik and Matthew Sachs, CEO of Peak Power, a company involved with clean energy tech, including the optimization of grid-interactive buildings, bi-directional electric vehicles and more.