Virtual power plants (VPPs) are networks of hundreds or thousands of households and businesses that agree to share the power of their thermostats, electric vehicles (EVs), appliances, batteries, and solar arrays to support the grid. When these devices are combined and coordinated, they can provide many of the same energy services as a traditional power plant.
A Virtual Power Plant can perform as reliably as conventional resources of electrical power, such as peaking power plants, and can provide energy to the grid at a similar scale, with far less impact on the climate.
According to a study by RMI, the research and advocacy group, the net cost to the utility of providing electricity from the VPP is only roughly 40% to 60% of the cost of the alternative options.
By that standard, a 60 gigawatt Virtual Power Plant could meet future resource needs at a net cost that could be up to $35 billion lower than the cost of the alternative options over the next decade.
For instance
Green Mountain Power, a Vermont electric utility, has been incentivizing its customers to install Tesla Powerwall batteries in their homes. Through that program it has built a network of 4,000 Tesla Powerwalls.
In a reciprocal agreement with customers, Green Mountain Power is allowed to use some power capacity of a customer’s batteries in exchange for credits on their electricity bill.
In 2020 alone, networking these Tesla Powerwalls into a Virtual Power Plant saved Green Mountain Power over $3 million.
Supporting data
RMI envisioned what this might look like nationwide in a report this year that demonstrated the potential for 61.9 gigawatts of capacity in the United States in 2030. Batteries would supply about 9.9 gigawatts; electric vehicles would contribute significantly more (17.3 gigawatts). But most of the capacity would be from homes and businesses (around 35 gigawatts) which would come from using the network to reduce electricity demand by adjusting thermostats, among other measures.
Even just focusing on batteries, 9.9 gigawatts is huge, equivalent to about a dozen natural gas power plants. And gas power plants have an additional drawback: a gas peaker is a multi-decade commitment with risks of becoming a stranded asset. By comparison, VPPs can be increased or decreased flexibly as the needs of a rapidly changing power system evolve.
The power grid is evolving rapidly, any plan for the future should be in the order of years, not decades. VPPs can provide multiple benefits to society and the grid, and it is time for regulators and grid operators to let them do just that.
Sources:
https://rmi.org/vpps-arent-just-a-one-trick-pony
https://insideclimatenews.org/news/22062023/inside-clean-energy-virtual-power-plants
https://electrek.co/2022/08/22/small-vermont-utility-builds-fleet-4000-tesla-powerwalls
https://www.brattle.com/real-reliability
*See Clean Energy Group’s webinar on VPPs
https://www.cleanegroup.org/webinar/an-introduction-to-virtual-power-plants/