The podcast discusses the importance of virtual power plants (VPPs) in building a grid powered 100% by zero-carbon resources. It explores the evolution of VPPs over the past 30 years, their potential role in addressing growing grid load, and the slow implementation of FERC order 222. The podcast also delves into initiatives and reports by Latitude Media, innovations in the VPP industry, and aims to generate excitement about the potential of VPPs in clean energy.
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Quick takeaways
To achieve a 100% zero-carbon grid, the capacity of virtual power plants (VPPs) needs to triple by 2030.
VPPs can effectively manage peak demand locally or shift it outside of peak hours, potentially saving billions of dollars per year.
Deep dives
The Origins of Virtual Power Plants
The concept of virtual power plants (VPPs) dates back almost 30 years, with the term gaining popularity in the early 2000s. Pilot projects in Europe demonstrated the effective integration of various distributed resources through top-down, dispatchable systems. With the advancement of technology and the increase in distributed energy resources, VPPs have evolved to include rooftop solar, customer-sided batteries, electric cars, and more. The US Department of Energy recognizes the potential of VPPs in meeting the increasing peak demand on the grid and has provided support, including a $3 billion partial loan guarantee for a solar and battery project.
The Need for VPPs
The US grid is expected to face a significant increase in peak demand while retiring old coal power generation. This creates a need for additional clean and firm capacity. By utilizing distributed energy resources and orchestrating them through VPPs, peak demand can be managed locally or shifted outside of peak hours. This approach can be more efficient and cost-effective compared to traditional methods, potentially saving billions of dollars per year. To meet the increasing demand and achieve a 100% zero-carbon grid, the capacity of VPPs needs to triple by 2030.
The Categories and Capacity of VPPs
VPPs come in various forms, depending on the types of distributed energy resources (DERs) involved. Examples include solar and storage VPPs, pure storage VPPs, managed EV charging, and commercial and industrial flexible demand VPPs. Currently, the estimated capacity of VPPs in the United States ranges from 30 to 60 gigawatts. However, with the growing adoption of DERs, including rooftop solar, batteries, EV chargers, and more, the capacity of VPPs could potentially reach 200 gigawatts by 2030.
Challenges and Innovations in the VPP Market
The adoption and success of VPPs depend on various factors, including regulatory measures and consumer experience. Some utilities are already embracing VPPs, either through turnkey approaches or by developing in-house programs. Regulatory innovations, such as integrated distribution system planning and performance-based rate making, are being implemented to align utility financial incentives with system optimization. Innovations in consumer experience are focused on optimizing when devices, such as EV chargers and water heaters, consume electricity, providing savings, decarbonization, and grid efficiency. The future of VPPs involves wider accessibility, integration with utility planning, and continued regulatory advancements and innovations.
If we want any chance of affordably and reliably building a grid powered 100% by zero-carbon resources, we need to triple the capacity of virtual power plants.
That’s the conclusion of a report released last fall by the Department of Energy, which examined the different business models and integration approaches for tying solar, batteries, thermostats, electric cars, water heaters, and other distributed assets into dispatchable power plants.
The US already has tens of gigawatts of VPP capacity, mostly in the form of “bring your own device” programs that harness thermostats or water heaters for demand response services. But there are new models emerging that harness rooftop solar, batteries, and EV charging to enable bigger, longer-lasting load shifts.
“I like to say that the term VPP is kind of like the term sandwich. There are lots of different kinds, they're full of different ingredients, and they serve lots of different purposes,” said Jen Downing, an engagement officer at the DOE, who leads the agency’s work on the space.
The concept of VPPs has been around for nearly 30 years. But as the US faces a dramatic increase in peak demand by 2030 – and with distributed resource capacity set to double – the urgency for deploying them has increased.
“We're going to need clean, firm [power]. We're going to need more transmission capacity to transport that electricity. But one way to address that increase in peak is to use distributed energy resources to either serve that peak locally or to shift that peak outside of peak hours. And so that's where VPPs come in,” said Downing.
This week on The Carbon Copy, we spoke with DOE’s Jen Downing about the different ways that virtual power plants are getting built – and the need to build many more.
Read our show notes and all our industry coverage at Latitudemedia.com.
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