From the Midwest to the South, the U.S. has experienced dangerous cold snaps this winter that challenge grid operators to meet rising heating demands. These temperature extremes are driven in part by climate change, which is why the past decade has had the highest temperature extremes in recorded history, as well as why temperature extremes are increasingly erratic.
COMMENTARY
For utilities, that means an increase in demand during months with greater temperature extremes, all while navigating the threat of increasingly volatile weather events. Fortunately, utilities can leverage the proliferation of distributed energy resources (DERs) like solar, battery energy storage systems, electric vehicles (EVs) and EVSE chargers, and smart devices like thermostats and water heaters for demand flexibility programs like demand response, EV managed charging, and Bring Your Own Device (BYOD) programs.
More Virtual Power Plant Capacity Needed
According to the Dept. of Energy (DOE), the U.S. needs to increase national virtual power plant capacity from the current 30-60 GWh available VPP output to between 80-160 GWh of capacity. In that same report, the DOE notes that the current 30-60 GWh of available capacity is largely attributable to demand response programs, and identifies virtual power plants as “aggregations of DERs that can balance electricity demand and supply and provide utility-scale and utility-grade grid services.” For utilities, this means that all demand flexibility programs are useful in raising virtual power plant capacity, both at a local and national level.
Syd Bishop The virtual power plant market has grown exponentially, with analysts predicting a 24.8% CAGR by 2034. This growth is, in part, driven by the efficacy of virtual power plants as a strategic resource for strengthening the grid and defraying high peak energy costs, which is why sunny locales like Texas and Puerto Rico are implementing virtual power plants as reliable and decentralized energy resources. Utilities benefit from virtual power plants by leveraging community-generated solar and battery energy or through aggregate load shifting designed to conserve during peak periods of usage or as part of an energy arbitrage strategy. Let’s look at the most common uses for virtual power plants.
Demand Flexibility Initiatives
Virtual power plants are realized by employing the behind-the-meter DER assets found in places like residential, business, and commercial customers through the use of a grid-edge distributed energy resource management system (DERMS), which aggregates these otherwise disparate resources for use in demand flexibility programs. For example, demand response is a time-tested demand flexibility strategy that aggregates customer devices for use in communal conservation efforts. This often manifests as part of a thermostat program, which allows program managers to shift or decrease usage to off-peak periods of demand. Likewise, EV charging and BYOD programs are effective load-shifting tools to mitigate usage during peak periods of consumption, in turn decreasing the potential for costly peak energy purchases while strengthening grid resiliency.
Tips For Running Virtual Power Plants
There are many opportunities to pilot or scale virtual power plant programs. First and foremost, market to customers. The efficacy of any virtual power plant is driven by customer enrollment and participation. Conduct market research to determine the optimal device partner(s) and type(s) that are most common in your service territory and advertise the benefits extensively. Once a virtual power plant program is established, there are many opportunities for utilities to optimize and streamline their operations.
Advanced Monitoring & Predictive Analytics
Smart grid technologies like EV telematics, solar inverters, and other device interfaces provide useful metrics for utilities to determine their best strategy moving forward. Through the use of forecasting technology, program managers can use device data to inform their demand events, energy purchases, and more. This approach allows utilities to quickly identify and respond to potential issues before they escalate, reducing outage times and enhancing overall reliability.
Predicting & Preparing
By employing predictive analytics, utilities can anticipate severe weather patterns and take proactive measures, such as pre-positioning crews and resources. Unfortunately, demand flexibility programs cannot prevent or resolve outages caused by extreme weather events; all customer programs rely on infrastructure to aggregate and redirect load, so if the infrastructure is damaged or destroyed, there is nothing to shift. Still, virtual power plants present a decentralized resource separate from conventional generation strategies, meaning that utilities can access and distribute energy as needed when possible. Furthermore, utilities can use forecasting technologies to inform energy purchases in advance, to prepare for potential outages.
Leveraging Energy Storage
U.S. battery storage has grown exponentially in recent years. Batteries are useful both in demand flexibility initiatives like demand response and as part of an energy arbitrage strategy. For the former, grid operators can tap into battery energy storage systems to manage stored energy to either slow charging speeds or to access available energy as part of a virtual power plant program. For the latter, utilities can use stored battery energy during periods of peak demand to minimize TOU rates and mitigate peak energy market purchases. In both cases, batteries are a critical component to the long-term success of any virtual power plant.
VPP Reliability
Ask a grid operator, and they will admit that behind-the-meter DER assets represent an unknown quantity. Because these DER assets are subject to environmental pressures—solar can only collect so much energy on cloudy days for example—behind-the-meter DERs are a challenge to grid operators who require certainty in their load planning. Virtual power plants alleviate this by providing an abundant path to clean energy through aggregate load shifting. Furthermore, tools like Topline Demand Control that combine model predictive control, AI, and forecasting with a Grid-Edge DERMS are designed to optimize DERs, guaranteeing a reliable output tailored to meet the needs of the grid operator.
Leveraging VPPs to Prepare Utilities for Extreme Weather
Virtual power plants have evolved beyond the pie-in-the-sky buzzword that has dominated the industry for years to a practical reality. With temperature extremes increasing in both winter and summer months, developing more virtual power plant capacity whether through demand response or more is crucial to meeting demand. Especially during uncertain weather months, VPPs offer an opportunity for utilities to meet demand, reduce energy insecurity, and defray the high costs of infrastructure upgrades. —Syd Bishop is a senior content specialist for Virtual Peaker.