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How Virtual Power Plants Can Help Replace Dirty Peaker Plants

By Ken Munson

A recent story in The Wall Street Journal highlighted the conundrum facing many electricity generating companies and PUCs today: How to pay for aging, mostly coal-fired power plants whose only function is as backup power for peak demand?

Power plant and visible emissions (optimist.com)In Ohio, two owners of seven such plants have proposed that consumers pick up the tab and pay to maintain the plants, as well as to convert them to burn natural gas. They argue the plants can’t be closed down or there won’t be enough power when demand really spikes. Consumers, of course, see the cost as the owners’ problem, not theirs – even though it’s also in the interest of consumers to have enough capacity available when it gets very cold this winter.

But there’s no reason this has to be a zero-sum game. There’s another far more cost-effective and environmentally sound alternative, which is to significantly increase the pace of deployment of renewable energy generation and high-capacity storage at the individual home and business level.

Current PV and wind technologies have improved to the point where they can produce enough power to meet the needs of the owner, plus excess energy that can be exported to the grid. When you add the latest utility-grade storage batteries to those installations, along with the most advanced inverters and electronics, you now have a reliable source of energy that can be tapped even when there’s no active generation.

It’s a simple step from using this technology to solve one consumer’s energy needs to addressing the problem in Ohio. Using cloud-based software management, these individual units can be aggregated by a local utility into a “virtual” power plant, or VPP, serving a whole neighborhood, an industrial park or even entire communities. The control systems allows the aggregated power of these systems to be redirected over the local grid at periods of high demand, to any consumer – not just to another DER owner.

The more of these renewable systems with integrated storage are installed in an area, the more they reduce the need to bring additional large-scale plants online to meet demand. And when enough VPP capacity is connected to the grid, the available stored energy and flexible nature of VPPs will make it possible to retire these old, costly and polluting plants. Their extra capacity will have been replaced by VPPs and be fully prepared to meet peak demand.

In fact, we will be better prepared to meet that demand reliably, because distributed VPPs eliminate the potential for single-point failure that is inherent in those large plants. Unplanned outages due to large plant failures also wreak havoc on utilities and consumers, and cause wild price fluctuations. Locating resources close to demand also reduces power losses, and may allow utilities to defer costly transmission and distribution upgrades.

Flexibility, reliability and cost: This is what makes VPPs highly attractive to utilities, while at the same time providing the assurance of reliability to the consumers who own them, as they have first call on their own power.

Utilities are already investing in modernizing the distribution grid to create a network-style electric power system that can accept the power from these storage units more readily. An acceleration of this process would allow even more VPP capacity to come online quickly. Rather than continuing to make major investments in large-scale power plants, we should shift that investment to utility distribution infrastructure and technology that will support the use of net generation from storage-based DERs. Connected into VPPs, they will save consumers money, provide reliable and robust excess capacity to meet peak demand, and help create energy independence for America.

Ken Munson is Co-founder & CEO of San Francisco-based energy storage company Sunverge Energy.

 
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