It’s been hot in New England this summer. Whether the heat is because of stalled jet streams or Mars being in retrograde, it has made people rush to turn on their air conditioners in record numbers, even in Vermont where a heat wave is officially defined as anything over 75 degrees. One utility company in Vermont is using a virtual power plant (VPP) comprised of 2,000 Tesla Powerwalls installed in homes across the state to beat the heat.
Last year, Green Mountain Power started offering 2,000 customers a chance to own a Tesla Powerwall residential storage battery for as little as $1,500 and $15 a month for 10 years. But there was a catch. All those Powerwalls would be accessible by the utility company to help stabilize the grid and supply extra electricity, when needed.
The program represented a significant cash outlay for Green Mountain Power. The cost of a Powerwall system plus installation is about $5,500, so the company was investing $8 million of its own money up front and betting it would recoup that investment over time. Now the company says its virtual power plant system saved it $500,000 in just one week this month as temperatures soared into the 90s.
“During that peak usage, peak hour, every megawatt that we can knock off is a real savings. That one hour is a very significant cost,” Josh Castonguay, vice president and lead innovation officer for Green Mountain Power, tells Granite Geek. Explaining how those savings came about is complex.
First, by tapping into its VPP system, it was able to avoid buying electricity from other power generators at peak prices. The cost of electricity from the grid is adjusted every 5 minutes. As demand goes up, so do the prices. But there is a second factor in play, one that people who only use electricity for routine domestic purposes are not aware of.
By drawing on its own resources, GMP was able to reduce its payments to the bulk transmission system for New England. That charge is based on usage during the hour of the year when the most electricity was being used. That hour for this year (so far) is between 5 pm and 6 pm on July 5, the time of day when Vermonters came home from work, realized “Oh my God, it’s hot in here!” and rushed to turn on their air conditioners.
By relying on all those Powerwall batteries, GMP skipped that peak hour, which will lower its electricity costs for the entire year. Total cost benefit to the company? $500,000, says Castonguay. “We’re always predicting the peak, looking at ISO-NE’s forecast information, looking at our own systems here. If tomorrow looks like there’s going to be a peak between 5 and 6 p.m., let’s look at running from 4 to 7 p.m. with batteries and other loads,” to lessen power purchases, he says.
“Right now, knocking down the peaks is the big advantage, but as we move ahead there will be more, things like regulation service, balancing solar intermittency,” he said. “You can use them like a generator, like a load, like a voltage source – you can do a lot with battery storage that we haven’t had flexibility to do in the past.”
The utility has developed sophisticated algorithms to monitor and control the Powerwall residential batteries connected to its system. “There’s a software platform that’s monitoring these all the time — check Powerwall performance, diagnose problems. We create a schedule so that it will make sure everything is topped off and ready to go. If we see storms coming, we can shift it.
“That same software can carve out batteries and say this group of systems we’re going to leave alone, or maybe use only 40 percent of them, to keep it for the customers if there’s a (power outage),” he says. “Unlike when you build poles and wires, where you have to build them and function with them but they don’t return any value. This actually pays for itself plus more,” he said. “Over the life of the program, we anticipate returns of over $2 to $3 million.”
Needless to say, Green Mountain Power is proactive when it comes to designing and building the energy grid of the future, unlike some larger utility companies like Arizona Public Service, which is fighting the changes coming to the utility business tooth and nail. It’s hard to believe that both companies are regulated public utilities.
APS acts more like an unregulated private company that wants to glom onto all the electricity in Arizona and use it to extract the highest financial return possible from Arizona rate payers. Part of that is because the Public Utilities Commission in Arizona has been packed with hand picked APS supporters for years, according to a recent report in PV Magazine.
Distributed energy is the future, no matter how much some utility companies may scream and kick up a fuss. Green Mountain Power is modeling today how a well run utility will operate tomorrow. Hear, hear!