What is a virtual power plant? It is any collection of behind-the-meter storage batteries that are linked together so they can provide electricity to the grid on demand. They typically involve residential batteries like the Tesla Powerwall, but can include any collection of batteries in homes, businesses, or even in electric vehicles.
Why would anyone want to create a virtual power plant? Because grid-scale battery storage is expensive. If there is a way to get residential storage batteries to multitask by providing backup power to a home or small business and help power the grid as needed, that would be a beautiful thing. It saves utility companies money and it also pays the owners of those batteries to let their batteries be tapped for grid duty. It is the proverbial win-win situation where everyone is happy.
Tesla vs. Sunrun
This summer, Pacific Gas & Electric, the largest utility company in northern California, will run tests on two different virtual power plants — one that uses Tesla Powerwall batteries and one that uses residential batteries supplied by Sunrun. What’s the difference? According to Canary Media, PG&E has been paying customers with Tesla Powerwall residential batteries to send power to the grid during during grid emergencies. “That’s more like a peaker plant,” John Hernandez, the demand response manager for the utility says.
By contrast, the experiment with the Sunrun batteries will also pay customers to discharge power during hot summer evenings. But instead of being tapped only during grid emergencies and paid for responding, they will receive a flat fee upfront in exchange for letting their batteries be programmed to discharge power from 7 to 9 p.m. every day during the months of August, September, and October. That’s more like the baseload power supplied by coal and nuclear powered generating stations, Hernandez says.
As California homes and businesses add rooftop solar systems that incorporate behind-the-meter battery storage, understanding the advantages and disadvantages of both systems will help PG&E decide what types of virtual power plants are best suited to balancing the state’s electrical grid when it is stressed by high demand — typically in the summer months. “What does a VPP need to look like going down the line?” Hernandez asks. He thinks the Tesla and Sunrun models are “a good start to defining the bookends.”
The Tesla virtual power plant program has grown to include more than 4,500 customers. In total, it can supply up to 33 MW of electricity to meet a grid emergency, as happened on the evening of September 6 last year when state grid operator CAISO was saved from having to order rolling blackouts by customers voluntarily reducing their demand for electricity and by tapping the extra electricity available in all those Powerwall residential batteries
Virtual Power Plant & Permanent Load Shift
The approach taken by the Sunrun pilot project is known as “permanent load shift.” Instead of only meeting grid emergencies, the resources are always available to provide a steady source of power that will make grid emergencies less likely. The PG&E project calls on Sunrun to deliver 30 megawatts of capacity from up to 7,500 new and existing solar-plus-battery customers across the utility’s service territory. Each participant will receive an upfront payment of $750 and a free smart thermostat in exchange for allowing their batteries to discharge their share of that 30 megawatt commitment.
This is familiar territory for Sunrun. Over the past few years, the company has launched VPPs in New England, New York, Hawaii, Arizona, and in multiple sites in California. Many of them were designed around daily, pre-planned injections of power rather than emergency responses.
Getting lots of homes and businesses to enlist in grid balancing programs could be one of the most cost effective ways for California to meet its clean energy and grid reliability goals, Canary Media says. Research from Lawrence Berkeley National Laboratory finds that smart investments in technologies and efficiency on the customer’s side of the meter could reduce energy use enough during the state’s summer evening peaks to eliminate the need for billions of dollars of batteries and other utility scale resources.
Giving Customers & Utilities What They Need
The challenge is developing a model that gives both customers and utilities what they need. Utilities need consistent, reliable grid support. Customers need their batteries to do what they bought them to do. Those two goals can sometimes clash with each other. Sunrun has promised those customers who sign up for its PG&E project that their daily evening battery discharges won’t leave them without sufficient battery power to handle grid outages, says Scott Peattie, Sunrun’s director of business development. He also promises participating in the program will not diminish their ability to sell power to the utility when they can make money by doing so.
Utilities are leery about relying on thousands of customer-owned batteries to provide help to the grid on a daily basis. They want to see proof that a virtual power plant is reliable before they start using VPPs on a larger scales. “Right in the middle of that is customer behavior,” Peattie says. “The more we plant the seeds of this repeated 7–9 p.m. contribution, the more we’re able to see how customers are able to deliver that.”
Ted Burhans, director of distributed energy resource technology at the Smart Electric Power Alliance, told Canary Media that reliability is the main thing that VPPs must prove in order for utilities to expand their use. “It’s easy for a utility to go to their peaker plant and say, give me 100 megawatts in a half hour. To give up that confidence is where utilities get scared.”
That is especially true for programs that change from treating batteries as just one of a number of resources that can respond to emergency demand requirements to something that utilities and grid operators rely on as part of their core reliability plans, he said. “There’s always the concern when you start to turn it into firm power. From a grid operator perspective, you need to give me that 30 megawatts because that’s what we’re depending on.”
PG&E’s plan to analyze just how solar-and-battery-equipped homes operate in the real world is a vital step in that confidence-building process, he said. “There’s going to be a lot of value in understanding what the characteristics of solar-plus-storage [are] in a home in California during late-season summer.” Peattie stressed that Sunrun is confident it will be able to deliver the full 30 megawatts of power between 7 and 9 p.m. from customers who sign up. “PG&E is looking at this as sort of an experiment,” he said. “Could it evolve into something bigger with PG&E? Sure.”
Software Is Key To Virtual Power Plant Management
Sunrun has teamed up Lunar Energy, a well funded Silicon Valley startup that is providing the software that will manage the PG&E trial. It has lots of prior experience from managing tens of thousands of behind-the-meter batteries for customers all around the world. “Lunar helps us juggle those critical priorities with our customers,” Peattie said. “We have to be impeccable with our dispatches, making sure that nobody’s battery is too low to supply backup power during that dispatch window.” Just how well Sunrun and Lunar Energy balance the competing needs of customers and the utility is what PG&E will be studying closely over the course of the year-long contract with Sunrun, John Hernandez said.
Virtual power plant technology is certainly not limited to California. Tesla has been operating one in Australia for several years that has been quite successful. The skepticism of utility companies is understandable. For decades, they have lived quite comfortably with a system that combines multiple sources of electricity so that whenever there is a demand for electricity, it can be met. The more these sorts of systems prove they are able to operate reliably, the more utilities will accept them as part of their normal operations.
Another untapped source of battery storage is developing — the batteries in all the electric vehicles coming to neighborhoods everywhere. If the electricity in those batteries can be harnessed the way residential storage batteries are today, that will open up entirely new ways to decarbonize the grid — something that must be done as quickly and affordably as possible.
Note: We’ve reached out to Sunrun for additional info and will update this article if we receive a response.
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