Virtual Power Plants Thwart Plot Against Renewable Energy

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Regardless of this year’s sharp turn against wind and solar power by the White House, the US renewable energy transition is unstoppable. The killer combo of solar plus storage has been outpacing all other utility-scale forms of domestic energy production in terms of adding new capacity to the grid. Wind has been pulling in a reasonable share as well under the circumstances, and now virtual power plants are reaching out to scrape together the vast potential of distributed energy resources, too.

Virtual Power Plants & Renewable Energy

Without getting too deeply into the weeds, “distributed energy resource” (DER) generally refers to anything that produces or uses electricity outside of the traditional model of centralized power plants. So, alongside rooftop solar panels, bi-directional equipped EVs, and home energy storage systems that can feed electricity back into the grid, a DER network can include refrigerators, EV chargers, thermostats, and any other device that sucks electricity out.

When all these resources are connected, grid operators can automatically call upon thousands of far-flung energy-using devices to dial down their electricity consumption if the grid needs relief during peak use periods, and they can request electricity-producing devices to contribute more inputs, too.

If all goes according to plan, DER systems can manipulate enough load-shifting to avoid the construction of new gas peaker plants, which would otherwise be needed to fill the gaps during daily peak use periods. Hence the term “virtual power plant,”  as opposed to a physical brick-and-mortar facility (see lots more VPP background here).

Virtual power plants represent a far more sophisticated, technology-driven system than existed for grid balancing purposes back in the olden days, when grid operators had to plea with customers over the airwaves or by telephone to cut back on their electricity consumption during periods of grid strain. Virtual power plants are also far more flexible and granular than conventional demand-response systems, which are designed to incentivize energy savings during set blocks of time, and they can be calibrated to maximize the availability of renewable energy on the grid.

Home Security Systems & The Rise Of The Virtual Power Plant

Virtual power plants are not a particularly new phenomenon, but there is plenty of room for scale-up, and that’s where things get interesting. In the latest development, the Brooklyn-based clean energy management specialist EnergyHub has just acquired the Texas firm Resideo Grid Service, with the aim of applying its DERM (DER Management) system to Residio’s DER network.

“The acquisition reflects a growing industry shift toward using a single integrated edge distributed energy resource management system (DERMS) platform to manage all distributed energy resources (DERs) as utilities expand Virtual Power Plants (VPPs) to include EVs, batteries, and other DERs,” EnergyHub explained in an embargoed press statement.

That’s a mouthful of acronyms all in one bite. Leaving those aside, the idea is to provide utility companies with one seamless platform to manage virtual power plant operations. EnergyHub states that its DERM platform is currently  deployed by more than 120 utilities, and Resideo has more than two dozen utilities and electricity markets in its portfolio. Together, the two companies now have more than 2.5 million DERs on their management roster.

In an interesting twist, both companies have roots in the property security industry, indicating a technology transfer opportunity between the security space and DERs. EnergyHub was acquired by the security systems firm Alarm.com back in 2013, and Residio is also  applying its extensive background in security to home energy systems.

What Could Be Better Than Solar Power?

The US solar industry has already established itself as the quickest and most economical means of adding more kilowatts to the nation’s power generation profile. It’s difficult to top that record, but stakeholders in the virtual power plant space are determined to beat solar at its own game.

That may seem counterintuitive at first glance. However advocates maintain that a vast amount of untapped grid capacity is already at hand, which virtual power plants can tap with a bare minimum of added infrastructure.

“VPPs are the fastest, cheapest and most customer-centric solution to load growth,” explains EnergyHub CEO Seth Frader-Thompson.

Don’t just take his word for it. In September, the firm Wood Mackenzie ran the numbers for North America and came up with this nugget: “The virtual power plant (VPP) market grew rapidly over the last year, reaching 37.5 GW of behind-the-meter flexible capacity.”

On the down side, Wood Mackenzie also notes that virtual power plant capacity in wholesale markets continues to reflect barriers to participation among residential customers. “The share of VPP wholesale market capacity from residential customers increased to 10.2%, from 8.8% in 2024,” they observed.

Still, with home energy storage and home EV charging on the rise, there is plenty of room for residential participation to grow, given a supportive regulatory environment. Wood Mackenzie notes that smart thermostats have been the incumbent technology for participating in virtual power plant systems, but home batteries and EVs were featured in 61% of deployments over the past year.

Next Steps For Virtual Power Plants

Grid resiliency and emergency response form another factor supporting both renewable energy and the DER movement, and that is beginning to show up in research leading to innovative new virtual power plant systems.

In February, for example, MIT teased word of a new DERM-enabled grid emergency response concept that enlists solar panels, batteries, electric vehicles, home appliances, smart thermostats and other DER to beat back cyberattacks and other grid disruptions.

Called EUREICA for Efficient, Ultra-REsilient, IoT-Coordinated Assets, the system deploys an algorithm that quickly sorts through all participants to identify those most capable of responding to an emergency quickly and effectively.

“Depending on the situation, the algorithm can dial down demand from these devices, or it can pull stored energy from them. In return, the subscriber receives compensation for their contribution to the grid,” CleanTechnica reported in February.

The key word is subscriber, by the way. Typically, a virtual power plant system runs on a subscription basis. Electricity users voluntarily sign up to participate, lured by the promise of financial incentives and the opportunity to use more renewables, or both. Subscribers generally retain the power to override any automatic adjustments as needed.

The EUREICA study was published in full on August 6. “The electricity grid has evolved from a physical system to a cyber-physical system with digital devices that perform measurement, control, communication, computation, and actuation, the study authors summarized.

“The increased penetration of distributed energy resources (DERs) that include renewable generation, flexible loads, and storage provides extraordinary opportunities for improvements in efficiency and sustainability,” they added, while reminding everyone that the point of the study is to develop systems to mitigate cyberattacks and other vulnerabilities that can plague cyber-physical systems.

Image: The smart home of the future can hook up to a virtual power plant to earn financial incentives and fight back against cyberattacks, too (courtesy of Residio).