Distributed energy resources (DERs) are rapidly changing the nature and needs of our energy grid, making electrification and digitization two of the most important megatrends – and imperatives – facing utilities and the grid today. Contact online >>
Distributed energy resources (DERs) are rapidly changing the nature and needs of our energy grid, making electrification and digitization two of the most important megatrends – and imperatives – facing utilities and the grid today.
The modern grid needs solutions that create compelling opportunities for customers to actively participate in the energy transformation. Harnessing the collective power and massive potential of the growing number of distributed energy assets, we can deliver a powerful step change in flexible capacity that results in a more resilient grid. Last month, Uplight announced an agreement to acquire AutoGrid, putting us firmly at the center of these energy transformation imperatives.
One (of many) new opportunities we''re excited about is Virtual Power Plants. VPPs are an aggregation of DER technologies (think: smart thermostats, electric vehicles, solar panels, and battery storage) that utilities can call upon to help balance the grid-like offsetting peaks and valleys of clean energy and reducing demand when everyone needs electricity simultaneously. A demand response program can be considered a type of VPP, but VPPs are rapidly evolving to include more device types and be used much more dynamically.
VPPs have become a buzzworthy term over the past few months. Not only are VPPs a cost-effective way to improve grid reliability, but they are cheaper to deploy than gas peaker plants or utility-scale battery programs. In fact, The Department of Energy says that tripling the scale of VPPs – deploying 80-160 GW – by 2030 could help cost-effectively manage the clean electricity boom. The Brattle Group put a number on the savings: between $15 and $35 billion in capacity investment over the next decade.
Many in the industry are digging in to see how to tap into this massive potential. We''ve seen both new and established companies including Ford, GM, Google, and SunRun working together to advance the market. This is great news because rules for wholesale markets and states vary widely, from device eligibility to compensation, to data requirements, and there''s a lot to do to ensure it''s easy for customer DERs to participate and get compensated fairly.
The real key to unlocking the power of VPPs? A connected customer experience. Although customers adopt different DERs through different channels, energy providers need to deliver a unified digital solution that makes it easy for them to access various rebates and programs. At Uplight, we see that the most successful utility VPP initiatives are those that use an integrated technology approach to educate customers at the point of sale, enroll them into programs upon purchase, and engage them continually to retain participants and provide flexibility year after year. Without a smooth and streamlined experience for customers, utilities run the risk of failing to hit VPP enrollment targets and/or losing capacity due to customer attrition.
Utilities in many regions are already utilizing VPPs to deliver meaningful results at scale. This past summer, utilities in Missouri, Illinois, and Georgia used Uplight''s demand response as a programmatic tool to address grid emergencies. We also helped California avoid forced outages during all-time record-breaking temperatures. PG&E''s demand response program, run by Uplight, recently reached over 100,000 device enrollments and has shifted up to 40 MW per event––half the capacity of a typical natural gas peaker plant. Most recently Puget Sound Energy and Uplight partner AutoGrid announced plans to scale up a multi-asset VPP comprising EVs, battery storage, and other DER to provide 100 MW of capacity by 2025.
To make the promise of VPPs a reality, we need the right market conditions in place to enable the market to scale. We''re already digging in with utilities, regulators, and industry leaders to help shape the policies and regulations that will enable VPPs to deliver a win/win/win: for utilities, the clean energy market at large, and energy customers. But, as with all great things, there is more work to do.
Sam Hartnett is a Senior Product Marketing Manager for Uplight''s demand management solutions. He has over a decade of experience in demand response, DER management, and software development across the US and international markets. When he''s not working on the energy transition, he can be found recreating in the mountains and rivers near his home in western Colorado.
Earlier this year, German battery manufacturer sonnen launched a new virtual power plant (VPP) in Sweden, its latest move to reinforce energy grids following work in both its home country and the US. VPPs, typically a combination of renewable power generation facilities and storage systems, have often been used to accelerate the deployment of small-scale renewable power, such as rooftop solar, as these systems can manage power demand and supply without power grids having to be upgraded, which can require time and investment.
However, as sonnen senior VP of VPP project business, Geoff Ferrell, tells PV Tech Premium, the benefits of a more sophisticated power management and distribution structure could be seen on a larger scale.
"The future is a harmonisation and a better utilisation of the grid that exists," explains Ferrell."We talk about off-grid and micro grids, and there are a lot of companies out there talking about grid defection or telling a utility to buzz off or whatever [but] as an industry, we don''t do a great job being transparent about what it is that we''re selling.
"One of the approaches that we, as an industry, and we, as sonnen, have taken is that it''s not about grid defection, it''s about grid partnership and utility partnership," he added, suggesting that the greater use of VPPs, and all the autonomous and intelligent systems that they involve, would help balance the two great and often conflicting demands of utilities: providing power to customers, but doing so in a way that is commercially viable for all involved.
"The reality is that magically, if I could drop a million batteries into Utah tomorrow, and the utility could use them in the way that they''re using the 5,000 or so that they''re using today, prices would drop," says Ferrell, pointing to the delicate balancing act in the renewable power-plus-storage space: greater renewable power generation capacity, and greater storage capacity, could be of benefit for a particular user, but could significantly disrupt power prices across the grid.
For instance, figures from the European Commission show that, in the second quarter of this year, renewable power, primarily wind and solar, accounted for a record 52% of the EU''s electricity generation, compared to a record low of 20% for fossil fuels. However, this quarter also saw an average power price of €60/MWh, a full 33% lower than in the second quarter of 2023, a significant decline that does not even take into account the power price changes in response to disruptive events beyond the energy sector, such as the Covid-19 pandemic and Russia''s invasion of Ukraine, in recent years.
"So if we do this right, if we harness these machines that have been built very carefully over decades and decades, and we partner with utilities and markets better, it will have the net effect we''re looking for: we will get lower carbon energy in the grid 24/7, we will have lower prices and we''ll have greater sustainability and greater interoperability for all the stakeholders involved," explains Ferrell.
This considerable potential is why VPPs, according to Ferrell, are "definitely primed for growth". Earlier this year, sonnen launched a collaboration with energy management platform Tibber in Sweden, which saw sonnen customers receive additional payments for involving their batteries in the frequency containment reserve (FCR) market, an example of a smarter energy management system looking to provide more reliable power for both consumers and a wider grid.
"Automation and intelligence are something that partners are certainly asking [for]," explains Ferrell. "AI has become the new new term! Last year, in the industry it was ''VPP'', before that we had things like blockchain and I think AI is the phrase right now.
He goes on to suggest that more sophisticated energy management systems could go above and beyond demand response systems, which have come to dominate much of the discussion around VPPs and take a more proactive approach to electricity generation and usage.
"[Our work] kind of diverges a little bit from the term ''VPP'' as it''s recently been defined," says Ferrell. "VPP encompasses demand response products and energy storage systems, and different things that have different levels of participation and efficacy in the marketplace.
"We really think that where it''s growing and really primed for growth is in this movement away from demand response products – thermostats, lightbulbs, pumps, these types of things – into what we''ve always done, which is energy storage systems, which can be extremely dynamic, extremely fast responding and can do more than just demand response.
"We can provide demand response – that''s what the market or the utility operator is looking for – and we can also do things like reverse demand response, or net injection, or pulling loads at very precise hour levels, as they''re requested."
When asked about the potential impacts on the global energy mix of this adoption of a smarter energy management system, Ferrell expresses optimism that systems like VPPs could be used to help manage a technologically diverse and renewable power-driven, energy mix. "That is certainly my hope," he says.
"The indicators would seem to be swinging that way," he adds. "Diversification, both in generation source and generation location, in every industry that we''ve ever seen something like that, have proven themselves more reliable, less expensive long-term and to be the prevailing solution. I don''t think energy is any different."
When asked about solar power in particular, Ferrell says that it would likely be "extremely important" in the future of the energy mix, but that it could benefit from a change in perception, at least in the US.
"The issue with solar is, at least in the US and how it''s viewed by the utilities, is that it''s almost like it doesn''t exist," Ferrell says. "The utility cannot plan on solar alone because it''s so variable, it''s so volatile, it''s so interruptible – a cloud rolls over, a customer turns it off, or whatever happens – and what ends up happening is we see a lot of curtailment.
"And when curtailment happens, a lot of that curtailment starts with renewables, which is the most shameful thing we can do; we''ve taken the time to harness this free, abundant clean energy and then the utility is forced to curtail it because it doesn''t have the ''plan-ability'' and effectiveness of a nuclear power plant or a gas power plant has, as part of their internal resource plan.
"VPPs, I believe, helps us solve that problem," adds Ferrell, who goes on to highlight that, often, utilities have a legal obligation, first and foremost, to provide reliable power to their customers at an affordable price. If solar is to account for a larger piece of the US energy pie, systems such as VPPs, which could improve the perception of solar as a cost-effective and reliable power source, may prove to be vital.
"It firms up, or makes solar and renewables fully dispatchable, fully dependable [and] fully reliable in ways that utilities can start to put these types of assets, that are controlled by a battery, into their resource planning, and know that when they call on them, those resources will be there."
For Ferrell, the greater use of VPPs could help ensure a reliable source of power, which fits the criteria of what he calls a "better-quality kilowatt-hour".
"Any time we can create a better-quality kilowatt hour – meaning lower carbon footprint, lower price and be a better steward of the source energy where it came from – I think that''s a good thing for us," he says. "I think, at least the utilities I''ve talked to, want to do that and are aligned around that, but at the same time they''re legally obligated to maintain a reliable grid, and make sure that when a customer turns on a light switch, that light switch turns on."
This need to present solar power as reliable is of particular importance, considering, as Ferrell says, a number of markets around the world are becoming increasingly liberalised.
"It becomes incumbent on us, as the aggregators, as the developers, as the producers of these programmes and assets – to do it in such a way that when you go to market you''re bringing an asset to market that can compete in that marketplace," says Ferrell. "If you create a solar farm and your embedded costs are US$0.30/kWh, and you''re trying to go to market, you''re just not going to get picked up.
"The flip side is that, ultimately, this becomes easier for the grid operators because they say ''it doesn''t matter where this came from, I''ve got this asset, they''re telling me they can provide energy at US$0.12/kWh, I''m going to pick that up''."
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