In the quest to switch to more renewable energy sources, we continue to develop creative solutions designed to meet the planet’s increasingly complex energy needs. One of the most interesting developments is the rise of virtual power plants (VPPs).
Virtual power plants are platforms that harness the power of distributed energy resources (DERs), such as solar panels, home batteries, electric vehicle charging stations, and wind turbines, to create a network that can supply electricity as reliably as traditional power plants can.
Recent approval of a statewide VPP program by the California Energy Commission underscores the growing importance of these systems. This initiative will serve as a pilot test for VPP implementation — especially as the state continues to deal with extreme temperatures and increasing grid failures.
In this post, we’ll look at what exactly VPPs are, why they’re important, and why they matter for solar installers.
Understanding virtual power plants
A VPP is a cloud-based distributed power plant that brings together a variety of energy resources. It resembles a symphony of diverse instruments, each playing its part, but all under the guidance of a single conductor. In the case of a VPP:
- The “instruments” are distributed energy resources like solar photovoltaic (PV) panels, battery storage systems, and even flexible power consumers.
- The “conductor” is advanced software that harmonizes these resources, creating a single, larger power plant that can supply energy to the grid.
The beauty of a VPP lies in its decentralized nature.
Each component, whether it’s a PV panel on a homeowner’s roof or a battery storage system in a commercial building, operates independently. Yet, they interconnect and coordinate through the VPP’s software. This setup enhances energy efficiency and reliability, as power is dispatched where it is needed most, reducing strain on the grid.
VPPs are more than just a collection of energy resources. They demonstrate the power of technology and innovation in the renewable energy sector. By harnessing the collective power of individual energy resources, VPPs pave the way for a more sustainable and resilient energy future.
The significance of virtual power plants
Virtual power plants play a crucial role in modern energy management, offering tangible benefits to power producers, consumers, and the environment alike:
- For power producers, VPPs offer a more efficient way to manage their resources. By aggregating distributed energy assets, VPPs can balance supply and demand in real-time, reducing the need for costly and polluting peaker plants.
- Consumers also benefit. VPPs can help prevent blackouts by managing peak demand. In times of high demand, VPPs dispatch stored energy to the grid, preventing overloads and maintaining grid stability. Virtual power plants can also lower energy costs by allowing consumers to sell excess energy back to the grid.
- From an environmental perspective, VPPs can help smoothly integrate intermittent renewable energy resources like solar and wind. This reduces our reliance on fossil fuel.
In essence, VPPs represent a significant step towards a more efficient, reliable, and sustainable energy future.
The integral role of battery storage in VPPs
In a virtual power plant, batteries store excess electricity generated by the various distributed energy resources. This stored energy is dispatched when needed, enhancing the reliability and efficiency of the VPP.
For a real-world example, consider the situation in California. There are roughly 100,000 residential and commercial solar-charged batteries installed across the state. Combined, these batteries have the capacity to store and dispatch approximately 1 GW of power.
As Bernadette Del Chiaro, the Executive Director of CALSSA, said during her Empower keynote (emphasis is ours):
“[California is] able to boast being home to the largest battery in the world. Many people think when you say that, that I’m referring to the Vistra Energy battery storage project over in Moss Landing.
“And while that is an amazing facility — they just got a little bit bigger and we applaud this work on that — the biggest battery in the world is actually in people’s garages, all throughout the state. There are over a hundred thousand distributed batteries now interconnected to the grid with a total capacity of over a gigawatt.”
This vast network of batteries, functioning as a VPP, offers an unprecedented level of flexibility. Unlike a traditional power plant, this system can respond instantly to fluctuating energy demands, showcasing the potential that VPPs and battery storage have to revolutionize our energy infrastructure.
For PV systems, battery storage is equally crucial. Solar panels generate electricity during the day when the sun shines. However, energy demand often peaks in the evening when solar generation stops. Batteries solve this problem by storing excess solar power produced during the day for use during these peak times.
This ability to store and dispatch energy on demand provides several benefits. For one, it increases energy independence by reducing reliance on the grid. This can lead to significant cost savings, as utility customers avoid buying electricity from the grid during peak times when prices are highest. Moreover, battery storage can provide a backup power supply during grid outages, further enhancing energy security.
For installers and homeowners: Accelerating battery storage adoption
None of the above works, however, without widespread battery adoption. Fortunately, storage prices continue to fall — precisely as reliability, durability, and capacity all continue to increase. Even still, battery storage has yet to become mainstream.
“We’re just getting started,” Del Chiaro explained. “The [California] Energy Commission calculated that to get to a hundred percent clean energy we need to increase the build rate of storage eightfold — not the 250 megawatts we’re building today, but 2 gigawatts every year. And we need these goals near-term, not 2035 or 2045.”
One of the key factors influencing battery storage adoption is consumer buy-in. Incentives, such as tax credits and rebates, can play a significant role in encouraging more homeowners and businesses to invest in battery storage systems. What’s more, most VPP programs come with compensation for enrollment, as well.
Solar installers also play a pivotal role in promoting battery storage. They are often the first point of contact for consumers and can provide valuable information and guidance. Advanced solar design tools can significantly aid installers in this process.
For example, with California NEM 3, battery self-consumption can provide additional ROI for consumers. Installers need to be able to show homeowners how this works, including the specific benefits, and dead-on accurate quotes.
In closing…
The success of virtual power plants hinges on the widespread adoption of battery storage technology. This is not a simple task, but a multifaceted challenge that requires a concerted effort. From educating consumers about the benefits of battery storage, to providing incentives that make it an attractive investment, to deploying advanced software tools that simplify the process — every step is crucial.
As we continue to make strides in these areas, we are witnessing a significant uptick in battery storage adoption. This is not merely a trend — it represents a transformative shift in our approach to renewable energy management. This shift paves the way for a future where our energy supply is not only reliable but also clean and sustainable.
