Virtual Power Plants Gain Ground

Virtual power plants are beginning to help meet peak power demand in California and across the globe at an affordable cost while diminishing the need for fossil fuel-powered peaker plants.

In the southern part of the state as summer approaches, customers with solar and battery systems are being incentivized by Southern California Edison to participate in virtual plans, including one operated by California company AutoGrid out of Redwood City in the Bay Area.

“Virtual Power Plants not only help with immediate crises like the power outages and over-extensions we’ve recently witnessed,” said AutoGrid CEO Amit Narayan “but also let energy-conscious Californians do their parts to better their communities and make positive impacts on the environment.”

Edison sees a big future for the virtual power plant technology.

“For California to meet its carbon neutrality goal by 2045, SCE estimates that 10 GW of stored energy from hundreds of thousands of California residents’ home batteries and solar power from 50% of single-family homes in California will be needed to help power the grid,” according to Katie Sloan, utility director of advanced energy solutions.

Virtual power plants, which combine solar systems and batteries at utility customer premises, can be used for both high-energy demands that are predictable and for unpredictable events like hot spells, storms, and emergencies, according to SCE.

The arrangement between SCE and AutoGrid works like this:

Edison incentivizes residential solar and battery owners to participate in AutoGrid’s virtual power plant, which helps stabilize, rebalance and increase the efficiency of the local power grid; AutoGrid handles payment processing and customer support with the homeowners; and then At times of peak demand, AutoGrid’s system integrated with SCE dispatch systems will automatically respond to the utility’s signals to supply carbon-free, battery-stored electricity to power homes.

Worldwide Virtual Plants

At this point, the program is small, with 400 kV of battery systems involved, but Edison has entered additional arrangements with other virtual power plant suppliers and reliance on the virtual plants to supplant gas-fired peakers is expected to grow.

Up to 1,500 Edison customers are authorized by the California Public Utilities Commission at this point to enlist in virtual power plant programs. Aside from with AutoGrid, the utility also has entered virtual plant arrangements with Sunrun and Swell Energy.

A 2022 Guidehouse Insights white paper commissioned by AutoGrid indicates that virtual power plants are equal to or less costly on a capacity basis than simple cycle fossil-fueled peaker plants. The paper shows that in Texas and New York, for instance, the cost of capacity ranged from about $100 to $140 per kW-year compared to as high as $260 per kW-year for gas-fired peakers.