How virtual power plants are revolutionizing home energy

Just like your favorite band or the sports team you root for, a power plant can be greater than the sum of its parts. Each individual plays their own role, but the magic happens when they all work together to do something greater than they could manage alone. 

In this analogy, we’re referring to virtual power plants (VPPs) and the ways that many hands can work together to strengthen the energy grid. Here, we’ll explore exactly what a VPP is, how it works to aggregate energy from businesses and homes and how you can join a VPP to support clean energy while saving money.

Source: Inside Climate News

In the next 5 years, residential energy customers could be contributing a majority of the power being distributed by VPPs. But how does it all work?

How VPPs work with home batteries

Home batteries are very common in Texas and are used to store extra electricity, usually from solar panels, in a battery storage system that can be used as backup during power outages. 

The technology behind VPPs

VPPs use a cloud-based software system to coordinate the home batteries of program participants. Homeowners store their excess energy in a home battery, and that stored energy is managed and released back to the grid by the VPP when energy demand is highest. VPPs can calculate how much stored energy is available and optimize energy flow in real time during peak electricity demand. This is how VPPs can help stabilize the power grid while leaving some energy reserves for participating homeowners. 

Real-time energy management

One of the benefits to homeowners who participate in a VPP is the hands-off nature of most programs. The VPP is connected to the homeowner’s battery storage system and knows exactly how much energy is available at any time. It can then utilize AI algorithms to predict times of high demand and prepare to support the grid during these windows. The homeowner doesn’t need to take any action and can still use their own power uninterrupted. If the participant doesn’t want to contribute their stored energy to the grid, they usually can opt out either temporarily or permanently.

VPPs and power outage prevention

How exactly do VPPs help prevent power outages? VPPs work to balance the grid in a way that most traditional power plants cannot. Because the DERs in the VPP program are scattered across many participants, the VPP can quickly access stored energy from a vast network, allowing it to take swift action when the grid is under extreme stress.

VPPs are able to respond to increasing demand and grid imbalances faster than traditional plants and can reduce the strain on those plants to preserve grid stability. This is particularly important in Texas, where weather events like summer heat waves can increase peak load and raise the risk of outages. 

VPP management tools

Most VPPs have a software platform they use to manage participants and aggregate DERs. These platforms can often be accessed by participants, where they can adjust settings, track incentives, calculate rates and opt out if needed. Most VPP-eligible products can integrate with these platforms, but if you’re interested in participating, it’s best to verify before purchasing equipment like smart thermostats, water heaters or EVs. 

The future of VPPs in the U.S.

VPPs are expected to be widely adopted across the country in the coming years, with the market tripling in size by 2030.

Source: Grand View Research

This rapid growth is largely driven by increased access to DERs. Focus on renewable energy is expected to grow in the near future, meaning more homeowners will have solar panels, home batteries, EVs and other devices that will allow them to participate in a VPP. Growth is likely to be highest in deregulated energy markets like Texas, which is a top candidate for future VPP participation because of its weather.

Getting started with virtual power plants

If you think participating in a VPP sounds like a great way to save money while supporting the electric grid, there are a few steps you can take to get started.

Research eligibility requirements

First, make sure you’re eligible to participate in a VPP program. Not all home batteries, EV chargers or solar panels are compatible with VPPs, so it’s important to verify before you make a major purchase. If you’re looking to buy an EV, keep in mind that only those with bidirectional charging — the ability to send power back to the grid — are compatible with VPPs.

Choose the right program

Once you know what type of DER you’d like to purchase and use as part of a VPP, you’ll then have to decide which program you want to participate in. There are 2 options: you can join a VPP through your DER manufacturer or through your electricity provider. 

Here are some things to consider before you join a VPP: 

• How it may impact your home battery’s lifespan
• Whether you will have enough stored energy for both personal use and to support the grid
• If there are exit fees, should you choose to leave the program early
• The total cost of DERs, including installation and any necessary maintenance or upkeep
• How and when you’ll receive financial compensation or other incentives for participation