In green energy exploding? - part 2

Virtual Power Plants can make it happen.

Buddy understood the Virtual supplier idea, supplementing his main source of nourishment from a wide array of other sources.

We’re seeing a dramatic spurt in sustainable energy initiatives, thanks largely to the Inflation Reduction Act.

As of July 31, over $270 billion in capital investment has been announced for utility-scale clean energy projects and manufacturing facilities since the IRA was signed less than a year ago. That surpasses total investment commissioned between 2015 – 2022! [American Clean Power]

But, at the same time utilities are seeing more and more roadblocks to actually distributing all this new green electricity. [See last week’s ClimateDog] Among these are

• the limited capacity of America’s transmission network,

• delayed permits for new sources to hook into that grid,

• political resistance to new high-voltage transmission lines,

• lack of energy storage,

• power outages from climate catastrophes, and

• the dramatic growth in demand for electricity - green or not - projected to be around 27% by 2050, the result of our effort to quickly replace those fossil-fueled elements in our lives with electrically-driven equivalents.

If moving electricity long distances is going to be difficult, what if we found we don’t need to move so much of the stuff? What if we found more power sources nearer home?

Most of us haven’t seen it coming, but a virtual power plant is on its way to our neighborhood. It’s going to help keep our rising need for green electricity from being stymied by these grid problems. And it should keep our electricity costs down.

How does a Virtual Power Plant work?

A few hints:

• “Honey, was it you who turned down the thermostat last night?”

• “Our car in the garage was fully charged this morning; now it’s down but charging again.”

• “Look, we got $47 in credits on this month’s electricity bill!”

We will all be part of this new virtual power plant, which will get its electricity from a mix of:

• the local utility, of course—but power can be limited or costly when air conditioners are straining its source, the national grid.

• solar panels on our and our neighbors’ roofs during the daytime.

• home battery storage units that those solar panels charge.

• the community solar farm in the nearby fields,

• the battery in our EV which can be called on to send electricity back to the utility when local demand is high.

• the electricity not used by our air conditioner, heat pump, water heater, and clothes dryer when they’re automatically dialed down a bit during periods of high demand.

So, our virtual power plant is a collection of small-scale energy resources that, aggregated together and coordinated with grid operations, can draw less power from the grid. Our homes and cars become those resources. So do commercial buildings, machinery and trucks, schools and school buses, public buildings, plus other non-residential users of electricity in the utility’s service area.

Who chooses which way our electricity flows?

Today ‘demand-response’ decision-making is fairly primitive. Some utilities are sending their customers cell-phone messages when demand is high, asking them to turn off the drier, lower the heat or air conditioning a bit, or make other temporary adjustments.

The power flows within a virtual plant will eventually be managed by lots of little pieces of software. Smart thermostats, for instance, will adjust based on requests from the utility. Similar governing devices will be built into our home battery systems, home appliances, EVs, even our electric bikes.

Some examples

The online news source, Next City, is a great place to see what’s happening out there in the real world.

In Vermont, the utility Green Mountain Power says it was able to decommission two diesel generators responsible for 4 megawatts — enough power for nearly 1,000 homes a year — of peak energy in part owing to a virtual power plant that relies on home battery systems.

Wood Mackenzie, a global energy research firm, has identified 563 virtual power plants either operating or in development in the U.S. in 2023, with California having the highest concentration. [Next City]

The benefits

Virtual power plants can have a significant impact on

• Utility’s costs and our rates, reducing peak-demand purchases from the grid.

• Utility construction costs for new transmission and storage equipment.

• Emissions: retire ‘peaker’ plants (often fired by coal) or avoid building new infrastructure that relies on fossil fuels.

• Happier politics for conservatives. VPPs reduce dependence on big companies like utilities and transmission operators and the federal regulators that govern them. More design decisions will be made at the state, city and community level. And since real estate developers are likely to be the main builders of VPPs, rather than utilities or government agencies, this will shift more control, and profits, into the private sector.

• Entrepreneurial opportunities for smaller companies offering many components such as software, smart devices, and home control systems. Yes, General Electric, Mitsubishi, Siemens and other big companies have major offerings, but young companies like OhmConnect, Autogrid, Sunverge, Encorp, and others have a good shot at these markets too. [Tracxn]

One problem with this virtual design

The strongest resistance to virtual power may come from established utilities, even though they are benefitting in some ways from these new arrangements. Profitability of green energy projects is way down due to interest rates and construction costs. Nevertheless the profitability of most utilities is guaranteed by state or county utility commissions who granted them a monopoly and must protect them from losses.

As an example, California regulators recently approved reduced solar compensation (net metering rates) for Homeowners. [Inside Climate News]

What can we do?

We can ask our utility, our city council, and our state energy office what’s happening. We can haunt the local electrical appliance stores, especially those that sell ‘smart home’ technology, bidirectional chargers for EVs, solar arrays / net metering equipment / energy storage, and other ‘Smart Grid’ stuff mentioned on the US Dept. of Energy site. The VPP idea involves so many players, devices, and agreements that it may be confusing for a while. But if we keep asking, we’re likely to find a lever we can push that will help accelerate VPP development in our area.