Inside Climate News – What’s a Virtual Power Plant?

An interesting possibility, which would help reduce the power of big electricity providers and their destructive energy monopoly. Interestingly Italy has initiated a programme that has some similar features.

By Dan Gearino

Cross-posted from Inside Climate News

Volunteers for the nonprofit Grid Alternatives install solar panels on a house in Farmersville, California. Credit: Grid Alternatives

 Credit: Grid Alternatives

Remember Megazord, the giant robot hero from children’s television whose body was made up of a bunch of smaller robots joining together?

Think of a new project by three Bay Area electricity providers as Megazord for the grid.

East Bay Community Energy, Peninsula Clean Energy and Silicon Valley Clean Energy have announced that they are working with the solar company Sunrun on a program that will give discounted solar panels and battery storage systems to up to 6,000 households and businesses.

The systems will have two purposes: Providing renewable backup power to those customers, and also enabling them to band together when needed to send electricity out to the grid, with up to 20 megawatts of battery capacity.

Another term for this kind of system is a “virtual power plant,” and anyone who’s been reading me for a while knows that I geek out at the potential of virtual power plants to make the electricity system cleaner and more reliable.

Sunrun, based in San Francisco, is the country’s largest installer of home solar and batteries. This would be the largest virtual power plant that Sunrun has ever created and one of the largest by any provider in the country.

“What I think is really cool is that a single system, a rooftop residential solar-plus-storage system, will get installed in a day or two and then we’ll immediately be providing direct benefits to the household where we installed it,” said Nicholas Smallwood, Sunrun’s vice president of business development.

“As we install more and more and more to the larger area, we can link them together and provide benefits to the larger area without having to wait for a single large asset to be built like you do with utility scale,” he said.

This latter benefit is one of the big selling points for the Bay Area electricity providers. They plan to use the combined capacity of the batteries in their planning to maintain the grid’s reliability. This means there would be less of a need to rely on natural gas plants and other resources.

“This is the way that utilities and specifically electric service utilities should be engaging in the push for mitigating climate change,” said J.P. Ross, senior director of local development for East Bay Community Energy.

Access to backup power is a big deal because of wildfire risk. Pacific Gas & Electric last year started conducting massive planned blackouts to reduce the risk of sparks from electricity equipment, leaving many East Bay Community Energy customers in the dark.

The project would roll out between now and 2022. The main benefit of the program for customers, most of whom lease their solar panels and battery system, is that Sunrun plans to give participants an upfront payment of $1,000 for joining.

The payment would cover the equivalent of several months of lease payments, a significant incentive. A common solar-plus-storage lease package costs about $150 per month, the company said. This figure does not take into account utility-bill savings, which vary a lot depending on the customer, but usually are enough to cover most of the cost of the lease.

Virtual power plants are still in the very early stages. The National Renewable Energy Laboratory issued a report two years ago about 23 demonstration projects across the country going back to 2009.

Until this Bay Area project, Sunrun’s largest virtual power plants were in Hawaii, Southern California and Upstate New York, with 1,000 customers in Hawaii and 300 each in the other two.

Smallwood said the biggest obstacle he faces in promoting the systems is that the idea of a virtual power plant is a new one that takes time to understand. But as more electricity providers create programs like the one in the Bay Area, the word will spread.

“We’re at the beginning,” he said.

I’m thinking about what this idea may look like in the near future, with hundreds of thousands or even millions of batteries. I don’t think it’s an overstatement to say that virtual power plants could fundamentally change the way the power system works, with a grid that is cleaner and less centralized. And that’s exciting.

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