How virtual power plants are shaping tomorrow’s energy system

A significant difference lies in the ability of VPPs to shape consumers' energy consumption in real time. Unlike conventional power plants, VPPs can communicate with distributed energy resources and allow grid operators to control end-user demand.

For example, smart thermostats linked to air conditioning units can adjust the temperature of the home and manage the amount of electricity consumed by the units. On hot summer days, these thermostats can pre-cool homes before peak hours when air conditioning usage increases. Staggered cooling periods can help avoid sudden surges in demand that could overwhelm the grid and cause outages. Likewise, electric vehicle chargers can adapt to the needs of the grid by supplying or using electricity.

These distributed energy sources connect to the grid through communications technologies such as Wi-Fi, Bluetooth, and cellular services. Overall, adding VPP can increase the overall resilience of the system. By coordinating hundreds of thousands of devices, VPPs have a significant impact on the grid: they shape demand, deliver energy, and ensure a reliable flow of electricity.

How popular are VPPs today?

Until recently, VPPs were mainly used to control consumers' energy consumption. But as solar and battery technology has evolved, utilities can now use them to provide electricity to the grid when needed.

In the United States, the Department of Energy estimates VPP capacity between 30 and 60 gigawatts. This represents about 4 to 8 percent of peak electricity demand nationally, a minor fraction in the overall system. However, some states and utility companies are moving quickly to add more VPP to their networks.

Green Mountain Power, Vermont's largest utility company, made headlines last year when it expanded its subsidized home battery program. Customers have the option to lease a Tesla home battery at a discounted rate or purchase their own, receiving up to $10,500 in assistance, if they agree to share the stored energy with the utility, as required. The Vermont Public Utility Commission, which approved the program, said it can also provide backup power in the event of an outage.

In Massachusetts, three utility companies (National Grid, Eversource and Cape Light Compact) have implemented a PPV Schedule which pays customers in exchange for public control of their home batteries.

Meanwhile, in Colorado, efforts are underway to launch the state's first VPP system. The Colorado Public Utilities Commission is urging Xcel Energy, its largest utility company, to develop a fully operational VPP pilot project by this summer.

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