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The VPP technology makes it possible to harness thousands of distributed energy resources and makes them perform like a single generating source.

VPPs : Bring Your Own DERs

Feb. 24, 2023
Thinking outside the grid is upgrading the infrastructure in a different way.

It’s been over a year since “Charging Ahead” featured virtual power plant (VPP) technologies, but recently VPPs have been back in the news as the use of these devices becomes more widespread. It’s not only widespread, it’s changing how we think about electricity generation. It could be said that VPPs are causing stakeholders to think outside the grid. VPPs are moving energy production from centralized generating plants to a variety of dispersed energy sources located behind-the-meter (BTM).

The VPP technology makes it possible to harness thousands of distributed energy resources (DERs) and makes them perform like a single generating source. That, however, isn’t what has struck a chord with the public. What is resonating within the customer-base is a continuous revenue stream in the face of rising electric bills. Also hitting home is the ability to power homes and businesses when the grid is out for whatever the reason. It hasn’t hurt that the technology has become more user friendly making VPPs attractive to customers, utilities, grid operators, and regulators.

There have also been a wide-ranging assortment of outside influences that have impressed individuals with the flexibility of VPP applications. At the start of the 2022-2023 winter storm season, you may remember researchers had predicted that it would be a mild winter with higher temperatures and less demand to electricity. In reality, global climate change seems to have provided a recurring phenomenal sequence of “once-in-a-lifetime” storms that has impacted the power system’s ability to deliver electricity. As a result, there has been an increase in interest in nontraditional technologies like VPPs utilizing BTM-DERs for keeping the lights on.  

Thinking Outside the Grid

One of these nontraditional VPP BTM-DER applications uses the vehicle-to-grid (V2G) and vehicle-to-load (V2L) technology’s bidirectional EV (electric vehicle) batteries and chargers. Utilities and EV manufacturers joined together and developed several VPP demonstration projects utilizing V2G/V2L technology as a power supply. The projects were successful and has become a sustainable energy storage resource. It recently got a shot in the arm when some new partnerships were publicized.

PG&E (Pacific Gas & Electric) and Ford announced their partnership to power homes using Ford’s F-150 Lightning eTrucks. In addition, Duke Energy and Ford also announced a similar partnership. In both programs, the F-150 eTrucks will supply homes with power in the event of an outage and return power to the grid when support is needed. Ford calls it “intelligent backup power.”

Hyundai launched its “Hyundai Home” application a few months ago. It’s designed to give consumers an easy way to “produce, store, and use their own energy to power their lives at home and on the road.” Hyundai went on to say customers can “make their homes more resilient with solar panels, energy storage systems and EV chargers.”

Another EV powered VPP was announced by Oncor and Toyota. It’s a research project using Toyota customers’ V2G/V2L technology to power the VPP. According to Toyota, their customers can use their EVs to power their homes and their communities. In times of need the EV powered VPP will feed power back into the power gird.

The most trendy DER are the popular rooftop solar assets that experts refer to as “a huge untapped source of electricity.” The California Public Utilities Commissions estimates that the state’s distributed solar represents about 12 gigawatts (GW). It does, however, need energy storage to make it sustainable for VPP applications. Subsequently there is a thriving market in place to upgrade those systems into solar-plus-storage DERs.

If that isn’t enough, these DERs can be modified to turn them into microgrids or nanogrids depending on capacity of the DERs. These upgrades are available from many suppliers such as Eaton, Schneider Electric, Hitachi Energy, GE, Siemens Energy, to name a few. Remarkably some naysayers don’t believe there’s enough interest in the technology to do what developers claim. So, let’s see how seriously the industry is taking VPP technology.

Several research companies have looked into this specialized market segment. The most recent investigation comes from Prescient&Strategic Intelligence. They published a report in December based on the historical years of 2017-2022. The global VPP market was valued at about US$3.4 billion in 2022. It’s expected that the VPP market size will grow to around US$12.3 billion by 2030, which is a CAGR (compound annual growth rate) of 16.9% for that period. This is a good point to dig a little deeper into the capabilities of VPP applications.

Is the Technology Effective

Critics argue that solar-plus-storage DERs are not sufficient to energize a home or business long enough to be effective during a prolonged outage. It a troubling issue for customers about to spend a lot of money on a system. A report published by the Lawrence Berkeley National Laboratory (LBNL) addressed this  topic.

The report is a collaboration between LBNL, and the National Renewable Energy Laboratory titled, “Evaluating the Capabilities of Behind-the-Meter Solar-Plus-Storage for Providing Backup Power during Long-Duration Power Interruptions.” It focuses on how successful rooftop solar-plus-storage systems are when it comes to keeping the lights on for 3 days or more.

The study looked at a group of 10 historical long-duration power outage events over a wide range of geographies and evaluated how solar-plus-storage systems performed. The study limited the critical load scenario excluding heating and cooling. It found a small solar-plus-storage system with 10 kWh (kilowatt hour) of storage can fully meet backup needs over a 3-day outage in virtually all U.S. counties and any month of the year. The size of the load can be increased, but the capacity of the installation also has to be increased. If you would like to read the report, it can be downloaded at

Merging Prosumagers 

Solar-plus-storage is not only effective, it has the ability to move the owner into the prosumage category, which is a key element in the growth of VPP applications. Prosumage comes from the combination of producer (pro) plus consumer (sum) plus storage (age). Aggregating prosumagers together with a single centralized BTM-DER control system forms a VPP, and it’s all off-the-shelf technology. For that reason, there is a growing list of utilities partnering with third party aggregators resulting in VPPs powering the grid.

One such program was announced by Sacramento Municipal Utility District (SMUD). Their offering is called the “My Energy Optimizer Partner+” program. It’s a residential customer-driven VPP that plans to start operations in April of this year. The VPP has about 600 customer-sited energy storage systems and roughly 400 in the interconnection process. Swell Energy will manage the VPP for SMUD. The targeted size of the VPP is 54MWh/27MW. For more details see

Another is “Project Symphony,” a VPP that went online in Perth, Western Australia last year. It’s a two-year project conducted by the state-owned network provider Western Power, utility company Synergy, and the Australian Energy market Operator. More than 300 customers and 650 customer-owned DERs are taking part in the VPP. The target is to have 900 business and home DERS aggregated to produce electricity for grid consumption.

The Public Utility Commission of Texas has been making news with their “ADER” (aggregated distribution energy resource) project when it was approved by ERCOT (Electric Reliability Council of Texas) for the grid. ADER will allow customers with generation, energy storage and/or controllable loads with a capacity of 1 megawatt (MW) or less participate in the ERCOT wholesale markets. The initial phase of ADER is limited to 80 MW with no more than 40 MW allocated to non-spinning reserve services.

With the ADER project approved, Tesla announced they have launched a Texas-wide VPP project by inviting Powerwall owners to take part. This will be much like the VPP pilot program PG&E and Tesla introduced in northern California in 2021. That project was successful and in 2022 it was expanded into southern California through a partnership with SCE (Southern California Edison).

Bring Your Own Battery

It's interesting, customers have embraced rooftop solar by installing GWs of solar generation. As prolonged power outages happened, they added batteries to their BTM-DER installations. Some reporters dubbed them “bring-your-own-battery” applications, but more accurately they are actually a “bring-your-own-DER” application. EV’s are also coming to the party with their batteries adding V2Gs to VPPs.

Government support has been strong with tax incentives for customers installing both solar and solar-plus-storage systems. It has also opened regional organized wholesale marketplaces to aggregators providing power and ancillary services. Granted, all of these DER aps are still in the process of evolving, and all of them are made up off-the-shelf technologies that are readily available.

Combining them into VPPs is becoming easier everyday as proven by the numbers of utilities and grid operators adopting them as grid resources. A clear indication of this is an announce from Swell Energy that they had raised US$120 million to expand their deployment of VPPs. This is an ambitious undertaking; it’s going to be fun to watch!

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