The first quarter of 2024 saw some interesting weather patterns taking place around the world. It’s not news that global climate change is responsible for the extreme weather related havoc, but it’s the variety of weather that’s getting attention. We have experienced record breaking arctic cold bringing large blizzards followed by drenching downpours causing widespread flooding. Making things worse, these extreme weather events have been coming in rapid succession giving utilities and their contractors very little time to put things back together before the next anomaly hits.
Are these unpredictable winter conditions the new normal that headlines have been proclaiming? Scientist are convinced we haven’t reached that new normal status yet because it’s still a moving target. Studies indicate that as long as greenhouse gasses are continually pumped into the atmosphere the climate will continue to change and the power grid must continue to adapt. How can the power delivery industry provide dependable electricity in undependable times?
Broader Thinking Required
That is a complicated issue that many believe is centered around the electric grid’s infrastructure. Doing more of what the industry has always been doing doesn’t seem to work in this changing landscape. Many authorities are saying the technologies coming from the behind-the-meter like the distributed energy resources (DERs) technology are the best approach. The DER market has been rapidly expanding and setting new records for adding new capacity to the system. When Wood Mackenzie published their “2023 US Distributed Energy Resource Outlook” report, it provided an interesting window into what’s happening within the DER market.
The report estimated that roughly 262 GWs of new DER and demand flexibility capacity will be installed from 2023 to 2027. To put that into perspective, the report said that approximately 272 GWs of utility-scale resources are expected during that same period – they’re almost equal. Statistics like those support the Department of Energy (DOE) recent claim that the grid’s edge is evolving faster than the bulk power system when it comes to integrating new technologies.
The Inflation Reduction Act and the availability of easy financing have given DERs a boost. It also helps that rooftop solar and energy storage costs continue to drop. In addition, electric vehicles (EVs) are growing in acceptance and are becoming more affordable. Manufacturers have added to their attractiveness by advertising those EVs can be used for backup power during outages. The overall result is commercial, industrial, and residential customers embraced DER technologies beyond anyone’s expectations.
Bottom Up Approach
This bottom up approach has been generating interest with a wide variety of industry stakeholders. It checks a large combination of boxes for the decarbonization segment, the grid modernization groups, and those pushing decentralization to make the grid more resilient. Regulatory support has also made this more attractive Like FERC’s (Federal Energy Regulatory Commission) Order No. 2222. The Order requires regional grid operators to remove barriers for DERs to participate in wholesale markets, but there’s room to improve. Utilities and grid operators need to get areas within enterprise like system planning, operations forecasting, and marketing involved.
DOE pointed out, FERC Order No. 2222 came along at an opportune time because of a wide variety of DER technologies being utilized behind-the-meter (BTM), which has helped virtual power plants (VPP) to participate in this new marketplace. Quickly, a VPP is a decentralized assortment of small-scale renewable energy sources and energy storage systems that operate as a single large-scale asset. Most of us think of a VPP taking the place of the traditional power plant by harnessing an aggregation of participant owned devices for supplying power, but that’s only part of the story.
Late last year, DOE published a report titled “Pathways To Commercial Liftoff For VPPs” that paints an interesting picture of VPP technologies. It shows how they have been advancing to the point they are poised to change the grid’s landscape in a very positive way. It starts by saying, “VPPs are not new and have been operating with commercially available technology for years,” but what follows is thought provoking. It asserts, “Most of the 30-60 GWs of VPP capacity today is in demand response programs that are used when the bulk power supply is limited.”
Sum Greater Than the Parts
Typically VPPs have been associated with DERs and demand response has been associated with DERMS (demand response management systems), but this a much more broad thinking approach. Taking the two separate technologies and integrating them together expands the technical potential of both. The result is a demand response VPP that can perform a wider array of functions than either individually, but there are issues doing this.
The demand response portion consists of enormous numbers of intelligent appliances and the DER segment contains many complex elements. Bringing these two different applications together to operate as a single coordinated system is easier said than done. One major problem area is data, big-data. These BTM elements generate real-time big-data that has to be managed in real-time. That’s where artificial intelligence (AI) enhancements are used. Keeping it simple, AI scourers the big-data and makes sense of it. The results use machine learning to develop predictive models with proscriptive algorithms enabling real-time monitoring, fast control response, and understanding what is taking place on the network.
AI augmented control systems utilizing cloud-based computing, sophisticated analytics, and complex management platforms keep everything operating efficiently. A demand response VPP can provide valuable grid services with a minimum impact to the DER/smart appliance owners. Getting back to the DOE report, it explained, “A VPP made up of residential smart thermostats, smart water heaters, EV chargers, and BTM batteries, for example could provide a peaking capacity at 40 to 60% lower net cost to a utility than alternatives (a utility-scale battery and natural gas peaker).” This flexibility lets the VPP respond to grid conditions rapidly.
Non-wire grid enhancements like demand response VPP provide many valuable characteristics that traditional approaches lack when it comes to making the power grid dependable. In a power grid beset by lengthy interconnection queues, BTM-VPPs are not subject to queue delays. If it’s determined that the BTM-VPP isn’t large enough, its size can be increased as fast as new participants can be added, but regulatory support is needed to move these programs forward.
On the Grid
In August of 2022, San Diego Gas and Electric (SDG&E) launched their VPP pilot program to boost energy reliability and build a resilient community. SDG&E said the program would run through December 2023. The VPP program utilizes advanced software to aggregate and coordinate the functions of a collection of small-scale, decentralized resources to meet grid needs. This program takes advantage of a wide range of smart devices and resources. During the 2023 August heatwave SDG&E said their VPP operated and supported the grid during critical peak demand periods. It performed as expected and SDG&E is considering expanding the program.
As 2023 was closing, Puget Sound Energy (PES) announced they were expanding their VPP partnership with AutoGrid they launched in 2021. It’s expected to grow to 100 megawatts by 2025. It’s networking resources from multiple sites. PSE said that initially the VPP consisted of smart thermostats and heat pump water heaters, but the expansion will include battery storage, EVs, along with other devices and offer valuable grid services to the network.
Last year the California Energy Commission CEC) approved a statewide VPP program. The program is part of the CEC’s Demand side Grid Support Program and is focused on tapping into the thousands of distributed solar-charged and standalone battery systems located on the customer’s side of the meter. It’s estimated there are currently over 100,000 customer batteries available. The program is available to all homeowners with energy storage and several aggregators are enrolling participants with guaranteed yearly payments.
Using demand response applications with DER technologies makes a great deal of sense in today’s power grid with an unpredictable environment. These hybrid VPPs offer a grid enhancing technology that can quickly be deployed. It has been suggested there are steps that would encourage VPP implementation. It would help to simplify BTM-VPP enrollment, integrate them into utility planning and incentives, incorporate them into wholesale markets, increase standardization in BTM-VPP operations, and expand DER support with rewards for consumer participation.
According to Research and Markets, they expect a significant industry trend for VPP technology. With the increasing adoption of solar storage, and smart home technologies, they are projecting the global VPP market to surpass USS2.6 billion in 2024. Other research groups see this expansion of BTM-VPPs continuing and growing, but many point out demand response BTM-VPPs are not competing with the bulk transmission system.
They are complementing each other. They are also blurring the transmission-distribution boundary. This symbiotic relationship is providing a more adaptable power supply in an unpredictable environment. It’s moving the industry closer to achieving a decentralized power grid. BTM-VPPs are catching on, and that’s exactly what the grid needs now!
