How virtual power plants are shaping tomorrow’s energy system

Kevin Brehm, a manager at Rocky Mountain Institute who focuses on carbon-free electricity, says comparing VPPs to traditional plants is a “helpful analogy,” but VPPs “do certain things differently and therefore can provide services that traditional power plants can’t.”

One significant difference is VPPs’ ability to shape consumers’ energy use in real time. Unlike conventional power plants, VPPs can communicate with distributed energy resources and allow grid operators to control the demand from end users.

For example, smart thermostats linked to air conditioning units can adjust home temperatures and manage how much electricity the units consume. On hot summer days these thermostats can pre-cool homes before peak hours, when air conditioning usage surges. Staggering cooling times can help prevent abrupt demand hikes that might overwhelm the grid and cause outages. Similarly, electric vehicle chargers can adapt to the grid’s requirements by either supplying or utilizing electricity. 

These distributed energy sources connect to the grid through communication technologies like Wi-Fi, Bluetooth, and cellular services. In aggregate, adding VPPs can increase overall system resilience. By coordinating hundreds of thousands of devices, VPPs have a meaningful impact on the grid—they shape demand, supply power, and keep the electricity flowing reliably.

How popular are VPPs now?

Until recently, VPPs were mostly used to control consumer energy use. But because solar and battery technology has evolved, utilities can now use them to supply electricity back to the grid when needed.

In the United States, the Department of Energy estimates VPP capacity at around 30 to 60 gigawatts. This represents about 4% to 8% of peak electricity demand nationwide, a minor fraction within the overall system. However, some states and utility companies are moving quickly to add more VPPs to their grids.

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 assistance of up to $10,500, if they agree to share stored energy with the utility as required. The Vermont Public Utility Commission, which approved the program, said it can also provide emergency power during outages.


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