City Decarbonization Goals Present Opportunities for VPPs

In November 2021, Ithaca, New York became the first city in the US to approve a plan to decarbonize its entire building sector by switching from oil and natural gas to electricity. The city’s energy code does not allow natural gas connections in new construction buildings or in major renovations, but this plan will also target the nearly 6,000 existing residential, commercial, school, and government buildings in the city, which account for roughly 40% of the city’s total emissions. The city acquired $100 million in private financing to cover phase one, which will focus on low and moderate income properties and plans to raise $250 million more for subsequent phases of the project. Ithaca has partnered with energy tech startup BlocPower for the effort, which includes installing air source heat pumps for HVAC and electric stovetops for cooking and foundational energy efficiency improvements like building envelope upgrades and lighting retrofits. Ithaca also has plans to electrify its transportation sector and meet all its energy needs from renewable sources on a path to be carbon-neutral by 2030.

Electrification Increases Flexible Resources on the Grid

Shifting from fossil fuels to electricity in buildings directly reduces emissions and increases the number of resources available for use in virtual power plants (VPPs). VPPs use software platforms and a smart grid to aggregate, optimize, and dispatch distributed energy resource flexibility services to meet grid needs, providing the same services as a traditional 24/7 power plant. VPPs make use of both supply and demand side resources to respond to changing grid conditions and maximize distributed energy resource value. Though historically viewed as strictly burdensome on the grid, building loads like HVAC and water heating (when electrified) have the potential to act as flexible resources for the grid as the energy industry shifts to a decentralized model powered by variable, renewable sources. When outfitted with two-way grid communication, these loads enable more flexibility in power grid operations by decoupling power demand from the end use, giving grid operators more control over how and when electric demand is met. Preheating water or preconditioning spaces shifts loads from peak demand times to those of peak renewable energy supply. This shift reduces the need for quickly dispatchable fossil fuel plants to meet increases in demand when solar or wind energy is not available without sacrificing end user comfort.

Other Cities Follow Ithaca’s Lead

When local governments have more control of their building and energy codes and a closer connection with their residents, they are typically in the best position to start large-scale building projects like Ithaca’s to eliminate emissions from that sector. Other cities such as Des Moines, Iowa, have followed Ithaca's lead because of extreme weather effects in recent years. In the aftermath of 2018 flooding and the 2020 derecho windstorm, the city started the process of evaluating and choosing a partner to work on its decarbonization plan, which will also begin with the buildings sector. As more local jurisdictions institute plans to transition buildings and transportation sectors from fossil fuels to electricity, VPPs will have a larger pool of resources to use when managing grid stability as variable energy sources become more prevalent.