• Virtual Power Plants
  • DER
  • HVAC
  • Grid Infrastructure

Equity Is Critical in the Energy Transition

Dan Power
Oct 12, 2021

Guidehouse Insights Sustainability

Virtual power plants (VPPs) use software platforms and a smart grid to aggregate, improve, and dispatch distributed energy resource (DER) flexibility services to meet grid needs, providing the same services as a traditional 24/7 power plant. VPPs use resources—such as behind-the-meter energy storage, solar PV arrays, demand response, and flexible demand, including EVs and water heaters—to respond to changing grid conditions and increase DER value. To realize the full potential of VPPs, technology that enables their growth and deployment must be available to all customers regardless of sector or income level.  

There are numerous barriers to adopting resources used in VPPs, including high upfront costs and unsuitable building conditions. Earlier this year, several jurisdictions launched programs to address these barriers. In June 2021, the South Australian government announced a partnership with Tesla to provide 20 households that were unable to have solar panels installed at their homes with free batteries, enabling them to access renewable energy from the grid and participate in the VPP. A similar program involving Sonnen was announced in California in March 2021. The company plans to provide an affordable storage solution for residential consumers in Los Angeles County to form a VPP capable of providing backup power when needed and relieving congestion on the grid.

Building Loads Can Be Resources in VPPs

Flexible demand sources, such as water heaters and HVAC building loads, can make use of their thermal mass to act as a virtual energy storage device within a VPP. Grid-enabled water heaters and HVAC heat pumps can be used to shift load from times of peak demand to those of high renewable energy supply. For water heaters and buildings to switch effectively, the water heaters must be electric and well-insulated, and building envelopes must be tightly sealed so that the energy used for preheating water or preconditioning spaces is not wasted. Upgrading water heaters, HVAC systems, and building insulation across all income groups would add more flexible sources to the grid to be used in VPPs, and it would also ease the financial strain on residential customers.

VPPs will be essential as the electric grid shifts from the centralized fossil fuel generation model to one reliant on interconnected and intermittent DER. VPPs represent an opportunity to use digitalization and energy technology advances to replace fossil fuels and an opportunity for communities to come together and serve one another for the greater good. It is imperative that residential consumers are incentivized adequately and are not left behind during the energy transition, for their sake and the grid’s.