• Residential Energy Storage
  • Virtual Power Plants
  • Software
  • Climate Change
  • Healthcare

VPP Programs Are Driving Adoption of Residential Energy Storage

Sep 15, 2021

Guidehouse Insights

As extreme weather events become more frequent due to climate change, homeowners are looking for more ways to build their energy resiliency in case of power outages. Likewise, utilities are attempting to rapidly adapt to a changing renewable energy mix and manage power shutoffs during critical peak demand periods. These conditions have created strong incentives to incorporate virtual power plant (VPP) programs that not only allow residents to save money but also give utilities and residents a better sense of energy security.

How Do Consumers Benefit from VPP Software in Their Homes?

We already know about the value that residential energy storage systems (RESSs) provide for consumers, mainly in the form of backup power and increased resiliency, but what additional value can VPP software provide? First, coupling an RESS with a VPP program can come with financial incentives. Recently, Hawaiian Electric announced a battery incentive program that offers cash to customers who pair their solar array with an RESS and agree to export power back to the grid during peak hours. This upfront cash incentive could provide the extra push that some customers need to access these technologies. Similarly, Southern California Edison and Swell Energy are providing VPP-enrolled customers with GridRevenue payments during peak demand hours and discounts on second home batteries.

Additionally, with VPP programs, customers can have more control over their energy use and improved awareness of how their home energy consumption is interacting with the larger power grid. As the era of smart homes continues to evolve, homeowners know that connected hardware and software can provide savings and environmental benefits.

More Than Just Cost Savings

Of course, this kind of VPP program participation brings benefits to utilities as well because they can utilize VPP software to balance out the grid during peak demand periods. Beyond the day-to-day peak hours that cause strain on the power grid, power shutoffs can cause issues. For example, in California, residents have been experiencing power loss when utilities have to conduct safety shutoffs due to risky fire-prone conditions.

Leaving thousands of people without power is not just inconvenient—it comes with dangerous consequences that affect the lives of residents. Many people rely on constant electricity for things such as powering their at-home medical equipment. For those who are not able to evacuate to another facility with power, their homes may be the only place where they can continue to use their equipment. Guidehouse Insights’ report Energy Storage and Solar PV for Healthcare Facilities explores these topics further. Homeowners may initially be attracted to the upfront savings that battery storage and VPP programs can provide. However, in the long term, the most valuable benefits may be maintaining energy security and resiliency through increasingly frequent extreme weather events and risks from climate change.