Virtual power plants could be the ‘next big thing’ – and homeowners could benefit

While the concept has been floated since the 1990s, virtual power plants are now becoming a reality – and they offer the potential to be a revenue opportunity for homeowners. But what, exactly, are virtual power plants (VPPs) and why might they be the next big thing in distributed energy?

The easiest way we’ve found to describe VPPs comes courtesy of GreenTechMedia: “A VPP is to a traditional power plant what a bunch of internet-connected desktop computers is to a mainframe computer. Both can perform complex computing tasks, but one makes use of the distributed IT infrastructure that’s already out there.” (Read GTM’s article on VPPs for more.)

In short, a VPP network could consist of elements including solar parks, wind farms, hydroelectric plants, geothermal plants, backup generators and …. (drumroll, please) … residential and commercial solar and battery storage systems.

Imagine it: 10,000 home solar and battery systems, networked together across a community, to provide power to meet grid demand, where each individual system also serves as on-site backup during a grid outage. This is the internet of energy!

The benefits of VPPs are many: they can help maintain grid stability. They can support increased demand at times of intense need – such as during extreme heatwaves, like the country has seen recently. They help to provide higher efficiency and increased flexibility when there are significant load (consumer use) fluctuations. And for consumers who are part of such a network, there is a revenue opportunity, as they can sell power back to the grid at times of high demand.

VPPs also reduce the justification for utility companies to build expensive peaking power plants, or peakers, which run only when there is high (peak) demand for electricity. While the utilities love building these pricey new facilities, thus justifying charging their customers more and more, there isn’t a need for peakers if there are VPPs at the ready to address surges in power use. (There are also environmental justice implications surrounding the building of peakers – which emit harmful pollutants – typically in disadvantaged communities; learn more HERE or HERE.)

While VPPs can be made up of multiple types of assets, each unit within the network remains independent in its operation and ownership. The assets can be located anywhere on the grid. Aggregation software manages the VPP in a way that mimics a traditional power plant control room.

VPPs aren’t yet a reality in Florida. Some Florida utilities are starting to look at the possibility but given our state-sanctioned monopoly utility model, most utilities here are resistant to the VPP concept. We have seen this before! However, as it has been with solar, we believe that VPPs will be critical to meeting our energy needs in the (not-so-distant) future – and solar PV and battery storage will be essential to their success.

Related articles:

Could Virtual Power Plants Help Stabilize the U.S. Energy Grid? How Stuff Works

Tesla is operating a virtual power plant demonstration in Texas, Electrek

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