| Work Detail |
With the days of solar net metering “numbered” and more utilities looking to deploy virtual power plants that compensate distributed storage owners, industry veteran Jigar Shah sees virtual power plants as a route to success of the industry.
The days of the solar industry operating as a “net metering type industry” “are beginning to be numbered,” Jigar Shah, director of the U.S. Department of Energys Loan Programs Office, said at the conference. RE+ 2023 in Las Vegas.
Now, “most solar systems come with batteries, and most are integrating smart panels,” he said. “They are integrating demand response and load control capabilities into the inverter controls.”
Since a solar-plus-storage system with such features can obtain compensation from its owner through participation in a virtual power plant (VPP) - an aggregation of similar systems often managed by a third-party aggregator -, Shah encouraged the solar industry to see its future in VPPs. The US deployment of VPP to date is shown in the image above.
In addition to distributed storage, other distributed energy resources that can be added to a VPP include electric vehicle chargers, smart thermostats, and smart electric water heaters.
Shah says power companies “want to bury the hatchet and deploy a lot of these technologies on a large scale” through VPPs. “Frankly, it is the only way for them to integrate all the enormous load that is coming upon them,” for example due to the increasing use of electric vehicles and heat pumps.
Shah separately noted that utilities Duke Energy, in North and South Carolina, and Luma Energy, in Puerto Rico, have announced large VPP projects, the latter with residential solar company Sunnova.
Addressing solar industry professionals at RE+, located 100 meters from a huge exhibition hall, Shah said, “You are the ones who should integrate all the technologies on display out there into a coherent package.”
DOE investment
For its part, the Department of Energy (DOE) plans to provide aid in the order of $100 million to boost VPPs, Shah said. Sunnovas inclusion of low- and moderate-income Puerto Ricans in its VPP project is supported by $3 million in the form of a loan, while other applicants are already preparing loan applications worth $30 million.
DOEs goal is for the United States to deploy VPPs spanning 80 to 160 GW of distributed energy resources by 2030, tripling the current scale of VPPs, to “support rapid electrification while redirecting grid spending from peak power plants to VPP participants and reduce overall network costs,” according to a DOE report released during the RE+ conference.
According to Jennifer Downing, senior advisor in the DOE Office of Loan Programs and lead author of the report, about $10 billion a year in avoided resource costs would be saved after payments to VPP participants. That figure is based on an estimate prepared by analysts at The Brattle Group that VPPs and time-of-use pricing combined could achieve annual savings of $13 billion by 2030. The analysis avoided double-counting savings from the pricing of time of use and the savings derived from the management of the time of use of electric vehicles.
Dynamic pricing
An alternative to VPPs to make electricity demand more flexible, dynamic pricing would mean annual savings of between $33 billion and $50 billion nationwide in various scenarios, according to a study conducted by the Northwest National Laboratory. from Pacific. California is now pursuing demand flexibility through dynamic pricing.
The DOE report states that time-of-use pricing “lacks a unifying architecture that allows the aggregation of distributed energy resources to interact with a grid operator as a single utility-scale resource.” The same can be said for dynamic pricing.
Policies
Shah encouraged the solar industry to push for state policies that encourage the deployment of virtual power plants. Downing described “favorable market mechanisms” in California and New York that have led to the creation of several VPPs in each state.
The DOE report is titled “ Pathways to Commercial Liftoff: Virtual Power Plants .” The DOE has also released a report on the takeoff of long-duration energy storage and similar reports on other technologies. |
