A✌️466-word✌️2-minute✌️read
I admit, I’ve been slow to jump on the virtual power plant (VPP) bandwagon. It wasn’t that I thought the idea lacked merit. It was that I thought it would be challenging for utilities to get the necessary technology and tariffs in place.
Utilities aren’t known for the speed at which they implement anything new. Still, the momentum behind VPPs appears real.
I recently posted about California de-funding what is a very successful VPP program. Making California’s move more head-scratching is the fact that the program just successfully ran what is believed to be the world’s largest VPP test. And nothing broke.
I don’t get.
Everyone benefits from VPPs. States gain much needed capacity without building anything new. Ratepayers who share their assets can monetize those assets. Even ratepayers not participating in a program should enjoy lower overall rates.
Oh wait, not everyone benefits.
Utilities that profit from building big and expensive new infrastructure don’t benefit.
Nonetheless, I’m not alone in being befuddled by California’s latest move. Illinois also seems to disagree with the Golden State as it’s on the verge of going in the opposite direction.
The state will seriously consider a bill (HB4120) in its upcoming October veto session that would create a VPP program. The proposed legislation would also mandate that the state’s two major utilities develop their own VPP program by 2027. And it would incentivize the development of utility-scale storage projects.
The proposed VPP program would pay residential customers a rebate of $300 per kilowatt-hour on the capacity of any battery purchased. For five years, it would also pay a minimum of $10/KW when power is accessed during the scheduled periods of 4 to 6 p.m. on weekdays during the summer months from June to September.
The states utilities – ComEd and Ameren - would be able to petition the Illinois Commerce Commission to gain access to battery storage outside of the predefined schedule. However, this would be limited to no more than three hours a day over 80 days in each year.
Research firm RMI believes that VPPs could handle the majority of Illinois’ load growth. RMI expects that by 2029, the state will need in the neighborhood of 3.9 gigawatts of new power. It believes that VPPs could cover about 75% of that new demand.
Here’s maybe the most pertinent argument to accelerate the adoption of VPPs: it takes several years to build a new power plant. That includes renewables as the interconnection backlog remains a significant obstacle. VPPs can up and running in as little as six months.
Given the interconnection challenges, the lead times for new gas turbines, and the woeful lack of investment in upgrading the grid, at a minimum, VPPs can be an excellent short-term solution to growing demand.
California – are you hearing this?
#vpp #electricgrid #powergeneration #electricity