California VPP capacity to exceed 15% of 2035 peak demand finds Brattle Group

April 18, 2024 Editor

Night sky view of Los Angeles from Griffith Observatory. Image courtesy 123rf

By 2035, VPP (virtual power plant) potential in California is forecast to exceed 15% of peak demand by 2035, representing five times its current capacity, according to analysis from consultancy Brattle Group for GridLab.

According to Brattle Group’s report, California’s Virtual Power Potential: How Five Consumer Technologies Could Improve the State’s Energy Affordability, more than 7,500MW of VPP capacity could be deployed cost-effectively across California over the next decade.

Significantly higher than the capacity of the largest power plant in California, the figure is also higher than the total system peak demand of Los Angeles.

According to the study, which considered five VPP technologies – smart thermostats, behind-the-meter batteries, electric vehicles, grid-interactive electric water heating and automated demand response for large buildings and facilities – all five make material contributions to the total potential. The study adds that the inclusion of additional VPP technologies could increase the potential.

Based on the technologies studied, Brattle Group finds that California’s full statewide portfolio of VPPs could avoid over $750 million per year in traditional power system costs. This translates into a significantly reduced need for new power plants and fewer required upgrades for poles and wires.

According to the report, the majority of VPP costs will be in the form of participant incentive payments. Roughly $500 million per year would be paid directly back to those participatory consumers.

VPPs were also found by the study to reduce risks associated with interconnection delays – they can be ‘built’ essentially as quickly as customers adopt technologies and enrol. Further, VPPs can scale flexibly as demand grows, mitigating risks due to unprecedented uncertainty in electricity demand forecasts.

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To reach the potential savings VPPs offer, Brattle Group calls for new state policies, which could facilitate the tech’s deployment.

Specifically, they state that among possible solutions to advancing VPP deployment, statewide policy goals or requirements could drive growth. California has a 7,000MW load shifting goal, as well as load management standards that could facilitate its uptake.

New draft legislation, says the study, could establish the equivalent of a renewable portfolio standard for VPPs across the state. California would not be alone in establishing such a VPP requirement.

According to Brattle Group’s report, states such as Maryland, Massachusetts, Minnesota and Oregon have shown that policy requirements can be highly impactful. If California moves forward with new VPP-focused policies, the findings of this study can help to facilitate the success of the planning, programme design and policy development activities that will follow.

Grid enhancing technologies

Brattle Group’s study is the latest research focussing on offsetting techniques to battle growing demand on the grid, without necessarily building new lines.

Especially the case in the US, a week after the release of Brattle Group’s report, the US Department of Energy released its latest Pathways to Commercial Liftoff report, focusing on the potential of advanced grid solutions.

According to the 10th iteration of the series, Pathways to Commercial Liftoff: Innovative Grid Deployment, multiple advanced grid solutions are already commercially available today that can help utilities and regulators respond to grid pressures in the near term.

Such solutions include advanced transmission and grid enhancing technologies (GETs), such as VPPs, dynamic line rating, advanced power flow control and energy storage, as well as system automation and situational awareness solutions. These solutions can serve as a bridge while critically needed new grid infrastructure capacity continues to be built out long-term.

Additionally, in September 2023, the DoE’s Pathways series focused specifically on VPPs, finding that deployment of 80-160GW of VPP capacity by 2030, a triple of its current scale at the time, could yield savings of approximately $10 billion in annual grid costs and potentially contribute 10-20% of peak demand.

To ensure VPP liftoff at the scale needed for the grid, the report outlines five imperatives that need to be addressed: