Tripled VPP capacity can save $10bn in grid costs finds US energy department
Image courtesy DOE loans program office.
Deployment of 80-160GW of virtual power plant (VPP) capacity by 2030, a triple of its current scale, could yield savings of approximately $10 billion in annual grid costs and steer grid investments back to electricity consumers, states a new report from the US Department of Energy (DOE).
According to the department’s Pathways to Commercial Liftoff: Virtual Power Plants, at this scale, VPPs could potentially contribute around 10-20% of peak demand, with local variation depending on factors such as DER availability and the composition of utility-scale renewable generation.
Between now and 2030, states the report, the US will need to add enough new power generation capacity to supply over 200GW of peak demand. However, in all projected scenarios, the mix of weather-dependent renewable generation will be unprecedented, leading to more variable electricity supply and higher demand for transmission capacity.
Transmission interconnection backlogs, which have stretched to an average of five years, pose potential resource adequacy challenges.
To ensure VPP liftoff at the scale needed for the grid, the report outlines five imperatives that need to be addressed via dialogue between the DOE, public sector leadership and the private sector:
1. Expand DER adoption with equitable benefits
Governments, nonprofit organisations, utilities, DER manufacturers and VPP platforms, states the report, should collaborate to promote DER adoption and VPP deployment that prioritises equitable benefits.
Said benefits include savings on electricity bills, grid reliability, air quality improvements and job opportunities.
Measures could include low-cost financing and rebates for energy-efficient, VPP-enabled devices, which can induce consumers to shift spending on equipment or vehicle upgrades toward DERs with greater potential system benefits.
2. Simplify VPP enrolment
The report calls on utilities, DER manufacturers, VPP platforms, consumer advocates and regulators to develop a phased approach to streamline VPP participant enrollment, including consumer education, automatic enrollment of DERs into VPPs at the point of purchase with opt-out options, as well as broader VPP-enablement of DER devices.
Have you read:
Iberdrola taps into automated demand response with Spanish VPP
Germany’s sonnen announces 250MWh VPP as ‘Europe’s largest’
3. Increase standardisation in VPP operations
Both private and public sector stakeholders, advises the report, should enhance coordination and resources to develop guidelines, standards and requirements that make VPPs more standardised and expedite the design and pilot stages of individual VPP deployments.
This includes improved DER and VPP forecasting tools, standardised service agreement contracts and measurement and verification methods.
The report adds how standardisation of distribution grid operations overall (i.e., including and beyond VPPs) will accelerate liftoff; key areas include distribution system reliability standards and formalised grid codes to govern system participants, DER interconnection and data standards, and cybersecurity.
4. Integrate into utility planning and incentives
According to the report, governments, utilities and nonprofit organisations should allocate more resources and personnel support for utility regulators to revise or introduce new distribution system planning requirements, procurement processes, rate-making strategies, and customer programmes that encourage cost-effective DER adoption and VPP deployment while considering potential grid upgrades.
5. Integrate into wholesale markets
The report adds how, in restructured markets, independent system operators/regional transmission operators can benefit from targeted support for the timely and inclusive integration of VPPs into system planning and marketplaces, as outlined in FERC Order 2222.
In addition to scaling up existing DER and VPP technologies and business models, the report emphasises the importance of continued investment in next-generation DER and VPP innovations.
The Department of Energy (DOE) and its collaborators, states the report, have initiated over 20 programmes to date to accelerate VPP expansion.
These encompass various aspects, including financing support for DER and VPP deployment, the development of VPP modelling and planning tools, demonstration projects, guidance on grid modernisation strategies and more.
