Virtual power plants (VPP) are an intriguing path to a more efficient and cost-effective electric grid. VPPs involve the aggregation and coordination of distributed energy resources (like homes with solar + battery storage or smart thermostats or even EVs) to work together as an asset on the grid. Customers themselves or their authorized energy management companies — with customer permission and the help of advanced software — can adjust charging, discharging, output, and demand from DERs in response to signals from markets and grid operators.
In this way, VPPs can play an important role in efficiently matching energy supply and demand. The technology and need is there, and it’s just a matter of the scaling the model up.
To that end, RMI, a nonprofit dedicated to accelerating the global energy transformation, announced the formation of the Virtual Power Plant Partnership (VP3) this week, with initial funding made possible by General Motors and Google Nest.
“Virtual power plants are poised for explosive growth, and RMI is committed to being at the forefront of their success by launching VP3,” said RMI CEO Jon Creyts. “Our analysis shows that VPPs can reduce peak power demand and improve grid resilience in a world of increasingly extreme climate events. A growing VPP market also means revenue opportunities for hardware, software, and energy-service companies in the buildings and automotive industries. For large energy users, VPPs can significantly reduce energy spend while providing new revenue streams.”
The goal of VP3 is to transform policy to support scaling VPPs in ways that help overcome barriers to VPP market growth. Founding members include Ford, General Motors, Google Nest, OhmConnect, Olivine, SPAN, SunPower, Sunrun, SwitchDin, and Virtual Peaker.
“The next 12 to 24 months are critical for policy and program development to seize the potential offered by virtual power plants, and VP3 is here to ensure that the energy transition doesn’t miss a beat,” said Mark Dyson, RMI Managing Director for Carbon-Free Electricity. “Policy change, customer and stakeholder education, and unilateral action by individual businesses or organizations all take time and resources. We’re excited to partner in this work with leading businesses in VPP-related sectors including electric vehicles, building controls, residential energy technologies, utility-facing software solutions, and more.”
With the guidance and support of its members, VP3 will work to:
- Catalog, research, and communicate VPP benefits
- Develop industry-wide best practices, standards, and roadmaps
- Inform and shape policy development
“Virtual power plants present an exciting opportunity to unlock additional value for homes, businesses and communities, helping to drive greater energy independence and grid decarbonization” said Mark Bole, GM VP and Head of V2X and Battery Solutions. “This collaboration underscores GM’s commitment to creating a more resilient grid, with EVs and virtual power plants playing a key role in helping to advance our all-electric future.”
“We are thrilled to partner with RMI to scale Virtual Power Plants and bring their benefits to households and communities across the US,” said Parag Chokshi, Director, Nest Renew. “Google is committed to building a more sustainable future and continues to lead and encourage others to join us in improving the health of our planet. VP3 will empower individuals and businesses alike to strengthen and decarbonize their local grid with the goal of making energy more affordable for all. Because when we each do a little, it adds up to a lot.”
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