How ‘Virtual Power Plants’ Will Change the Future of Electricity
If “virtual” meetings can allow companies to gather without anyone being in the office, then remotely distributed solar panels and battery energy storage systems (BESS) can harness energy and act as “virtual power plants.” It’s simply the orchestration of many dispersed assets to manage the supply of electricity—power that can be redirected back to the grid and distributed to homes and businesses.
The ultimate goal is to revamp the energy landscape, making it cleaner and more reliable. By using onsite generation such as rooftop solar in combination with battery storage, those services can reduce the network’s overall cost by deferring expensive infrastructure upgrades and by reducing the need to purchase cost-prohibitive peak power from 4–9 pm.
Think of it this way: A centralized coal-fired unit may have a generating capacity 1,000 megawatts of electricity. It’s also connected to a transmission network, all of which makes it susceptible to cyberattacks or natural disasters. In other words, a series of wildfires took out PG&E’s transmission network and left whole communities vulnerable without power.
Small Assets—Big Impact
But a distributed energy system, or a virtual power plant, would have 200,000 subsystems. Or, 200,000 5 kilowatt batteries would be the equivalent of one power plant that has a capacity of 1,000 megawatts.
“A virtual power plant acts as a generator,” says Amit Narayan, chief executive officer of AutoGrid, in an interview. “It is one of the top five innovations of the decade. The value proposition comes when you can aggregate these batteries and market them as a generation unit. The pool of individual assets will improve over time and when you add them up, it is better than a large-scale plant. It is like going from mainframe computers to laptops.”
The AutoGrid executive goes on to say that centralized systems are less reliable than distributed resources. While one battery could falter, 200,000 of them that operate from remote locations will prove to be more durable—able to withstand cyber-attacks and wildfires. Sunrun’s Sachdev adds, “...that the ability to store energy in batteries and to move it to the grid on demand creates value not just for homes and businesses but also for the network as a whole.
”The good news is that the trend in California led by MicroNOC Inc. and other energy service providers are making it easier for smaller distributed assets to get the same regulatory treatment as power plants. System operators have been obligated to call up those power supplies that are the most cost-effective and that can be easily dispatched. But now regulators are giving virtual power plants comprised of solar and batteries the same treatment.
FERC Orders Allow for Energy Storage Systems in Wholesale Markets
In the United States, for example, the Federal Energy Regulatory Commission (FERC) issued Order 841 in 2018 that allows energy storage resources to participate in wholesale markets—where electricity is bought directly from generators before selling that power to homes and businesses. Under the ruling, virtual power plants are paid the same as traditional power suppliers.
The latest ruling on September 17, 2020, approved FERC Order 2222 that, “...broke new ground towards creating the grid of the future by knocking down barriers to entry for emerging technologies,” said FERC Chairman Neil Chatterjee, lauding the order. “With this final rule on distributed energy resources (DER), we build on the significant progress already made through Order 841 and expand our ability to harness the full potential of these flexible resources.”
Adds Chatterjee, “By relying on simple market principles and unleashing the power of innovation, this order will allow us to build a smarter, more dynamic grid that can help America keep pace with our ever-evolving energy demands. I am honored to be at the helm of the agency as we bring this critical rule across the finish line and continue to navigate our nation’s energy transition.”
As we deploy more of these assets per the FERC orders, there will be increasing opportunities for thousands of commercial and industrial virtual power plants through California,” explains Mark Durmisevich, Business Development Director for MicroNOC Inc.
Virtual power plants have the potential to change the energy horizon by harnessing locally-produced solar power and stored electricity and redistributing those energy resources to where it is most needed—all facilitated by cloud-based software that has a full panoramic view like MicroNOC’s network operating center (NOC). At the same time, those smaller distributed assets can add more reliability and give facility managers greater peace-of-mind—a dynamic that does, indeed, beef-up America’s generation and delivery network utilizing clean virtual power (CVP) plants.
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Article content provided by Ken Silverstein, Forbes Senior Contributor on July 22, 2020, and Corey Lee Wilson, President of CLW Enterprises.