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Virtual power plants near prime time

Alan Neuhauser

Illustration: Gabriella Turrisi/Axios

Big-name energy players are putting real money into virtual power plants.

Driving the news: PG&E is testing two VPP models in California: one with Tesla that's grown to 33 MW, another with Sunrun that's aiming for 30 MW.

  • Sunrun, meanwhile, tapped startup Lunar Energy to manage its growing VPP network.
  • Voltus this week launched a VPP program in Illinois with Resideo, Google Nest and Ecobee. It says it expects capacity to reach about 20 MW by the end of the year.
  • Texas residents in January began enrolling in a pilot VPP program. Tesla, Octopus Energy, and startup David Energy are among the companies participating. (Sunrun's fingerprints are also on the program.)

Of note: VPP startup Swell raised a $120 million Series B in November.

Catch up fast: VPPs enable grids to draw energy from resources like solar- and battery-equipped buildings to ease load during peak demand. VPPs serve as power networks minus the large and expensive infrastructure.

  • The Federal Energy Regulatory Commission helped clear the way for VPPs in September 2020. Order 2222 enables them to be compensated for the services they provide to the grid.
  • The Inflation Reduction Act, meanwhile, includes tax credits for assets like rooftop solar and EVs, which can be incorporated into VPPs.

Yes, but: It's early days yet. There are just 21 VPPs in the U.S. larger than 30 MW, per Wood Mackenzie. Only seven are bigger than 100 MW.

By the numbers: The largest is 1.1 GW, operated by Olivine for Commonwealth Edison.

  • The next two are 500 MW and 300 MW. Details on those VPPs are confidential, Wood Mackenzie tells Axios.

What we're watching: Smart thermostats that can be controlled remotely, and EVs whose batteries can provide power to the grid when plugged in, are both key technologies for VPPs.

  • Google Nest and GM are among the companies backing "VP3," a program from nonprofit RMI aimed at expanding VPPs.
  • VPPs offer another potential revenue stream for companies. Or at least a way to trim energy costs. We'll be interested to see how this program and others potentially accelerate corporate uptake.
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