By David Dodge, GreenEnergyFutures.ca
A Virtual Power Plant is simply a network of distributed energy resources such as solar, wind, backup generators, batteries and even EVs using vehicle-to-grid technology that supply power to the grid.
Most of these sources are too small for the grid to pay attention to, but when aggregated they can deliver peaking power for 40% less cost than peaking power plants.
More to the point, virtual power plants and smart grid technologies are essential in managing the millions of solar systems, EVs and small energy storage systems that radically change how we get energy and how the grid functions.
Dwayne Caldwell was a solar developer who caught the energy management bug and started up ENSPI Technologies three years ago in Minneapolis.
ENSPI helps companies understand, measure and manage their energy use with a view to saving and making money.
Save energy, make money
“We’re helping manufacturers and high energy users reduce their energy and turn those reductions into revenue by participating in demand response and grid events,” says Caldwell.
“What ENSPI does is we aggregate energy sources from businesses on the curtailment side. So when there’s a grid event, if the grid needs 50,000 kilowatt hours, we will call on our manufacturers to reduce that energy as a curtailment. And we deliver it to the grid during peak demand,” says Caldwell.
Reducing energy demand or curtailment works hand-in-hand with energy production to solve the same problem.
Their goal is to help clients reduce their energy use by 20 – 30% and bring them new revenue of up to $50,000.
“It’s essentially a win-win for you. You’re already shooting to reduce your energy. Why not make some money from it while you’re doing it.”
Virtual power plants are just starting to take off and it’s responding to a need for grids to get a whole lot smarter about integrating and making much better use of existing resources.
“It’s projected that by 2030 VPPs can save ratepayers $60 billion in energy costs based on not needing to upgrade certain elements of the grid.”
– Dwayne Caldwell, CEO ENSPI
Efficiency has never been the hallmark of grid design, but it’s one thing that can bring rates down by making much more efficient use of existing assets.
However, you do need modern grid policies and regulations to make this work.
Grid policies need to evolve
The policies need to allow aggregators to sell into the grid, and for players to be compensated for the services they provide to the grid whether it’s energy storage or peak power provision. Time-of-use pricing is one of the most important policies that drives efficiency.
California has “a pretty solid program and market” along with Texas and the northeast US says Caldwell. This is where he is focusing the efforts of ENSPI.
“We really see a lot of support for this on both the implementation of storage and incentivizing of storage assets to respond to a lot of these events, as well as just the deregulation of energy markets,” says Caldwell.
ENSPI is helping manufacturers take advantage of rebates and other programs designed to get energy storage on the grid in addition to the growing market for small solar. And then ENSPI will aggregate them and essentially become a peaker power plant.
In Canada, where grid policies are not ready for the smart grid revolution the Canadian Renewable Energy Association did a study to determine the impact of adding one 300-megawatt energy storage plant to Alberta’s deregulated market and found through arbitrage it could have save consumers $600 million dollars under 2022 conditions.
Smart technologies are the most underrated solution
With the right grid policies companies are incentivized to create robust systems that can serve multiple purposes. A battery system can work as a backup for the business, but when connected to a virtual power plant it becomes a grid resource that brings in revenue and makes the grid more resilient.
It’s estimated that there will be 250 million EVs on the road by 2030 which on the one hand represents demand for a lot of electricity and on the other hand represents an incredibly powerful tool that can utilize extra capacity in non-peak times and even provide power back to the grid. Sunrun, another company operating virtual power plants is running a vehicle-to-grid pilot in Maryland.
Smart grid technologies and solutions may be the most underrated solutions needed to build the distributed, affordable grid of the future. Consumers should love these technologies because it doesn’t cost them anything and can make better use of existing grid resources and ultimately save money.
In a previous story, we found how easy it is to be creative and successful in building a resilient grid with smart grid technologies.
Small city with no energy hits it out of the park
The small City of Summerside Prince Edward Island in Atlantic Canada had no generation capacity except for backup diesel generators. This left them totally dependent on generators from another province.
So they built a small wind farm right in the City of this windy east coast city.
At the same time they started to build a smart grid, hooking up about one-third of their homes to a smart grid.
Then they incentivized residents to replace fuel oil furnaces with thermal energy-storing electric furnaces by offering them a significant long-term discount on electricity.
This simple initiative flattened the curve on wind energy allowing them to use all of the wind power generated and provided their city with 47% locally generated renewable energy.
They later added solar and energy storage and pushed that number to 62% which makes them an international leader. Remember, they started from zero.
Dwayne and his start-up ENSPI are managing about 5 megawatts of energy for customers with about 200 kilowatts available for energy-to-grid response programs, a number that is sure to grow.
With millions of small generators, batteries and EVs coming on the market each year virtual power plants can expect exponential growth in the coming years, especially as grid operators realize this is an easy, inexpensive way to solve growing challenges by integrating renewable energy and satisfying growing demand for electricity.