A big-scale battery storage system in Long Beach, Calif., provides renewable electricity during peak demand periods. (Patrick T. Fallon/AFP via Getty Images)


  • Amidst a rising demand for electricity, driven by electric vehicles, climate-controlled environments, and data centers, the U.S. is witnessing a paradigm shift towards virtual power plants.
  • These decentralized systems harness distributed energy resources like batteries, solar panels, and even demand-side adjustments to make sure a balanced grid.
  • By integrating consumers as a part of the answer, virtual power plants promise a more resilient, efficient, and responsive power supply landscape.

This text was written by Daniel Cohan, Associate Professor of Civil and Environmental Engineering, Rice University.

After nearly twenty years of stagnation, U.S. electricity demand is surging, driven by growing numbers of electrical cars, data centers and air conditioners in a warming climate. But traditional power plants that generate electricity from coal, natural gas or nuclear energy are retiring faster than latest ones are being inbuilt this country.

Most latest supply is coming from wind and solar farms, whose output varies with the weather.

That’s left power firms in search of latest ways to balance supply and demand. One option they’re turning to is virtual power plants.

These aren’t massive facilities generating electricity at a single site. Moderately, they’re aggregations of electricity producers, consumers and storers – collectively generally known as distributed energy resources – that grid managers can call on as needed.

A few of these sources, reminiscent of batteries, may deliver stored electric power. Others could also be big electricity consumers, reminiscent of factories, whose owners have agreed to reduce their power use when demand is high, freeing up energy for other customers. Virtual power sources typically are quicker to site and construct, and might be cleaner and cheaper to operate, than latest power plants.

A growing resource
Virtual power plants aren’t latest. The U.S. Department of Energy estimates that there are already 30 to 60 gigawatts of them in operation today. A gigawatt is 1 billion watts – roughly the output of two.5 million solar photovoltaic panels or one large nuclear reactor.

Most of those virtual power plants are industrial customers which have agreed to scale back demand when conditions are tight. But as growing numbers of homes and small businesses add rooftop solar panels, batteries and electric cars, these energy customers can change into not only consumers but in addition suppliers of power to the grid.

For instance, homeowners can charge up their batteries with rooftop solar when it’s sunny, and discharge power back to the grid within the evening when demand is high and costs sometimes spike.

As smart thermostats and water heaters, rooftop solar panels and batteries enable more customers to take part in them, DOE estimates that virtual power plants could triple in scale by 2030. That might cover roughly half of the brand new capability that the U.S. might want to cover growing demand and replace retiring older power plants. This growth would help to limit the associated fee of constructing latest wind and solar farms and gas plants.

And since virtual power plants are positioned where electricity is consumed, they’ll ease the burden on aging transmission systems which have struggled so as to add latest lines.

Latest roles for power customers
Virtual power plants scramble the roles of electricity producers and consumers. Traditional power plants generate electricity at central locations and transmit it along power lines to consumers. For the grid to operate, supply and demand should be precisely balanced in any respect times.

Customer demand is usually assumed to be a on condition that fluctuates with the weather but follows a reasonably predictable pattern over the course of a day. To satisfy it, grid operators dispatch a mixture of baseload sources that operate repeatedly, reminiscent of coal and nuclear plants, and more flexible sources reminiscent of gas and hydropower that may modulate their output quickly as needed.

Output from wind and solar farms rises and falls in the course of the day, so other sources must operate more flexibly to maintain supply and demand balanced. Still, the essential idea is that massive facilities produce power for tens of millions of passive consumers.

Virtual power plants upend this model by embracing the indisputable fact that consumers can control their electricity demand. Industrial consumers have long found ways to flex their operations, limiting demand when power supplies are tight in return for incentives or discounted rates.

Now, thermostats and water heaters that communicate with the grid can let households modulate their demand too. For instance, smart electric water heaters can heat water mostly when power is abundant and low-cost, and limit demand when power is scarce.

In Vermont, Green Mountain Power is offering its customers incentives to put in batteries that may provide power back to the grid when it’s needed most. In Texas, where I live, deadly blackouts in 2021 highlighted the importance of bolstering our isolated power grid. Now, utilities listed below are using Tesla Powerwalls to assist turn homes into virtual power sources. South Australia goals to attach 50,000 homes with solar and batteries to construct that country’s largest virtual power plant.

Virtual power, real challenges
Virtual power plants aren’t a panacea. Many shoppers are reluctant to offer up even temporary control of their thermostats, or have a delay when charging their electric automotive. Some consumers are also concerned in regards to the security and privacy of smart meters. It stays to be seen how many shoppers will join for these emerging programs and the way effectively their operators will modulate supply and demand.

There are also challenges on the business end. It’s lots harder to administer tens of millions of consumers than dozens of power plants. Virtual power plant operators can overcome that challenge by rewarding customers for allowing them to flex their supply and demand in a coordinated fashion.

As electricity demand rises to fulfill the needs of growing economies and replace fossil fuel-burning cars and furnaces, and reliance on renewable resources increases, grid managers will need all the flexibleness they will get to balance the variable output of wind and solar generation. Virtual power plants could help reshape electric power into an industry that’s more nimble, efficient and attentive to changing conditions and customers’ needs.

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