The deployment of Virtual Power Plants (VPPs), which aggregate consumer-owned distributed energy resources (DERs) such as solar panels, batteries, and electric vehicles, is poised for significant growth. A recent report from the U.S. Department of Energy (DOE) suggests that VPPs could contribute up to 160 gigawatts (GW) of the nation’s projected 200 GW peak demand by 2030, potentially reducing power system costs by $10 billion annually. However, developers and industry advocates warn that the lack of standardized interoperability among the various DER components could hinder the widespread growth of VPPs.
Industry experts emphasize that establishing common standards is crucial for ensuring that utilities and aggregators can effectively “orchestrate” these diverse DERs to deliver a full range of services to the power grid. Without interoperability standards, VPPs may struggle to achieve the scalability, affordability, and reliability needed to address the increasing variability in energy demand, extreme weather events, and rising electricity loads, according to Arshad Mansoor, CEO of the Electric Power Research Institute (EPRI).
“Now is the time to bring together all VPP stakeholders to work on interoperability,” Mansoor stated, noting that standardized systems would be key to simplifying the adoption of DERs and enabling the integration of VPPs into utility operations and wholesale markets. The DOE’s report underscores the importance of standardized interoperability in helping to expand the adoption of DERs and facilitate their integration into utility planning processes.
A Collaborative Approach to Standardization
Lon Huber, senior vice president of pricing and customer solutions at Duke Energy, highlighted the necessity for system operators to have complete visibility of connected DER devices. Operators must also be able to send signals to these devices and be confident in their responses to ensure reliable grid operation. Huber emphasized the need for a multi-stakeholder collaborative approach to developing these standards across the VPP ecosystem.
The key challenge now facing industry leaders is determining what those standards should be and what technologies will be necessary to optimize performance across a wide range of connected DERs. To address these questions, EPRI is partnering with Kraken, an international software platform provider, and other industry players to develop comprehensive solutions.
Adapting to New Demand Dynamics
Experts agree that the electrification of transportation, buildings, and industrial sectors will create new and more complex demand patterns, including more frequent and higher demand spikes. VPPs are seen as a critical solution to manage these dynamics. By making small, automated adjustments to when customers use electricity—shifting consumption to times when energy is cheaper and cleaner—VPPs can significantly contribute to balancing supply and demand across the grid.
Ben Brown, CEO of Renew Home, which operates 3 GW of VPPs and plans to scale to 50 GW by 2030, emphasized the role of demand flexibility in reducing peak demand and ensuring a more resilient energy system. “Demand flexibility across thousands of homes is a significant peak capacity resource,” Brown explained. “It helps balance the power system and ensures a more sustainable and reliable energy grid.”
According to Jigar Shah, director of the DOE’s Loan Programs Office, VPPs represent a cost-effective and timely solution to manage the challenges posed by widespread electrification. “VPPs are likely the only way to manage electrification at a reasonable cost and within the timeline we need,” Shah said in a recent interview.
As the demand for clean and reliable energy grows, experts agree that the development and adoption of interoperable standards for VPPs will be essential to unlocking their full potential and ensuring that they can effectively contribute to a more sustainable and resilient power grid.
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