I love California – there’s plenty to like about sunshine and palm trees. But the state currently is dealing with a few problems that I’d like to fix. First, electricity rates are rising rapidly. Second, the reliability of the power grid is being challenged. And third, California’s NBA teams always beat my Portland Trailblazers.
Fortunately, there’s a solution that can help to address the first two (sorry, Blazers). Virtual power plants (#VPPs) can leverage the inherent flexibility in consumer technologies such as electric vehicles, smart thermostats, and batteries to help keep the lights on in California while putting money directly back into the pockets of consumers who participate.
Our new study for GridLab shows that the market potential for VPPs in California could exceed 7.5 GW by 2035. That’s more than the peak electricity demand of Los Angeles, and more than three times the capacity of the largest power plant in the state. It’s also five times the demand response capability that exists in California currently. This is real potential. Our estimate is based on achievable participation rates and cost-effective technologies that are commercially available today.
That portfolio of VPPs could provide significant net cost savings to California consumers. When deploying VPPs, utilities will pay customers rather than corporations for grid services. Our study estimates that payments to VPP participants would exceed $500 million annually by 2035. A residential customer with all four VPP technologies considered in our analysis potentially could receive incentive payments of $500 to $1,000 per year. If structured appropriately, even non-participants would experience savings.
There’s still more to be done to achieve this potential, of course. Our study lays out several recommendations in that regard.
Huge thanks to Ric O'Connell of GridLab for his leadership throughout this project. Kate Peters managed the analysis fabulously, and Sophie Edelman – our newest “flexpert” – became a certified VPP aficionado virtually overnight. We appreciated insightful review of the study by Feliz Ventura (Ava Community Energy), Rizwan Naveed (Google), Cliff Staton (OhmConnect), Brian Gerke (Recurve), and Sarah Minczeski Delisle and Jon Fortune (Swell).
Lastly, something to keep an eye on: This month, the California State Senate will consider draft legislation that would establish the equivalent of an RPS for VPPs. It’s called SB 1305. As currently written, it would require all utilities to meet a growing portion of their future resource adequacy obligation with VPP capacity. It will be interesting to see how that policy debate evolves.
You can download our report and the technical appendix here: https://lnkd.in/gYY5Hwki
