For example, Tesla recently piloted a VPP in California to help stabilize the grid. Tesla worked with more than 5,000 homeowners to equip their homes with Powerwall batteries. Homeowners received $2 per kWh compensation for those who choose to participate in the VPP. During beta testing, over 2,000 batteries pushed more than 16.5 MW of power back to the grid.
VPPs expand existing power grids, adding energy capacity and supply without the need for new or upgraded infrastructure. They also create redundancy and resiliency. If a conventional power plant fails, it must be taken offline, whereas VPPs can continue operating even if one of their nodes experiences a service interruption. Likewise, VPPs can sense when the power grid is stressed, then automatically redistribute and rebalance energy loads during periods of peak demand in order to spare overworked energy assets. In this respect, they can emulate or replace peaking power plants – i.e., power plants that run only when the demand for energy is high.
The increased power capacity and resiliency from VPPs act like electrical insurance for consumers and businesses, who because of VPPs are less likely to experience power outages – even when electricity demand spikes. With VPPs as a power source, Texas might have been able to reduce the number of residents who suffered blackouts and freezing temperatures during the aforementioned winter storms that took place there in February 2021.
VPPs’ virtual networks also ensure that critical infrastructure like hospitals and banks – both of which need power to do business that saves lives and livelihoods – will continue operating uninterrupted. Plus, VPPs keep unexpected power surges from damaging electrical equipment, which keeps the larger power grid in working order to the mutual benefit of consumers and their coffers.
The Virtues of ‘Virtual’
By supplementing traditional power plants and providing increased power supply during periods of peak demand, VPPs may prevent power outages like the one in Texas. But that’s just one benefit among many.
Other benefits are sustainability and cost, as VPPs can incorporate renewable energy sources like wind turbines, solar parks and battery farms, which are cleaner and often cheaper than fossil fuels, but typically can’t generate enough energy on their own to power an entire grid.
Recently, China opened its first virtual power point in Shenzhen. Unpredictable weather has caused widespread blackouts, including a power shortage that affected nearly 80 million residents in China's Sichuan Province in August. The virtual power plant’s capacity is planned to increase to one million kilowatts by 2025. This is expected to save tens of thousands of tons of carbon dioxide, sulfur dioxide, and standard coal.
“Renewables are positioned to overtake coal this decade as the most popular way to generate electricity,” author Jennifer Castenson writes in an article for Forbes.com, in which she stated solar power is now cheaper than natural gas and coal across most of the United States.
“Those cheaper costs along with government efforts to slash climate-damaging emissions will increasingly push coal off the grid and give renewables 80% of the market for new power generation by 2030 … This accelerating trend is paving the way for the virtual power plant.”