While many people don't know what a virtual power plant is, those who do still might not realize the scale of the impact they could have on our energy system. One up and coming start-up is showing that virtual power plants aren't just about turning buildings into power generating facilities but potentially turning real estate portfolios into significant energy suppliers. The scalability of virtual power plant technology could be the factor that fundamentally changes the energy and real estate landscapes.
Blueprint Power has developed an innovative platform to help buildings sell their excess electricity into a growing number of competitive energy markets, a previously untouchable opportunity for the real estate community. Blueprint's machine-learning platform transforms buildings into producers of surplus energy by connecting to and managing onsite assets such as solar, battery storage, cogeneration, fuel cells, thermal storage and controllable loads. The company's marketplace software receives price signals and dynamically matches supply to the best source of revenue, turning buildings and entire building portfolios into virtual power plants.
"Until very recently, buildings were not able to proactively sell excess energy capacity in the same way that traditional power plants do," said Robyn Beavers, CEO of the New York City based firm. "Now in states like New York they can. We are helping buildings connect to and transact in these markets in a scalable way."
Where access to coal, oil, gas or uranium and nuclear technology may have defined traditional energy production, tomorrow's solar-dominated energy sector will be led by those with access to sunlight. In the urban areas where this type of virtual power plant technology aims to take hold, that means rooftops hold the power, which creates a new opportunity for real estate moguls to become significant energy suppliers.
“Blueprint is offering a first-of-its-kind opportunity to real estate owners in New York City enabled by a technology and regulatory evolution, uncovering new revenue streams and driving more sustainable energy solutions for society,” says Abe Yokell, co-founder and managing partner, Congruent Ventures, one of the principal investors in Blueprint’s $3.5 million series A that closed this week.
That is not to say that Brookfield Asset Management (NYC's biggest landlord) could be the next Duke Energy, the distribution of generating resources is entirely different when it comes to rooftop solar. However, it is fair to say that energy generation could become a significant revenue stream for building owners, and even more significant for those with an extensive portfolio of buildings.
Consider Elon Musk's recent project in South Australia, being hailed as the world's biggest virtual power plant. The project installed solar panels and Tesla's lithium-ion batteries at 50,000 homes in the state, together they generate a total of 250MW of electricity – about half as much energy as is produced by a typical coal-fired power station. The intelligent interconnectivity between these generating and storage resources then adds greater efficiency to the system and its abilities to power the building and produce surplus saleable power.
A real estate firm with a portfolio of thousands of buildings now holds the potential to become a producer of tens, if not hundreds, of megawatts, tied together in a virtual power plant. Groups of buildings brought together by associations and partnerships between real estate firms can also share the spoils of scalable virtual power plant technology creating greater aggregate levels of surplus for sale into the wider energy market. These figures only rise as solar, storage and demand response software and technology improves.
Then, considering that energy surplus only begins once the building itself has covered its own power needs, an interesting side-effect of this push for profit from selling electricity might be a surge in the adoption of energy efficiency technology and strategies in these buildings. The cost-saving appeal of making a building "smart" may become a profit-driven exercise in a world of virtual power plants.
Whether this new energy landscape can emerge is, of course, largely dependant on regulation and policy. Logic suggests that making solar and storage profitable would not only be beneficial to the environment but also to reducing electricity costs for the consumer and stabilize the grid.
Resistance will come from those who currently produce power in our centralized energy system using their influence on regulators and policy-makers to hold back decisions on electricity buyback schemes. You would think, however, that it is only a matter of time before distributed, renewable, intelligent virtual power plants disrupt power provision and kick-start a new energy era.