Smart Cities

Virtual Power Plants Can “Relegate California Blackouts to the History Books”

“As I look out my window I can see [wildfire] smoke right now and I was warned about power outages last week,” said Ryan Hledik, principal at research consultancy Brattle Group, during a phone interview from his California home in mid-August. The state’s grid operators went on to order rolling blackouts for the first time in 20-years as a heatwave swept across the region. California ISO called the events a “perfect storm,” caused by the heatwave and a corresponding spike in demand, simultaneous loss of some sources of power, and inability to import out-of-state electricity. The Federal Energy Regulatory Commission chairman, Neil Chatterjee, blamed the blackouts on California’s move away from fossil fuels in favor of renewable energy resources, like solar and wind, for an increasing level of its power generation. Later, a 121-page preliminary report by the California Independent Systems Operator (CAISO), Public Utilities Commission, and Energy Commission, stated that the number one reason […]

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“As I look out my window I can see [wildfire] smoke right now and I was warned about power outages last week,” said Ryan Hledik, principal at research consultancy Brattle Group, during a phone interview from his California home in mid-August. The state’s grid operators went on to order rolling blackouts for the first time in 20-years as a heatwave swept across the region. California ISO called the events a “perfect storm,” caused by the heatwave and a corresponding spike in demand, simultaneous loss of some sources of power, and inability to import out-of-state electricity.

The Federal Energy Regulatory Commission chairman, Neil Chatterjee, blamed the blackouts on California’s move away from fossil fuels in favor of renewable energy resources, like solar and wind, for an increasing level of its power generation. Later, a 121-page preliminary report by the California Independent Systems Operator (CAISO), Public Utilities Commission, and Energy Commission, stated that the number one reason for the blackouts was climate change, further fueling the debate. Neither is wrong, but while more fossil fuel power generation may have stopped this year’s blackouts, renewable energy is focused on slowing the process of climate change, which is increasing the intensity and frequency of the heatwaves themselves.

“The California grid operator resorted to blackouts because a heatwave led to high electricity demand at a time when it was not possible to import power from neighboring states since all of them were facing the same heatwave. Additionally, one power plant unexpectedly shut down and the wind, which powers many generators, stopped blowing. To make matters worse, cloud cover reduced solar generation,” Hledik added in a September article written with his colleague Ahmad Faruqui. “One solution is to build more power plants — some of which would be used only a few hours of the year. There is a better option that would prevent blackouts while saving Californians money.”

Hledik and Faruqui are alluding to virtual power plants (VPP), a cloud-based distributed power system that aggregates the capacities of heterogeneous distributed energy resources (DER) for the purposes of enhancing power generation, as well as trading or selling power on the electricity market. VPPs are able to relieve the load on the grid by smartly distributing the power generated by the individual units during periods of peak load, such as during the heatwaves that ravaged California in August. Within weeks of the heatwave and wildfires, German energy storage company Sonnen had announced the largest VPP of its kind, linking up 3,000 apartments across seven, otherwise standard, residential complexes.

“We wanted to prove that we could do this kind of clean energy, carbon-neutral, resilient community of decentralized batteries and solar in an average middle class, [or] low to middle income apartment community. We are seeing this as an important new focus for us,” says Blake Richetta, chairman and CEO of Sonnen. “These projects are the result of two years of hard work, planning, and dedication to the mission of building a cleaner, more reliable and secure energy future for humanity,”

Working with Wasatch Energy, the new California VPP will feature Sonnen ecoLinx intelligent battery storage systems to ensure that heatwaves, cloudy/smokey skies, and low-wind conditions won’t result in blackouts. Individual Sonnen systems within each community will be capable of communicating with each other as a single intelligent battery asset, harmonizing and optimizing the community’s solar production, grid usage, and individual apartment loads to build resilience. Wasatch and Sonnen seek to use the same value stream Rocky Mountain Power used when integrating the Sonnen platform into the Soleil Lofts VPP.

"As far as the utility dispatching our fleet directly, like Rocky Mountain Power does with Soleil Lofts, and potentially not participating in the CAISO, but instead participating, really simply, directly with utility, we're very open to that. We would love that kind of relationship," Richetta said. "It's obvious that the value of behind the meter, end-of-the-distribution-system energy storage, is adjacent to the customer load."

Currently, California does not have plans to dispatch VPP projects directly by utilities, but it remains a possibility to work within the wholesale energy market. The developers claim that the next 12 months will determine whether VPPs will be allowed to dispatch their energy within CAISO or directly through utility partners. Wasatch is funding the first fleet in order to demonstrate the effectiveness of the model, after that the group hopes to bring in external investors who can see the potential of VPPs for grid resilience in the challenging years ahead for the sunshine state.

“Achieving the benefits of load flexibility will require a significant change in thinking,” wrote Hledik and Faruqui. “Regulators should encourage utilities to offer load flexibility. Utilities should educate customers and provide them the financial incentives to modify their load. Grid operators should factor the capabilities of load flexibility into their operations. Only then will we have relegated blackouts to the history books.”

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