Puget Sound Energy and AutoGrid have launched a virtual power plant, or VPP, they aim to grow to 100 MW by 2025, Aaron August, PSE senior vice president, chief customer and transformation officer, said in a Nov. 22 interview.
With plans to add about 15,000 MW of clean energy resources to its system by 2045, including about 3,660 MW of demand-side and distributed resources, PSE aims to scale up its VPP over time, according to August.
Ultimately, the VPP will likely include five key elements — energy efficiency, demand response, distributed energy resources, energy storage and electric vehicles — that will be used as a single resource, according to August. “How we're thinking about it at Puget is ‘energy orchestration’ … where you've got decentralized systems that if you can create the right engagement mechanism with customers, you can literally transform when and how customers use energy,” he said.
VPPs are groupings of distributed resources, such as energy storage, rooftop solar and EV chargers, that can balance electricity loads and provide grid services like a power plant, according to the Department of Energy.
A confluence of market factors, including growing EV sales, has put VPP growth at a potential inflection point, DOE said in a September report.
PSE and AutoGrid, a Schneider Electric unit, started developing a VPP in 2021 to provide a centralized application for enrolling, dispatching and assessing the performance of individual and combined programs across PSE’s portfolio.
Under an expanded relationship, AutoGrid will provide capacity to PSE through AutoGrid Flex, an artificial intelligence-driven distributed energy resource management system, the companies said earlier this month.
Initially, PSE is using a rewards program to sign up residential customers with smart thermostats and heat pump water heaters for the VPP, according to August. PSE expects to use the VPP when the grid is stressed on especially hot or cold days.
PSE, Washington’s largest utility with 1.2 million customers, expects the VPP will scale up to include EVs, battery storage and other resources.
“The volume of storage driving around America today, it's an incredible amount of power,” August said. “We're talking about how do we fully unleash the potential of that energy? It's going to take utility programs, it's going to take software, like AutoGrid’s, that allows all these things to start to come together, but it's no longer [energy efficiency] as a silo, [demand response] as a silo, EVs as a silo.”
PSE’s interest in VPPs is driven by a need for resiliency in the face of increasingly extreme weather combined with the evolving grid and advances in technology, according to August.
For AutoGrid, which manages about 8 GW of VPPs, with about half in the United States, the partnership with PSE is part of a shift in its business model, according to Scott McGaraghan, AutoGrid chief revenue officer.
Instead of licensing its software to PSE, for example, AutoGrid will deliver capacity to the utility under a contract that runs at least five years, McGaraghan said. The long-term contract provides AutoGrid with enough certainty so it can front load financial incentives for customers to buy assets that can be part of the VPP, such as batteries, he said.
Looking ahead, McGaraghan expects VPPs will move beyond residential demand response programs to tie together commercial and industrial building controls, water treatment plants and manufacturing facilities, as well as grid-scale assets like front-of-meter batteries.
Eventually VPPs will be used as more than a capacity resource, to include managing wholesale market risk while providing ancillary services and locational benefits, according to McGaraghan. VPPs will become “a true resource that a utility control room operator looks at alongside all the other resources they have at their disposal,” he said.