What Is A Virtual Power Plant? What You Need To Know

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Virtual power plants (VPP) are a network of energy-producing or storage devices, like solar panels and batteries, that are interconnected and can serve the grid by transferring power into the grid or alternating demand times virtually.

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Virtual Power Plants (VPPs) can operate on various scales. They utilize energy generated and stored in residential homes, which can be accessed by utility companies during power outages or peak demand periods, often coinciding with severe weather events.

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Homeowners who contribute to these VPPs are compensated, helping to reduce reliance on fossil fuels. Unlike traditional power plants that rely on a centralized physical facility, VPPs leverage distributed resources like home batteries and solar panels.

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This decentralized approach contrasts with coal or gas plants, which depend on a single, central facility to distribute energy. Additionally, VPPs incorporate smart technology, allowing for remote control over energy demand via software in devices like thermostats or mobile apps, eliminating the need for manual adjustments.

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Now that you know a bit more about virtual power plants, let’s look closer here on Currents. 

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Virtual Power Plants (VPPs) Help the Grid

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Virtual power plants may not be our most important energy source, but they could very well become that if there is a complete or half-way shift from coal and gas. The investments towards distributed energy sources is estimated to reach $110 billion between 2020 and 2025, according to Reuters. 

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A virtual power plant combines a portfolio of resources that reduces the carbon footprint while allowing the grid to respond to higher energy demands. The Department of Energy estimates the national VPP capacity to be at around 30 to 60 gigawatts, which is 4% - 8% of peak electricity demand in the United States.

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The DoE is also projecting this number to expand to 80 - 160 GW by 2030, and there are plans to reduce the U.S. peak demand by 60 GW by 2030 by using VPPs. One gigawatt is 1 billion watts, or 2.5 million solar photovoltaic panels or one large nuclear reactor, making up for quite a lot of energy.

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If you’re wondering if virtual power plants are better, virtual power plants are quicker to build and are a clean source of energy compared to new power plants. They balance out the grid, reduce peak demand, and integrate renewable energy. However, they are a small piece of the growing energy landscape.

Now let’s check in with some companies to see what changes they’ve made in congruence with virtual power plants.

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Make Money Joining A Virtual Power Plant

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VPPs vary by state and company.

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Some companies have created programs for virtual power plants. For example, Green Mountain Power, Vermont’s largest utility company, created a program in 2023 in which customers can lease a Tesla home battery at a discounted rate or purchase their own, receiving up to $10,500 in assistance if they share their stored energy with the utility. 

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Three utility companies (National Grid, Eversource, and Cape Light Compact) in Massachusetts have already put in place a VPP program that pays customers in exchange for utility control of their home batteries. The Colorado Public Utilities Commission is asking Xcel Energy, its largest utility company, to develop a fully operational VPP pilot in 2024.

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If you live in one of these states, Currents can help you sign up your devices and start earning fast.

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U.S. solar companies, including Sunrun Inc. and SunPower Corp., have pooled some of their customers' systems into virtual power plants in California, Hawaii and New England. Last year, Sunrun operated a virtual power plant with homes in New England that provided 1.8 gigawatt-hours to the grid from June to August.

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According to Reuters, OhmConnect, which also manages a network of energy-consuming devices, said its members received $2.7 million in 2022 for conserving energy during a nine-day summer heat wave in California - showing how VPPs can also be used to cut demand when utilities are short power.

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Tesla Virtual Power Plant

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Tesla has contributed to virtual power plants as well. In fact, they're the most well-known VPP in the country right now as any Tesla battery owner can sign up and contribute their energy to the VPP. Texas customers can install and use Tesla powerwalls to contribute back to the power grid through the the Texas grid, or ERCOT.

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See posters on Reddit talk about their VPP earnings here: https://www.reddit.com/r/teslamotors/comments/10xg6wd/57477_in_compensation_from_the_virtual_power/

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Californian companies like PG&E joined together with Tesla to create a network of powerwalls. Australia also has its own virtual power plant initiative with Tesla, where 50,000 homes would be equipped with a 5kW solar panel system and a 13.5kWh Tesla Powerall 2 at no cost to the residents.

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Currents' VPP - Earn money from your home energy

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Currents mission is to educate homeowners on their energy usage and monetize their smart devices. We do this by identifying which smart devices can connect to VPPs and pay you when the grid requires it.

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If you're interested in making money from your energy devices, anywhere from $100-$1500 per year, sign up for Currents. We make it easy to connect your devices and start earning quick.

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Sources

U.S. Energy Information Administration - EIA - Independent Statistics and Analysis

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