A Texas-sized Milestone for VPPs

By John Bonnin

John Bonnin

Spiking energy prices, power plant failures, and the threat of rolling blackouts plagued much of the U.S. this past summer. But as Texans know all too well, winter can also bring outages. Extreme heat and cold require bold new solutions to maintain grid reliability. Particularly as Texans embrace electric heating, cooling, and even vehicles, putting more demand on the grid.

These trends led the Public Utility Commission of Texas (PUCT), working with the Electric Reliability Council of Texas (ERCOT), to announce a new pilot program testing how distributed energy resource (DER) solutions can bridge between residential rooftop solar + battery systems and the larger wholesale market. In the industry, we call this kind of bridge a “virtual power plant” (VPP).

This news took some by surprise. Not me.

“The DER Pilot Program paves the way for Texans with home solar+battery solutions to provide energy to the Texas grid at times when it is most needed – helping to boost electric reliability and resiliency,” said Amy Heart, vice president of public policy at Sunrun – the largest residential solar installer in U.S. She and I are both members of the PUCT Aggregated Distributed Energy Resource (ADER) Task Force. The pilot program is the next step in a series of rulings and other new market rules that are making Texas a leader in leveraging customer assets (electric vehicle chargers, heat pumps and HVAC systems) that can benefit the larger grid and other Texans – while also helping eliminate polluting fossil fuels.

Renewable energy is our future, and we’ve learned to manage still days, cloud cover, and sundown. We need energy “flexibility” to keep the grid in balance, and DERs are the answer. They help keep the lights on, costs down, and polluting “peaker plants” offline, despite demand spikes during hot and cold weather.

The entire Texas fleet of peakers is approximately 30 gigawatts (GW.) Guidehouse Insights forecasts that more than 32 GW of DERs will come on-line in Texas this decade. These numbers show DERs can eliminate the state’s peaker plants in less than 10 years if intelligently aggregated into VPPs. As a result, many peakers stayed silent and switched off throughout the summer. (To read more analysis on this topic, download our whitepaper written with Guidehouse Insights: “How VPPs Can Replace Fossil Fuel Peaker Plants: Democratizing Energy Supply While Lowering Costs and Emissions.”)

The growth in VPPs is a global phenomenon. This past summer around the world, AutoGrid launched over 1,000 peak demand “events” by controlling over 1 million devices with artificial intelligence-powered solutions. During one event in Hong Kong, over 600,000 devices were controlled and orchestrated to provide the same services as a traditional power plant.

Not only is ERCOT embracing aggregated DERs via VPPs, but it’s putting customer resources in the same game with traditional utility grid-scale resources. Few changes required: VPPs will fit into the existing market rules and operations. Plus no preference nor penalty. This neutral approach is critically important, many in Texas would argue, and reflects an important benefit, of an independent, isolated market like ERCOT. Namely, Texas can move swiftly to accommodate changes in technologies that meet a market need without waiting for sign-off from federal regulators.

Since DERs are diverse by definition, the software systems that interact with and control these resources need to be flexible enough to interface with any vendor’s products. AutoGrid’s technology-agnostic approach is ideal for Texas, creating a blueprint to meet the needs of prosumers, grid, the economy and environment.

Last year, different portfolios of flexibility helped shave off demand during the extreme cold spell, showing the world that the VPP concept is evolving into a year-round way to maintain system reliability and reduce costs.

The key to creating a sustainable VPP market in Texas, throughout the U.S. and across the globe is technology-agnostic solutions that support customer choice and the need for scale.

Big things ahead in Texas.

John Bonnin has nearly 30 years of industry experience, including 18 years at CPS Energy as Vice President of Energy Supply and Market Operations. His focus was managing market risks to native load customers and optimal dispatch of CPS Energy’s power generation fleet, which included over 1.5 GW renewable energy and 200 MW Demand Response capability. Mr. Bonnin has a Master of Science in Management/Computer Resource Management from Webster University and a B.S. in Chemistry from LSU.

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