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Home batteries and soon Electric Vehicles can alleviate strain on the grid, resulting in cost savings for everyone on their energy bills. We break down how VPPs can help homeowners.

In today’s tech-driven world, internet-connected household items are becoming increasingly common. From thermostats to solar batteries, the rise of “smart” technology is undeniable.

For consumers, these smart appliances offer convenience by allowing scheduling of energy usage, remote adjustments, and alerts for potential issues. But for electric utility companies, these devices represent a revolutionary way to manage the grid efficiently, respond swiftly to emergencies, and reduce costs for all users.

During peak demand, utility companies can tap into the power of thousands of customers’ connected batteries and smart devices. By drawing power from batteries while pausing smart devices, they reduce overall power demand, essentially creating a virtual power plant.

Understanding Virtual Power Plants

A virtual power plant (VPP) is a network of small to medium power-generating, consuming, and storage devices remotely controlled to address surges in grid demand.

The concept of VPPs has evolved from theory to reality with the expansion of always-connected broadband internet.

Aggregators and Assets

Aggregators manage the collective power output capabilities and demand of grid-connected devices known as assets within a VPP.

Assets within a VPP include solar installations, battery storage systems, EV chargers, and more.

Virtual Power Plants (VPPs) Aid the Grid

During peak congestion, utility companies require extra power. Traditionally, this has come from “peaker” power plants, but these are inefficient and costly.

VPP aggregators use three strategies to reduce reliance on peaker plants:

  1. Activating devices like smart thermostats and water heaters ahead of peak demand times.
  2. Disabling devices temporarily during peak demand periods (demand response).
  3. Engaging energy storage devices to counter sudden demand spikes.


Consider this scenario: Imagine 10,000 homes with air conditioners running throughout the day, each consuming an average of 3 kilowatts (kW) when active. This setup could potentially demand 30 megawatts (MW) if all air conditioners operated simultaneously—calculated as 3 kW multiplied by 10,000 homes, resulting in 30,000 kW or 30 MW.

While a peak demand of 30 MW isn’t consistently necessary, grid operators must anticipate and prepare for potential spikes.

Now, suppose these air conditioners only need to run for a total of 20 minutes within an hour to maintain a comfortable temperature. If all 10,000 homes were part of a VPP, the aggregator could remotely manage smart thermostats, ensuring only one-third operate concurrently, reducing the maximum demand for air conditioning to just 10 MW.

By intelligently regulating home thermostats and curbing maximum demand from 30 MW to 10 MW, there’s no need for a 20 MW gas peaker plant. This action avoids environmental harm from rapidly burning natural gas and saves the grid operator substantial expenses on energy procurements.

Ways Homeowners Can Engage with VPPs

Homeowners can join VPPs by allowing aggregators to activate their battery or regulate their thermostat during peak periods.

Participation may involve sacrificing energy storage or adjusting comfort levels, but it can also be financially rewarding.

Looking Ahead

Home batteries will seamlessly integrate with VPPs, charging during daylight hours and discharging during evening peaks. This will alleviate strain on the grid and lead to cost savings for consumers.

Electric vehicles are set to become crucial energy reservoirs for VPPs with the adoption of vehicle-to-grid technology.


More References

NREL White paper – Virtual Power Plants and Energy Justice

Clean Energy 101 – Virtual Power Plants Virtual Power Plant Projects




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