By Patrice ‘Pete’ Parsons
July 12, 2023
Another week, another round of local, state and national news articles about how the Texas grid is trying to handle the relentless heat and keep up with increasing electricity demand. According to ERCOT, so far, so good. But it’s only July and we have more heat coming. But, as so many of you know, more and more Texans are part of a critical solution with rooftop solar and batteries.
Home solar and batteries have provided thousands of Texans peace of mind when their power goes out. And now some of those systems are being harnessed together and provide even more resilient power to the state’s strained grid.
Called virtual power plants (VPPs), this solution can help ERCOT continue to provide power as heat waves push traditional power plants to their max. Virtual power plants are created by aggregating resources such as consumer solar paired with batteries, smart thermostats, efficient appliances and even EVs. When those devices are connected with software that measures, manages, and dispatches power – you’ve got a mini power plant.
“Virtual Power Plants can harness power from the people, to help the grid when it needs power the most,” says Amy Heart, VP of Public Policy for Sunrun. “Up until now, these systems have been helpful to manage energy bills, passively alleviate demand when the sun is shining, and provide backup power during outages. But with a managed VPP, these resources are leveraged to their full potential, sharing electricity exactly when the grid and Texans need it most to reduce peak demand and avoid outages.”
Texas launched a pilot project called Aggregated Distributed Energy Resources (ADERs) in 2022 that aims to open a pathway to VPPs. Heart, Sunrun’s VP of Public Policy, is a member of that pilot team working with the Public Utility Commission of Texas and ERCOT to understand how ADERs can support reliability, enhance the wholesale market, incentivize investment, potentially reduce transmission and distribution investments and support better load management during emergencies.
In fact, it might be one of the most affordable grid-backup options. The Brattle Group estimates that ADERs could be 40-60% cheaper to implement compared to traditional backup services such as peaking power plants (power plants that only burn fossil fuel when the grid exceeds usual demand) or utility-scale battery storage systems.
So far, Houston has been a leader in the ADER pilot, having approved 5.2 megawatts (MW) enrolled in the program.
Challenges exist, however. For example, the current regulatory framework restricts the ability of wholesale electric negotiations between retail electric providers (REPs) and ERCOT. A household with a solar and battery system must find an REP that is willing to enroll and pay for that system to participate in the ADER program. To increase access, third-party aggregator models could be considered to manage the enrollment for consumers, while eliminating duplicative parties. Tesla has had some early success in the ADER Pilot enrolling customers as an REP.
Additionally, it is unclear how municipal utilities and rural electric cooperatives are able to participate, and none have created a pathway for their residents to participate yet, missing valuable resource opportunities. During times of high demand, municipalities could operate a mini-VPP within their areas, drawing on locally created ADERs before purchasing additional power at the high market rate from ERCOT.
Virtual Power Plants bring valuable distributed resources together as a critical solution for Texas’ grid and our growing electricity demand. Ultimately, we all benefit from greater affordability, performance and grid resilience. Accepting the fact that extreme weather events are now the norm, why not deploy strategies like ADERs that will provide significant grid resilience and compelling financial benefits to all Texans? It’s plain common sense.
Special thanks to Amy Heart and Sunrun for their valuable insight and input into this article.
Disclosure: Amy Heart is a Texas Solar Energy Society board member, and Sunrun is a Business Member of The Texas Solar Energy Society.