Photo courtesy of Panasonic Eco Systems and Advance Solar
As more homeowners choose to install energy resources such as rooftop solar panels and batteries, homes are turning into miniature power stations. These mini power stations can be connected together in vast networks known as Virtual Power Plants (VPPs) that can talk to each other to streamline energy production and use across whole neighborhoods and regions.
What is a Virtual Power Plant?
In the past, homes were mostly reliant on electricity generated from a few, very large power stations, often located a long way away. But today, many homeowners are choosing to produce their own electricity on-site, using technologies such as solar panels and batteries. These 'distributed energy resources' (DERs) can be connected together to act as one large power station known as a VPP.
A VPP links DERs together through the internet. In doing so, they can talk to each other, monitoring and adjusting energy production and usage in real-time in response to demands on the grid. For example, during peak hours when demand exceeds supply, a VPP can draw on its assets to supply extra power to meet this gap, reducing the chance of outages and the need for utilities to use backup power plants.
In practice, if you're part of a VPP this means that during times of high energy demand, your solar panels or stored power in your battery may be used to meet this demand. In return, you will receive financial rewards for supporting the grid.
Photo courtesy of Panasonic Eco Systems and Blalock Electric
What is the difference between a VPP and demand response program?
Demand response programs incentivize homeowners to reduce or shift their energy usage during times of high demand, to ease pressure on the grid. For example, during a demand response event you might receive a financial reward for lowering the usage of your energy intensive devices such as air conditioning or large appliances. The aim is to reduce strain on the grid and prevent outages.
VPPs, on the other hand, are vast networks of multiple small energy resources that all work together to manage both the supply of energy as well as demand. In a VPP, you'll typically receive financial rewards when your home's energy resources, such as solar panels, are used to supply the grid with power during times of peak demand.
How does participation in a VPP work for solar owners?
Every VPP has its own combination of energy assets and unique eligibility requirements. VPPs can consist of a single type of asset, such as batteries, or a mix of assets, including batteries, solar panels, smart meters and electric vehicle chargers. While specific requirements vary, most require participants to have at least solar panels or a battery.
You can join a VPP with existing equipment or sign-up after buying a new system. Some VPP operators offer financial incentives for purchasing the specific technologies required by their program. You will also need internet connectivity and a smart inverter to join, as these enable your devices to communicate with the VPP operators and vice versa.
In a VPP, the power generated by your solar panels is first used to meet your own needs. Any excess electricity is then fed into the grid or stored in a connected battery. The VPP can coordinate how this energy is used across the network, to support grid stability during times of high demand.
What are the financial rewards of joining a VPP?
Homeowners are usually offered a financial incentive to join a VPP. This could be an upfront cash payment or ongoing payments when your energy system is used to support the grid. Some operators even offer incentives to lower the costs of buying solar panels and batteries. The Connected Solutions program in Long Island, for instance, pays eligible homeowners $25 to join and $25 a year to participate. This means joining a VPP can accelerate the payback period for your solar and battery investment. There are similar programs in other areas, including Connecticut, San Diego and North Carolina, among others.
How do I get started with a VPP?
Step 1: Assess eligibility
Check what energy technologies the VPP requires. If you don't have any or all of these systems, look into whether your utility provides any financial support for their purchase.
Step 2: Look at system compatibility
If you already have a solar system, you need to check if it's connected to the grid and what type of inverter it has. Check with the VPP operator what is needed and whether your existing system could be updated to meet its criteria.
Step 3: Understand the terms and conditions
Be sure to read and understand the terms of participation and the level of control the VPP has over your system. While the VPP is controlled by the operator, you maintain ownership of your systems. The operator can then use these as agreed in your contract. For example, some operators require you to participate regularly while others will only use your devices when energy demand is very high, such as in extreme weather.
Step 4: Sign-up and participate
Once enrolled, you will typically receive notification of an event in advance. For example, the VPP operator will notify you about when the event will take place and what is required, such as reducing energy usage or making the energy stored in your battery available. However, participation is usually automated, which means many events can be managed automatically.
Joining a VPP is an easy way for homeowners to realize immediate financial rewards from their home solar system. The type and amount of incentives provided depend on the program you join and every VPP has different requirements.
When you're ready to connect your current solar system to a VPP or install a new solar and home battery setup, talk with your local Panasonic Authorized Installer to get your questions answered about their award-winning EVERVOLT systems.
