As an IoT technology that unifies and coordinates the control of distributed generation, demand-side response and energy storage resources in response to grid dispatch commands, " virtual power plants " can include anyone.
Tesla, for one, is turning its network of battery storage customers into a vast distributed virtual power plant.
The company is participating in California Pacific Gas & Electric's (PG&E) Emergency Load Reduction Program (ELRP) pilot. The program is designed to reduce the need to generate electricity when the grid is under stress during peak demand periods.
Tesla's home battery storage product, called Powerwall, is sold as an add-on to a solar panel roof or other solar panel product.
When the California grid needs extra power because of a particularly hot day, users of Tesla's Powerwall can get paid $2 per kilowatt hour by returning the stored power to the grid. powerwall users can check in their app to see if they have this need.
Last month, Tesla has invited about 25,000 PG&E customers with Powerwalls to join the virtual power plant. More than 3,000 customers reportedly expressed interest in joining the program two weeks ago, and as of Aug. 18, nearly 2,500 customers had officially joined the program.
On Aug. 17, Tesla Powerwall customers were reportedly asked to supply power to the grid for the first time and "provided up to 16.5 megawatts of solar power to the grid when it was needed most.
Grid, customers, Tesla all benefit
"A " virtual power plant " literally means that it does not have the form of a physical power plant, while a " power plant " means that it has some of the attributes of a power plant, such as providing ancillary services such as peaking and frequency regulation, participating in the electricity market and receiving revenue.
The core of the "virtual power plant" is the centralized control platform, which can analyze the data collected from charging piles and residential electricity consumption to achieve accurate demand-side response and management, and can be used as a "positive power plant" to supply power to the power system when the demand-side power supply is insufficient, and as a "negative power plant" to increase the load to consume power from the power system when the power generation side is too large for the demand-side load, helping the power market Peak shaving and valley filling, smoothing the impact of new energy to the grid.
On the other hand, it can realize the interoperability between the grid and the power market, which not only helps to optimize the whole grid system, but also provides a way for market players such as internal aggregators, users, charging piles, energy storage, distributed energy, etc. to participate in power market-based trading, so that they can all become micro-generators and participate in power market trading, thus obtaining arbitrage gains.
For the grid (PG&E), $2 per kilowatt hour seems high, as residential customers in the U.S. typically see 10 to 20 cents per kilowatt hour on their electric bills. However, during peak usage periods, wholesale electricity prices can rise and easily exceed the $2 level.
For Powerwall customers, a Powerwall unit can store about 13.5 kWh of energy, so it can make about $25 every time PG&E calls the program by feeding power back into the grid.
Considering that buying a Powerwall plus a solar roof or solar panels can cost tens of thousands of dollars, a $25 payout may seem relatively small. But it makes sense that the electricity generated by the solar panels also offsets the homeowner's electricity bill.
And for Tesla, while it doesn't appear to be generating any revenue from the pilot program itself, deals like PG&E's help spur demand for Tesla's energy storage and generation products.
Tesla's energy business generated $866 million in sales and $97 million in gross profit in the second quarter of 2022, according to the data. Tesla's automotive business generated nearly $17 billion in sales and about $4.1 billion in gross profit during the same period.
Could be the prototype of the future grid
Not only is this model interesting, but it also foreshadows how the grid may change in the future, especially with the proliferation of electric vehicles produced by companies like Tesla on U.S. roads.
Ford's F-150 "Lightning" pickup, for example, can power a home for 3 to 10 days, depending on which devices are connected in the event of a power outage.
Of course, the Tesla/PG&E program is only available to customers with solar panels, and currently Tesla vehicles can't send power back to the grid the way the F-150 can. And most electric cars are charged in homes without solar panels.
Nonetheless, PG&E is targeting electric car owners - after all, the total number of batteries in electric cars on U.S. roads today is equivalent to about 11 million Powerwalls.
This year, PG&E has reportedly begun a pilot program with customers who own Ford and GM-branded electric vehicles. Last year, PG&E and BMW Group launched the third phase of the ChargeForward pilot program, expanding the program to all BMW EV drivers in northern and central California who are also PG&E residential electric customers.