What are the benefits of a virtual power plant?

VPPs help meet energy needs with on-site devices to give people more control over their usage. Homes and businesses collectively contribute to grid health by balancing the amount of energy supplied to the grid with the amount of energy they demand. Traditionally the main strategy to balance electricity supply and demand is increasing energy supply. In times of emergency or when electricity supply on the grid has to quickly ramp up to meet demand, this could mean turning on a power plant to increase supply. VPPs, on the other hand, allow closer control over on-site demand because they incorporate technologies that create demand such as smart thermostats and EV chargers.

Benefit #1: Fewer Outages

Outages can occur when there isn’t enough energy supply to meet demand. VPPs provide tools to respond to fluctuations in demand more effectively and swiftly. Using a VPP at critical times to reduce energy consumption and deploy additional clean energy supply is an invaluable resource to help the state avoid blackouts.

Benefit #2: More Clean Energy

Energy generated from renewables varies from day to day. As rooftop solar has become more common, California has accumulated an excess of solar energy in the middle of the day. VPPs allow power dispatchers to shift electricity demand to times when the most renewable energy is on the grid or use solar when the sun isn’t shining by charging up a storage battery for later use.

Benefit #3: A Healthier Environment and Communities

VPPs help reduce the need for California’s peaker plants, which are polluting fossil fuel plants that are relied on during times of high demand, otherwise known as “peaks”. Peaker plants emit toxic air pollution and can cause significant health and environmental issues for surrounding communities. Not all VPPs are created alike – for example, some include backup diesel generators. MCE’s pilot only uses clean energy sources to respond quickly to demand during periods of high energy usage thereby reducing the need for these polluting power plants and supporting healthier communities for everyone.

Benefit #4: Lower Energy Costs

VPPs can shift energy consumption to hours when energy costs are lower and significantly reduce bills. Households and businesses participating in a VPP have direct participation in the market and can be compensated for their stake or participation, as is the case with MCE’s VPP.

What will MCE’s VPP look like in practice?

MCE’s VPP pilot is currently in development and available to select homes and businesses in Richmond. MCE and our project partners are engaging with eligible sites to offer clean energy technologies.

For the first stage of development, 100 homes will be provided with free clean energy technology upgrades. Of these homes, 90 will be offered the opportunity to receive no- to low-cost clean energy upgrades for participation in the VPP. The remaining 10 homes were previously abandoned and recently purchased and fully modernized into zero net carbon homes. They are then sold at below-market prices to first-time, income-qualified homebuyers with the agreement that the homeowners will allow their appliances to be grid-smart enabled.