A virtual power plant project that developer AutoGrid claims could be a blueprint for the market has been racking up thousands of customers per day.
AutoGrid’s vice president of virtual power plants, Gisela Glandt, told Latitude Media that its latest project with Puget Sound Energy had attracted 2,000 residential customer registrations in just 24 hours. She declined to share specifics on how much flexible capacity had been aggregated since PSE launched the VPP offering to customers at the start of November.
The PSE Flex VPP, which was publicized nearly two weeks after going live, allows residential customers with smart meters to enroll in one of two demand response programs. Under PSE’s Flex Smart program, customers give the utility the ability to automatically adjust the temperature setpoint of smart thermostats when needed. Customers get up to $75 per device enrolled in the program and a $10 annual loyalty bonus, plus fees for referrals.
The other program, Flex Rewards, gives customers the option of cutting electricity use during periods of high grid demand. While its current focus is on harnessing domestic heating and cooling loads, a second phase slated for the middle of 2024 will include electric vehicles. At present, customers get $35 for enrolling in the program and $1 for each kilowatt-hour they save, plus a $15 annual loyalty bonus.
PSE is looking to integrate commercial and industrial assets into the first phase of VPP operation, although most of those enrolled so far have been from residential customers. The VPP is expected to have “upwards of tens of megawatts” of capacity and a 60/40 split of residential and business-based demand response, according to AutoGrid.
PSE provides electricity for approximately 1.2 million customers, most of which are residential.
Turnkey offering
Smart thermostat penetration in PSE’s residential customer base is around 15%, Glandt said. More widely, Washington is also a leading state for EV adoption, with 18% of new vehicles sold in the first half of 2023 being electric or plug-in hybrids and EVs representing 2% of cars on the roads.
Schneider-owned AutoGrid, which started working with PSE in 2021 and employs artificial intelligence within the software it uses to connect and control distributed energy resources, hopes to harness this enormous potential on a white-label basis for PSE.
This means AutoGrid takes care of customer recruitment and enrollment, and also manages the VPP platform. PSE pays AutoGrid for the service based on power availability and energy provision, as measured in raw kilowatts and kilowatt-hours.
This represents a new business model, according to Glandt, and one that is particularly timely given a September report from the Department of Energy that said the VPP market will need to almost triple in size by 2030 to compensate for a loss of fossil fuel plants.
“The industry has been very much about either you sell a piece of hardware, or you sell a piece of software,” Glandt said. “What about selling capacity? This concept is going to put VPPs within reach of many of our utility customers.”
AutoGrid has similar arrangements with Californian utilities Sonoma Clean Power and Clean Power Alliance, she addd.
It remains to be seen how far the model will spread; Latitude Intelligence analyst Daisy Dunlap highlighted the need to overcome a “pilot death syndrome” in the VPP sector, with few pilots ending up as full-scale programs.
“Having a technology deployed as a pilot is important because it allows companies to develop a proof of concept while gaining visibility and trust from customers, utilities and commissions within a jurisdiction,” Dunlap said.
But she added that the pilot phase “is also a highly pressurized step because companies have to work on an expedited timeline, usually of about one to three years, to not only deploy the necessary components, but prove to be cost-effective, reliable, and overall usable.”
AutoGrid, though, seems confident it can ease this pressure: “We are just showing up with capacity in a way that’s super simplified,” Glandt said.
