Texas leads VPP adoption with deregulated market
This article was originally posted by PV Magazine USA on 30th May 2024.Texas is uniquely suited to adopt virtual power plant (VPP) technology due to its competitive, deregulated market. Its success highlights the “perverse incentive” of vertically integrated utilities in other US states to make capital expenditures without discretion to raise profits.
Texas has a unique electric grid. Its grid operation organization, ERCOT, is independent of other states and deregulated, making the state open for business for a market-based approach toward energy generation and transmission.
Texas has been a favorite among utility-scale solar PV developers for a long time, thanks to its business-friendly environment and its lack of substantial local permitting regimes. The state is also operating as a proving ground for the buildout of a more nascent industry: VPPs.
VPPs are defined by their distributed and connected nature. Rather than transmitting power over long distances from a centralized power plant, VPPs use smart software to control a variety of connected energy assets like rooftop residential solar, battery energy storage, smart heating and cooling, and appliances. Homeowners with eligible VPP assets are compensated for exporting power or reducing use at electricity demand events throughout the year.
A panel of experts at the RE+ Texas conference in Houston, spoke on VPP progress in the state. The discussion opened with Stuart Page, senior consultant, Department of Energy (DoE) Loans Program Office asking the audience whether they were currently enrolled in a VPP program. Only two people in a room of hundreds raised their hands. Page then asked how many in the audience had heard of VPP, and most conference attendees raised their hands.
“I bet every single one of you has an energy resource or utilization than can be controlled by an app,” said Page. “Yet none of you are enrolled, despite the fact that there are discounts with your electric bill associated with it.”
Page said that part of the issue with VPP participation is the complexity of programs. Often, they require an opt-in, where the customer must choose to join the VPP program. Page said that VPP providers should instead choose an opt-out model, where customers are automatically enrolled in the program when they buy a smart device like a thermostat or a home battery. He cited a DoE experiment where an automatic enrollment model with an opt-out option increased participation by 400%.
