Virtual Power Plants, Real Benefits
This report was originally posted by RMI in 2023.How aggregating distributed energy resources can benefit communities, society, and the grid.
By Kevin Brehm, Avery McEvoy, Connor Usry, Mark Dyson
Virtual power plants (VPPs) — grid-integrated aggregations of distributed energy resources such as batteries, electric vehicles, smart thermostats, water heater, and other connected devices — are already providing benefits to households, businesses, and society, and they are on the cusp of significant market growth.
VPPs are a valuable and largely overlooked resource for advancing key grid objectives:
Reliability: VPPs enhance grid reliability and resilience. By 2030, VPPs could reduce peak demand in the United States by 60 gigawatts (GW). That number could grow to more than 200 GW by 2050.
Affordability: VPPs are a cost-effective resource for improving the affordability of electricity. VPPs can help reduce annual power sector expenditures by $17 billion in 2030.
Decarbonization: VPPs accelerate power sector decarbonization by decreasing dispatch of highly polluting power plants, driving build-out of lower-carbon power supply, and accelerating electrification.
Electrification: VPPs enable economy-wide electrification. They provide revenue streams to incentivize electrification and help avoid grid bottlenecks that would otherwise constrain electrification.
Health and equity: VPPs help address health impacts from power plant pollution by decreasing reliance on natural gas-fired “peaker” plants, which disproportionately impact the health of people of color and low-income communities.
Consumer empowerment: VPPs empower consumers to play a more active role in shaping the way energy is used and consumed in society and within their homes and businesses.
To enable a vibrant VPP market that can unlock projects at the scale of hundreds of gigawatts in the next decade, as well the benefits associated with VPPs, three priorities must be advanced:
Catalog, research, and communicate the benefits of VPPs
Develop industry-wide best practices, standards, and roadmaps
Inform and shape policy development
The insights presented in the Virtual Power Plants, Real Benefits brief provide an overview of how VPPs are already providing impact, the potential future impact of VPPs, and the barriers that must be overcome to scale a vibrant VPP market. This report is designed for a wide range of power grid stakeholders including policymakers, energy consumers, grid planners, and the general public.
This insight brief is a product of RMI’s Virtual Power Partnership, also known as VP3.
