California Eyes Broader Role for Home Battery Networks in Grid Reliability

(TNS) — An energy experiment three weeks ago involving some 2,800 Bakersfield homeowners and roughly 100,000 others across California may point to a new way of keeping the lights on during times of peak demand — without building new power plants.

The July 29 event was the world’s biggest demonstration of a “load shifting” strategy called virtual power plants, or VPPs, in which owners of home batteries allow companies to take some of their stored electricity in exchange for bill credits that could total $100 or more per year.

Although VPPs are reserved mostly for emergencies and have been largely taxpayer-funded in California, a pair of bills pending in the state Legislature are aimed at giving them a more prominent place in the state’s energy system.

Last month’s experiment ran from 7 to 9 p.m., pulling in a reported 535 megawatts of electrical power. If there had been an emergency — if temperatures were high enough that the state’s power grid was strained by millions of people using air conditioning — then the combined batteries would have been enough to power hundreds of thousands of homes.

VPPs primarily rely on large, home-installed batteries connected to rooftop solar panels. But they can also run on what are known as smart thermostats that can be called upon to raise indoor temperatures a few degrees for the sake of avoiding blackouts.

The same idea may be applied to electric vehicles, assuming they’re plugged into a charger that also allows a VPP company to take back energy stored in the battery. This assumes the charger runs both ways — not all do — and that the owner has an agreement with the company hoping to borrow the stored power.

Utilities and VPP companies see substantial benefits in the system, including savings in the range of $2 for every $1 invested. Plus, environmental groups like the idea of not having to build expensive “peaker plants” that only kick in during times of greatest demand, burning natural gas during hours when photovoltaic solar arrays aren’t producing power.

There are potential drawbacks, though. Homeowners may find their batteries don’t have as much energy stored as they thought, or they might object to giving up a few degrees of air-conditioning when it’s hot outside. They could opt out, but that might cost them rebate credits on their power bill.

Ahmad Faruqui, an independent rate-design consultant who has tracked VPPs for years, said he supports their use in the short run, during power crises. He noted the strategy is catching on “like wildfire” in places like Australia and Europe.

But as a homeowner in the East Bay, Faruqui said he has rejected offers to sign up his household for VPP programs because they don’t offer enough compensation for the use of his power. He said there’s a risk customers might get depleted on a day when there’s an actual outage.

“I think, personally, it should just be for emergencies,” he said.

A national industry group called Advanced Energy United disagrees. It advocates for treating VPPs like other sources of power that can be contracted by utilities.

A senior principal at AEU, Edson Perez, said customers don’t typically notice when their energy usage, or storage, is being taken.

“The customers don’t really notice it, and that’s the goal of it,” Perez said. He noted that most of the money involved goes back to customers, with a minority going to the companies that run the programs, such as makers of home batteries and smart thermostats.

Until now, California’s biggest VPP program has been taxpayer-supported. Called the Demand Side Grid Support Program, it has received at least $33.5 million in General Fund dollars since fiscal 2021-22, plus $75 million in state cap-and-trade money.

The two bills now under consideration, Assembly Bills 740 and 44, would take VPPs mainstream, requiring state officials to come up with a full deployment plan by Nov. 1, 2026. Private utilities would be required to annually report their progress toward load-shifting goals.

A spokesman for Pacific Gas and Electric Co. said by email millions of customers across the utility’s service area participate in what are known as demand-response programs such as VPPs. He wrote that nearly 75,000 PG&E customers, mostly residential, have batteries that can combine for more than 670 megawatts of energy.

The company has a residential program called Emergency Load Reduction Program that earns participating customers $2 per kilowatt-hour for load reduction during critical times of peak demand. The credit could add up to hundreds of dollars per year.

“PG&E sees virtual power plants (VPP) as an essential part of California’s clean energy future, a valuable resource for supporting grid reliability, and we continue actively integrating VPP resources into our energy portfolio,” spokesman Paul Doherty wrote.

He added, “VPPs provide a unique opportunity to shift energy and energy use from central generation systems to a mix of central and decentralized, enhancing resilience and reliability.”

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