According to the U.S. Energy Information Administration, primary sources of energy in 2021 consisted of gas, coal, and nuclear. Respectively, accounting for about 38%, 22%, and 19% of the energy generated to run the country… however, that is rapidly changing. According to a government report that tracks short term energy outlook, next year, we’re poised to see a quarter of our energy coming from solar, wind, and other renewables.
While this is good news, it’s not what we want to talk about… rather, we want to talk about a shift that is galloping alongside our energy transition, and that’s the way we receive our power. Currently, for most of the country, we have centralized power. We’re connected to a larger power grid somewhere far from where we live and work. Now, in hindsight, we’re realizing that relying on a system with centralized, easily damaged points of failure is far from ideal.
As we’ve seen our grid tested by cataclysmic tornadoes, record-breaking heat, flash flooding, and even political unrest, the problem of power distribution has become an urgent matter. We have billions and billions of lives counting on continuous, reliable power… but an antiquated power system to serve them. Except, as we fit more solar panels and plant more wind turbines, it’s becoming more obvious that we don’t have an energy distribution problem, we have a thinking problem.
Our problem is this: we’re trying to solve a problem with the same system that is the problem. Sometimes, a shift of perspective is needed to appreciate the tools we have on hand… and what do we have on hand? We have countless little power generators all over the place, but we’re not tapping into them… that is until now. Something called the virtual power plant (VPP) is coming into being and it’s powered by all of us, and all of our numerous gizmos and gadgets.
A VPP isn’t a power plant in the traditional sense. Rather, it’s a network of the on-premises power generators that might otherwise sit underutilized. Think wind turbines, the solar panels on homes and businesses, home batteries packs, and the like all independently creating bits of power. Alone, they can only do so much. Together, they form a powerful virtual network. With a VPP, energy from many smaller sources can work to power the local environment.
If you’ve been keeping tabs on electrification news, this should ring a bell. The current push toward electrification plays into VPPs, and the move away from centralized fossil fuel dinosaurs for our power needs. With this model, there’s no need for anyone to worry about ownership squabbles either… nothing changes in that department. You own your solar panels, any extra power generated helps balance the power load for others, and theirs does so for you and yours.
Had these challenges come along at any other time in history, we may not have been equipped to handle them. Good thing for us, we are more than equipped… we have the technology to handle this in spades. With the rise of cloud computing over the last decade, we’ve enabled ourselves to scale ideas like VPPs in ways unthinkable just a few years ago. Connected networks of VPPs living in the cloud can operate as the smart grids of the future.
Some have predicted that the future of electricity networks won’t use digital, they will be digital. Some in the business of advising on energy, such as Australian firm Rennie Partners, have asserted that electricity networks of the future will mainly consist of a sea of Internet of Things (IoT) devices communicating through virtual power plants and distributed energy systems. We must say, we can see it coming to fruition. The VPP space is expected to reach $2.85 billion by 2027.
There are a few companies ahead of the game, such as CPower Energy, based in Baltimore, Maryland. CPower was recently recognized in Wood Mackenzie’s Virtual Power Plant (VPP) Market report as the national leader in overall flexible capacity under management. They are already deep into VPPs, with 6.3 GW of capacity at more than 17,000 sites across the U.S. Unlike most companies, CPower don’t just operate VPPs, they support full implementation, and are one of only six such companies.
CPower has faced some hurdles, especially in midwestern states, where regulatory barriers have been thrown to slow progress by those still married to the idea of old-school power methodologies. That said, they’ve pushed through, and have been recognized for their leadership in the region. They are doing important work by providing data points for such a new technology, and they’ve already helped prove the usefulness of VPPs in today’s temperamental climate.
A few months ago, the company reported that customers were able to provide over 50GWh of load relief for fellow customers during Winter Storm Elliott in late December. That’s the equivalent of the energy used in 1.7 million homes in a single day. We’ve seen terrible consequences from power outages in places like Texas… an energy system like this could save lives in the future. That’s about as good as it gets, especially when you pair it with being better for the earth.
The Biden administration is gung-ho on the idea of the VPP as well, and DOE funding is reflecting that. According to them, as of February of this year, VPP funding requests are pouring in. The popular kids in class seem to be VPPs, alongside advanced nuclear, carbon management, biofuels, and advanced vehicles & components projects. We can certainly see a clearer picture of our electric future coming into view, and we hope you do too. Come back next week, we’ll have more from the green tech space.