What are Virtual Power Plants?

A Virtual Power Plant (VPP) is a portfolio of distributed energy resources (like member-owned rooftop solar, smart appliances, and EVs) controlled by a utility to achieve system-wide benefits. Co-ops can help their member-owners install resources directly managed by the co-op to benefit the grid as a whole, like demand reduction or energy storage capacity. Cooperatives can even make those upgrades directly via inclusive utility investment programs.

The most prominent purpose of the VPP is to reduce the need for conventional generation and lower demand costs during peak load events. VPPs also increase grid reliability while lowering emissions and grid upgrade & maintenance expenses. The energy savings and other benefits are shared by participants, the cooperative, and the community.

Why do we need Virtual Power Plants? 

Rural Americans are evermore reliant on electricity for cooking, heating, and water heating, meaning Rural Electric Cooperatives (RECs) are seeing their capacity requirements grow as member-owners (customers) electrify. Even as RECs seek a record-breaking number of clean energy investments, many will still face tremendous needs for new capacity to meet projected load growth. Rural Americans also face a sharp increase in extreme weather events, requiring their RECs to make investments that bolster local resiliency, like local battery storage facilities or behind-the-meter technologies. The Rural Power Coalition recommends Virtual Power Plants (VPPs) as a direct response to both necessities.

How can Virtual Power Plants help my community? 

The Brattle Group found the net cost to the utility of providing resource adequacy from a VPP is roughly 40–60% of the price of the alternatives, including gas peaker plants - while delivering more local benefits.

Are there Virtual Power Plants in operation now? 

There is a growing list of successful VPPs that are currently operating, including:

  • Holy Cross Energy, Colorado: Since 2020, the U.S. Department of Energy's (DOE's) National Renewable Energy Laboratory (NREL) has been partnering with Holy Cross Electric to pilot an autonomous energy grid in the town of Basalt Vista, Colorado. 

  • Green Mountain Power, Vermont: According to an article published by Electrek.co, "Green Mountain Power (GMP), a Vermont electric utility, has quietly built a fleet of 4,000 Tesla Powerwalls, and it is saving them a lot of money. The electric utility offers substantial incentives to either deploy Powewalls at customer's homes or onboard existing Powerwalls in its grid program where GMP is allowed to use some power capacity of a customer's batteries in exchange for credits on their electricity bill." The batteries saved over $3 million in 2020 and 2021 and almost $1.5 million in just one week during a heat wave in the summer of 2022. GMP announced plans last fall to nearly double the program's scale from 30MW to 55MW. 

  • Dakota Electric, Minnesota: Dakota Electric Association has over 40% of members participating in a demand response program and can reduce approximately 20% of peak demand with managed load assets.

Go deeper to learn more about Virtual Power Plants:

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