🌎 Virtual power plants are surging

Plus, EV charging sentiment still lacking

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Acclimate Editor
August 21, 2023

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In today’s edition:

  • 🔥 VPPs are on the rise

  • ⚡️ EV charging sentiment still lacking

  • 🌎 A look at clean energy manufacturing projects since the IRA

Read time: 5 minutes

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BIG STORY

Driving the news: The US is witnessing a surge in virtual power plants (VPPs) as the demand for renewable energy grows.

  • With an increasing supply of renewable energy, there's a pressing need for greater reliability and resiliency in the power grid.

  • VPPs, which use battery storage and smart appliances, are becoming a viable solution to address the intermittency challenges of renewable energy.

What's happening: Virtual power plants are a collection of distributed energy resources that are managed by software to offer services similar to centralized power plants.

  • These can include households with smart thermostats, storage batteries connected to solar arrays or wind turbines, and more complex setups.

  • The aim is to store surplus energy and feed it back to the grid when renewable sources are not generating electricity.

  • For instance, Sunrun and PG&E have worked together to create a VPP that will operate on California's grid during peak hours from August to October.

Why it matters: VPPs represent a shift in how we perceive and utilize energy storage. Instead of merely acting as backup power, batteries in VPPs serve the broader grid.

  • For instance, Rocky Mountain Power, serving parts of Idaho, Utah, and Wyoming, collaborates with sonnen on a VPP project. About 3,500 customers have joined, purchasing a sonnen battery system and receiving rebates.

  • During peak demand, like during extreme weather events, the utility can draw electricity from these batteries, with customers getting credits on their bills for their contributions.

What's next: Regulatory changes, such as the Federal Energy Regulatory Commission's order in 2020, are paving the way for more VPPs by allowing distributed energy resources to participate directly in wholesale markets by 2026.

  • With advancements in technology and evolving regulations, the US is expected to see a significant increase in VPPs in the coming years.

  • Clean energy researchers envision a future where batteries are just one of several resources networked together, with a nationwide capacity in the tens of gigawatts.

  • A report by RMI suggests the potential for 61.9 gigawatts of capacity in the U.S. by 2030. Batteries would contribute 9.9 gigawatts, while electric vehicles and buildings would offer even more.

🌶 Hot take: Virtual Power Plants offer a solution to the issue of grid reliability, which is a significant problem due to the rise in extreme weather events and demand from a more diverse range of energy sources.

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HOT TOPICS

  1. 🔋 EV batteries: GM leads a $60M Series B funding round in Mitra Chem, a company that significantly quickens EV battery development using machine learning and more sustainable iron-based cathode materials.

  2. 🔌 Charging sentiment: Satisfaction with charging infrastructure has decreased, according to the JD Power survey. This reflects users' concerns about the cost, charging time, and lack of amenities while waiting. The Miami-Port Saint Lucie-Fort Lauderdale area had particularly poor service, with 35% of visits resulting in no charge.

  3. 📈 Texas renewables: After introducing the Inflation Reduction Act, private investment in Texas' clean energy sector, including wind power and battery storage, has surged. Canadian Solar's $250 million factory—using incentives from the Act—is an example, while Texas' new wind generation projects have seen a sixfold increase in a year.

  4. 🔋 Micromobility: The tax credits provided by IRA have encouraged Freyr, a battery manufacturer from Norway, to speed up its manufacturing plans in the United States. As the US already has the biggest market for storage, these incentives are predicted to attract $86.3 billion in investments from the capital market.

  5. 🌍 Micromobility: A year after the implementation of the Inflation Reduction Act, the financial impact of the landmark US climate law may exceed initial estimates, reaching beyond $1 trillion, due to uncapped incentives sparking high spending and investment in the clean-energy sector.

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CHART OF THE DAY

Biden's Inflation Reduction Act spurred 100+ new cleantech factories and nearly $80B in private investment within a year. The law, ensuring mainly local production of clean energy, made the U.S. a sought-after place for cleantech capital.

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