“Those [nuclear plants] are necessary solutions, but those are going to take years, maybe decades, whereas our distributed virtual power plant solution can be deployed today,” explains Chris Rauscher, head of grid services of virtual power plants (VPPs) at solar installer Sunrun.
VPPs are made up of a network of distributed energy resources, such as residential solar arrays and battery systems, which work together to provide a variety of grid services. A key advantage compared to other technologies is the shorter timeframe to add residential solar and batteries compared to nuclear power plants or even utility-scale solar, which could offer a quicker solution to companies building their data centres and are looking to power them in the coming months or years.
Not only are VPPs quick to deploy, but given the geographical locations of where data centres are being built, they could also open new markets for residential installers in the US.
“This is a way to unlock residential and commercial solar and batteries and virtual power plants in new markets,” says Rauscher, adding that most of the markets Sunrun is currently present in are not necessarily the ones where most of the data centres have been announced in the US, with the exception of Texas.
An example of how this would work is through a master power purchase and dispatch agreement. The agreement would be signed with either a utility or a data centre – depending on the territory, says Rauscher – which offtakes all of the power generation and battery dispatch of a VPP. Rauscher adds that this would look like what is currently being done in community solar, given that residential owners would have no upfront payment to install residential solar PV and batteries in their homes, but would instead receive a fixed bill discount from the utility.
As with community solar, Rauscher adds that installing residential solar and battery capacity to provide power to data centres would bring a “tangible” benefit to the communities nearby these data centres.
“We really think that this structure can get out of some of the historical friction between residential solar companies and utilities and can provide very fast, very flexible clean energy to data centres today,” says Rauscher.
Finally, another positive outcome for this solution is that it would free up grid capacity, instead of adding it, says Rauscher.
“This solution not only does not need new poles and wires, but it frees up capacity on the existing poles and wires. If we cite a 100MW virtual power plant in the area, then the community surrounding a data centre, let’s say, 10,000 customers that are hosting that virtual power plant…we are going to effectively take all of those customers off of the grid during peak times.”
EV bi-directional charging VPP
Even if the use of VPPs to power data centres might still seem in its infancy, another technology that could be useful for VPPs is electric vehicles (EVs) and, more particularly, bi-directional charging. “If you look at the amount of battery capacity that’s already deployed today in electric vehicles, it probably already overwhelms stationary batteries,” explains Rauscher.
Even a limited use of an EV power capacity for grid services, could still offer more capacity than a residential battery, says Rauscher, adding that using only 10 to 20kWh of an EV can create “significant” value to a car owner as well as the grid.
“Bi-directional EVs providing power to the grid, providing capacity and ancillary services to the grid, is something that I think is going to be a long time coming, and then all of a sudden it’s going to be ubiquitous,” adds Rauscher.
Upcoming markets for VPP
When asked about markets that have the potential to see a rise in VPP interest, Rauscher highlighted Texas, Illinois and New York, among others.
“Texas is really exciting. We’re looking forward to some tweaks to the ADER[
The success story of Puerto Rico and its utility, Luma, shows that other utilities across the US have no excuse to implement VPP programmes and offer stability to the grid across the US.
“If we can do it in California with PG&E and we can do it in Puerto Rico, every other utility in the country can have a viable, cost-reducing, pollution-reducing virtual power plant programme today. There are no barriers. And those two markets prove that,” explains Rauscher.
He concludes: “Today, in 2024, there are no technological, software or hardware barriers to having VPPs be widespread around the country. It’s all just policy, regulation and utility inertia.”