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Everything is bigger in Texas, and that includes virtual power plants. A virtual power plant deploys smart technology to enlist individual ratepayers in grid stability and resiliency efforts. If all goes according to plan, the collaboration also enables utilities and their ratepayers to avoid the cost of new brick-and-mortar power plants. The latest development in that field is a Texas-sized, 1-gigawatt effort involving the Texas firm NRG Energy, Google Cloud, and the company Renew Home.
Texas And The Virtual Power Plant Movement
Aside from the potential for saving money on ratepayer bills, virtual power plants can help improve grid resiliency. That’s particularly important in Texas, where the statewide grid operator ERCOT (the Electric Reliability Council of Texas) is largely on its own when the grid is strained.
Grid managers in other states can draw on a regional energy sharing system to meet different circumstances, with oversight from the Federal Energy Regulatory Commission. The regional system began to take shape in the 1990’s but Texas lawmakers opted to avoid federal oversight, and they have not changed their minds since then.
That helps to explain why Texas has been front and center in the virtual power plant trend. Even though the state is an epicenter of fossil energy production, ERCOT has been scrambling to muster new opportunities for grid resilience, taking full advantage of the state’s wind and solar resources.
An Army Of Free Smart Thermostats For A Supersized Virtual Power Plant
The big question is how to communicate with ratepayers on a granular basis, and that’s where smart thermostats come in. At 1 gigawatt, the new virtual power plant will be big enough to meet the needs of an estimated 200,000 homes during periods of peak demand. NRG anticipates they will need to deploy hundreds of thousands of smart thermostats to meet that goal.
They have tapped the well known smart home firms Vivent and Nest to supply the thermostats, which will be distributed and installed free of charge. “These advanced thermostats make subtle automatic HVAC adjustments to help customers shift their energy use to times when electricity is less constrained, less expensive, and cleaner,” NRG explains.
Building A Virtual Power Plant, Brick By Brick
The prospect of getting something for nothing should help encourage ratepayers to sign up for the program. Even without the brick-and-mortar angle, though, it takes time to assemble a virtual power plant. NRG anticipates that it will begin distributing free thermostats in 2025 and continue into the 2030’s, with a goal of completion by 2035.
NRG also notes that the effort involves a soup-to-nuts technology makeover for itself. “To maximize the impact of the [virtual power plant] and other strategic initiatives, NRG will embark on a broad multi-year technology transformation with Google Cloud,” the company explains.
With the upgrade in hand, NRG expects to improve its performance in predicting weather conditions as well as forecasting the availability of renewable energy.
Ratepayers may want to keep an eye on another aspect of the technology upgrade. NRG anticipates that predictive pricing models will play a key role. That’s not to be confused with surge pricing. In the utility field, predictive pricing can provide ratepayers with opportunities to take advantage of lower rates.
Smart Thermostats Are Just For Starters
Electric vehicles are also creating impactful new opportunities in the virtual power plant field. Those opportunities are especially abundant in Texas, which is one of the biggest EV markets in the US. NRG already plans to adapt its model to accommodate electric vehicle batteries and home energy storage devices as well.
Keep an eye out for utilities in other states to supersize their virtual power plant plans as well. Texas is not the only state where the grid is increasingly strained by population and demand growth as well as extreme weather.
“This initiative raises the bar for future-proofing our electricity infrastructure and delivering cost savings to customers,” emphasized Renew Home CEO Ben Brown, in a press statement dated November 7.
Google Cloud North America President Michael Clark also chipped in his two cents, noting that the collaboration will “empower consumers to get more from their energy, smart home, and essential home services in the future.”
Texas Is The Tip Of The Virtual Power Plant Iceberg
Virtual power plants were somewhat exotic just a few years ago, but the technology has mainstreamed and Renew Home is right on top of it.
“Renew Home is building North America’s largest residential virtual power plant and transforming American households into a cohesive force for energy management,” the company says of itself, noting that has already has more than 100 utility partnerships under its wing.
That’s no accident. Renew Home comes under the umbrella of Sidewalk Infrastructure Partners, an independent infrastructure investor anchored by Google parent company Alphabet along with the leading investor Ontario Teachers’ Pension Plan and StepStone Group, which SIP describes as “one of the world’s largest private infrastructure investors.”
“Each of SIP’s innovation platforms benefits from this intentional network of partners, who offer capital, capabilities, and a commitment to forward-thinking infrastructure,” SIP observes.
What Comes Next?
Of course, now that the voting public of the USA has decided who gets to control the levers of power in the federal government, the decarbonization picture is up in the air. Some programs may wither on the vine but state-based efforts like the new virtual power plant in Texas are likely to continue relatively unimpeded, with the wheels (and the investor dollars) already in motion.
The big question is what will happen to the 2022 Inflation Reduction Act. Last summer I had an interesting conversation with a transactional attorney from a law firm with a big footprint in the IRA space. He pointed out that the IRA is essentially a tax law with a built-in timeline of 10 years. Though anything is possible nowadays, tax laws are notoriously difficult to unravel, and many transactions under the IRA are already greenlighted.
He also noted that the competitive cost of renewable energy is a significant factor driving demand. That includes Texas, where his firm is particularly active.
On the other hand, some media organizations are already posting screaming headlines about a screeching halt to renewable energy development in the US. If you have any thoughts about that, drop us a note in the comment thread.
Image: The virtual power plant movement is scaling up, powered by smart thermostats that enable utilities and ratepayers to collaborate on grid resiliency and affordability (courtesy of Vivent).
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