06 22, 2023

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By Steffi Klawiter

Steffi is a Senior Product Manager at Enel. She is responsible for understanding the VPP market and how Enel’s software services can be enhanced to serve organizations of all sizes and technologies, allowing them to earn revenue by assisting the grid to balance electricity supply and demand in real-time.

The coordination problem for distributed energy resources

Distributed energy resources (DERs) – or energy resources located on an organization’s premises – are quickly growing more popular. Guidehouse Insights is estimating that by 2030, decentralized generation will total more than 500 GW of capacity, while centralized generation will total about 280 GW.  

There are a variety of reasons behind this growth. Commercial and industrial energy consumers may use DERs to improve their sustainability and gain more control over their energy usage. Benefits also extend to include greater energy flexibility and resilience

With DERs’ growth come both unique challenges and opportunities. As they become a larger part of the energy mix, there will be greater operational challenges as DERs can cause significant grid demand fluctuations when end users switch between on-site and grid consumption. This is exacerbated in many instances where the grid operators don’t have visibility into these smaller DERs and therefore have greater difficulty planning around them to ensure continuous grid supply and demand balance. 

It comes as no surprise that there’s a growing need to better orchestrate these decentralized assets to maximize their value for both energy end users and grid operators. Enter virtual power plants – VPPs for short. 

The promise of VPPs

virtual power plant (VPP) is a decentralized portfolio of DERs and other assets that can be aggregated and operated as a larger scale asset in response to external factors – such as requests from grid operators or price signals like time-of-use rates. While VPPs are not a new solution, they are becoming increasingly necessary to ensure better communication and coordination of DERs. And they’ve also become more viable from a regulatory perspective, with advancements made to allow DERs to tap into wholesale energy markets. 

In the LPO’s inaugural blog series on VPPs, Jigar Shah, Director of the LPO, wrote that “virtual power plants can catalyze DER deployment at scale and help make affordable, resilient, and clean energy accessible to all Americans.” And now, with new funding in the Bipartisan Infrastructure Law, there is renewed optimism about how VPPs can scale, delivering affordable power and supporting grid reliability in an increasingly electrified world.

What is the Smart Grid Grants Program? 

As part of the Bipartisan Infrastructure Law (BIL), also known as the Infrastructure Investment and Jobs Act, the Grid Deployment Office in the U.S. Department of Energy is administering a $10.5 billion Grid Resilience and Innovation Partnerships (GRIP) Program. The GRIP Program aims to improve grid flexibility and boost resilience in the power system. This effort was prompted in part by the growth of extreme weather events in the past several years and the effects these events have had on local energy reliability. The GRIP Program is made up of three different programs:

  • Smart Grid Grants ($3 billion)
  • Utility & Industry Grid Resilience Grants ($2.5 billion)
  • Grid Innovation Program ($5 billion)

We’re going to focus on the Smart Grid Grants Program – as that is where we see opportunity for VPPs. According to the Grid Deployment Office, this program is designed to increase the flexibility, efficiency, and reliability of the electric power system. The program focuses on increasing the capacity of the transmission system, preventing faults that may lead to wildfires or other system disturbances, integrating renewable energy at the transmission and distribution levels, and – most importantly for VPPs – facilitating the integration and aggregation of renewable energy resources, electric vehicle charging infrastructure, smart building technologies, and other grid-edge devices.

How can organizations participate in a VPP through the Smart Grid Grants Program?

Enel North America sees major opportunity ahead in increasing the connectivity and integration of DERs like EVs and buildings (classified under the Smart Grid Grants). This grant program has broad eligibility. If you’re a commercial or industrial company, higher education institution, government, or nonprofit entity, there is funding for your grid resilience and innovation project – 50% to 100% depending on the program. This program offers a great opportunity to make progress on your sustainability goals while bolstering grid resilience for the community you live and work in. 

The deadline for the submission of concept papers for the first funding opportunity has already passed. To get ahead of the second round of applications, interested applicants should get an early start and begin discussions with energy partners.

How can Enel help you with your energy needs?

The VPP industry is growing quickly, supported by interest in reducing emissions and funding like the Smart Grid Grants Program. Enel North America can help organizations participate in VPPs through demand response, solar, battery storage and more. Contact us today to learn more about Enel’s VPP services and to evaluate the potential for your organization to take advantage of funding opportunities like the Bipartisan Infrastructure Law’s Smart Grid Grants Program. 

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