California could potentially save substantial resources by focusing on optimal locations for virtual power plant implementations.
California is looking to add 3.5 gigawatts of "load shift" capacity to its grid by 2030, and a new study by think tank GridLab, in collaboration with Kevala, a grid-focused data analytics startup, sheds light on the most efficient way to deploy these virtual power plants (VPPs).
The strategy targets more urban areas, where upgrading the grid is more expensive and challenging due to underground infrastructure. Prioritizing the least overloaded parts of California's grid for VPP deployment, according to Kevala's analysis, is the most cost-effective approach. This approach is expected to reduce grid costs for utility customers by a total of $13.7 billion through 2030, saving approximately $10 billion more than spreading VPP efforts equally across the grid or targeting the most overloaded parts first.
Starting with the most heavily overloaded circuits for VPP allocation may not save a lot of money and might require "real money" on poles and wires, the study found. The distribution grid in California is a greater expense due to the need for wildfire-prevention measures and the state's ambitious decarbonization goals.
The report did not mention any specific showcase projects for non-wires alternatives, but New York utility Con Edison's Brooklyn-Queens Demand Management initiative was mentioned as an example. Despite programs launched over the past decade in California, little progress has been made in implementing non-wires alternatives.
VPPs, which combine rooftop solar systems, home batteries, electric vehicles (EVs), smart-home appliances, and can help relieve pressure on the grid, especially at counterintuitive "sweet spots", are seen as a solution to these challenges. Kevala, the startup that partnered with GridLab on the study, has a decent idea of where those sweet spots might be, based on its past analyses of distribution grids in California and nationwide.
California state policy requires regulators and utilities to build distributed energy resources (DERs) into their annual spending plans since 2014. Most of the spending on distribution grids is going toward replacing aging equipment and keeping up with booming demand for electricity. A new report examines how California's utilities can spend less on new infrastructure by occasionally paying homes and businesses to reduce power use or to inject energy into the system, a concept known as "load flexibility".
Spending on distribution grids (poles, wires, and transformers) has grown rapidly in the past decade and made up 44% of total utility spending in 2023, according to data from Lawrence Berkeley National Laboratory. The cost of keeping California's power grid up and running is increasing, leading to higher energy bills for households.
If California can defer upgrades to its distribution system, it can produce savings for customers. However, relatively few proposals for non-wires alternatives have moved past the planning phase, and critics say the lack of progress is due to utilities proposing grid projects that DERs cannot solve within the timeframes and cost restrictions provided. VPPs may struggle to defer investments in the most strained parts of the grid, as progress on non-wires alternatives projects has been slow.
The company that collaborated with GridLab on the study about the use of virtual power plants in California is RAP (Regulatory Assistance Project). The best way to defer the most upgrades, according to GridLab's new study, is to find those grid sweet spots and rapidly scale up virtual power plant programs to serve them. This strategy could potentially revolutionise the way California manages its power grid, making it more efficient and cost-effective for all involved.
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