Are virtual power plants the next evolution of American infrastructure?

By Erin Vaughan,

The dipping cost of solar installations over the last three years has made them all the more appealing to businesses and homeowners looking to offset high energy bills.

2016 may well go down as the year energy made a giant leap forward. In June, New York’s Con Edison, together with solar storage providers SunPower and Sunverge, announced a new pilot program for New York City homes that would transform their rooftops into a virtual power plant. That news came on the heels of a similar effort launched earlier in California this year as a response to a gas leak in Aliso Canyon—a disaster that pushed the California Public Utilities Commission to seek out new storage options for alternative energy sources, like solar.

Interest in renewable technology is surging all across the country. In many states, like California, a notable amount of the area’s energy potential now sits distributed across multiple grid-connected homes, businesses, and industrial-sized solar sites. As solar energy progresses past the point of mere novelty, leveraging those locations as backup generation sites—and to offset peak load demand—for the rest of the grid just makes sense.

How Does a Virtual Power Plant Work?

The dipping cost of solar installations over the last three years has made them all the more appealing to businesses and homeowners looking to offset high energy bills. Tying all these networks back together, though, relies on remote technology for monitoring grid demand and load, and pinging distributed resources for excess power when it’s needed. This system, hailed as the “Internet of Energy,” works using an industrial communication method known as supervisory control and data acquisition (SCADA). That system sends coded signals back and forth from the remote unit back to the control location, letting the energy provider know, for instance, the amount of excess energy being generated off-site.

However, it’s solar storage that’s really making virtual networks viable. Con Ed’s program combines high-efficiency solar panels with lithium ion batteries to collect and store renewable energy. That means there’s more harvested energy to call on in the event of a sudden spike in demand (or in the case of a gas leak, when other energy sources fail), making virtual grids a potentially vital resource for emergency energy response.

The dipping cost of solar installations over the last three years has made them all the more appealing to businesses and homeowners looking to offset high energy bills.

Improvements Are Still Needed For Solar Storage

Unfortunately, the solar battery isn’t exactly the most efficient technology right now. Long-term energy storage eventually degrades the stored electricity due to the internal resistance of batteries. After a few years, they generally deteriorate, experiencing significant drops in their ability to hold energy. And although the next iteration of lithium ion storage systems, like the Tesla Powerwall, purport to reduce these inefficiencies, the industry has yet to see evidence of an exceptionally efficient local storage system.

That’s why California’s main objective has been identifying and testing alternative storage solutions. There are two potential technologies that show some promise here: compressed air and thermal storage. Essentially, both convert solar electricity to a type of energy that can be more easily stored without degrading. Compressed air technology, like the kind being tested by LightSail Energy in California, uses excess electricity to fill a massive compressed air pump. Later, when it’s needed, that air can be used to power a special generator, converting the energy back into usable AC electricity.

Thermal energy works similarly, but converts the electricity to heat instead of compressed air. Heat energy is much easier to store without degrading, and can be held in superheated tanks of water. While both storage systems still need to be perfected, both financially and technologically, on-demand stored energy may be a real possibility in our lifetimes.

And the Existing Grid Requires Updates

The existing grid infrastructure was built to accommodate traditional power plants, where energy traveled at generally consistent levels. But the sudden productivity and drop-offs inherent to renewable energy pose a big challenge to our aging grid. For example, just this past spring, high solar productivity put California’s grid at risk, to the point that energy providers had to ask solar farms to shutter operations for several days.

The cost to transmit energy remains high compared to the cost of generation. But a remotely controlled system will rely on newer, technologically proficient smart grids and controls that can respond and adapt to shifting production levels without human intervention.

Virtual power plants are the best hope for energy providers to wrangle distributed energy resources. But getting these systems in place will mean investing in development for new technologies that can make decentralized production a reality.

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