Energy
Wednesday, September 14th, 2022 2:02 pm EDT
In 2017, sonnen GmbH, a German residential battery company, was exploring places in America where it could replicate the virtual power plant systems it had already created in Europe. At first glance, Utah seemed like pretty rocky soil for an idea like this to flourish. Rooftop solar was a niche market at best, there were no state incentives for domestic renewable energy, and the state’s net metering program paid rooftop customers far less for their excess electricity than they paid for electricity from their local utilities.
That’s when serendipity came into play. sonnen struck a deal with Wasatch Group, a housing developer. It found an installer partner called ES Solar that was willing to completely overhaul its sales tactics to emphasize what batteries can do. As a result, a sonnen battery became part of every unit in a new solar-powered apartment complex in a suburb of Salt Lake City known as Soleil Lofts. (“Soleil” is French for sun. “sonnen” is German for sun. Marketing types just can’t resist such cutesy cleverness.)
When the apartment complex was completed, sonnen approached Rocky Mountain Power, the area’s largest utility company, and said it had 12.6 MWh of stored energy at Soleil Lofts which it would be happy to share with the company. Then it gave Rocky Mountain Power the keys to the virtual power plant and wished them well.
As marketing strategies go, this was a bold move. In the world of sales, it is known as “the puppy dog” close. Give the customer the product and tell them they are free to return it later if they wish. After a few days, the vast majority decide to keep it just as the most people would never consider taking a rescue puppy back to the dog pound.
Sure enough, Rocky Mountain Power started experimenting with this real world laboratory of distributed solar generation and energy storage conveniently located at a single point in the distribution grid. Pretty soon, it was cycling those batteries all the time to reduce demand for fossil fueled peaker plants, relieve grid congestion, and deliver the momentary adjustments to the grid known as “frequency regulation.”
Three years later, according to Canary Media, the batteries were being called upon to inject electricity onto the grid multiple times a day. The utility also used the system to study what kinds of grid infrastructure upgrades it could defer with the help of those batteries in Soleil Lofts.
A Virtual Power Plant Is Born
In 2020, Rocky Mountain Power rolled out a new program known as Wattsmart and started expanding it to its entire service area in Utah (which is most of that state). The utility is part of PacifiCorp, a utility group owned by Berkshire Hathaway. The Wattsmart program is now being offered to utility customers in Idaho and will soon be available to PacifiCorp customers in California, Oregon, and Washington, according to spokesperson (we swear we are not making this up) Brandon Zero. “Rocky Mountain Power’s vision for the program is that all solar customers will also install a battery. Our goal is to have thousands of customers and hundreds of megawatts enrolled in Wattsmart,” he said.
So how does this virtual power plant work? Any utility customer can sign up. Residential storage batteries typically cost about $10,000 installed, but the Inflation Reduction Act provides a 30% credit ($3000). The utility company then kicks in $400 per kWh of battery capacity ($2800 for a typical 7 kWh battery) and pays the customer an annual credit of $15 per kWh ($105 for a 7 kWh battery,) The total? $5800 off the price and $105 a year credit for as long as you remain part of the program. (A 4-year commitment is required.)
“The consumer can see this is the solar of the future,” Blake Richetta, CEO of sonnen’s US business, tells Canary Media. “Not [just] a solar panel on your roof, but a solar array plus battery, with the utility seeing value. With the program, it makes solar by itself look way inferior in Utah.” So far, 3,000 Utah households are participating or in the process of getting enrolled.
Adding a battery lets Utah homeowners store solar power throughout the day and consume it into the night instead of dumping surplus generation onto the grid for meager compensation. The batteries also provide backup power during outages. And now, thanks to the Wattsmart program, residential customers can get paid by their utility for allowing their batteries to be used to support the grid as part of a virtual power plant.
What do the utility companies get out of the deal? Access to hundreds of megawatt-hours of battery storage without having to pay for massive grid-scale battery storage systems. We haven’t done the math, but you can be sure the utility companies have and decided this is the best deal since sliced bread.
The sonnen Virtual Power Plant Software
Rocky Mountain Power licenses software from sonnen to control all the distributed batteries as one fleet, responding in real time to the needs of the Western grid. sonnen adapted the software to integrate battery hardware from other vendors, so the utility wouldn’t be locked in to a single battery provider.
The Wattsmart fleet is currently dispatched to reduce peak grid demand by meeting the post-sunset needs of the households that have batteries so they draw less from the grid. The program also dispatches batteries for 5-minute bursts of frequency response. Longer duration exports to the grid are technically possible, but the low net metering rates that prevail in Utah raise compensation issues that are not yet fully resolved.
Rocky Mountain Power treats the battery network as a regular part of its operational fleet. Using it every day means generating value every day. Any evening could be the time when a fossil fueled peaker plant doesn’t need to fire up because the batteries met the last increment of demand. As more variable renewables join the Utah grid, the utility sees the home battery network as a crucial tool for balancing the resulting fluctuations in supply and demand.
A similar virtual power plant operated by Green Mountain Power in Vermont includes 4,000 households and has saved customers millions of dollars in recent years. Those batteries have helped the company avoid paying peak prices during heat waves and those savings get passed on to customers in the form of lower utility bills. Tesla is also inviting its Powerwall customers to join in a virtual power plant experiment in California.
The Takeaway
Many utility companies have been hostile to rooftop solar, which is somewhat understandable if you look at things from their point of view. Those residential systems feed excess electricity into the grid at precisely the time of day when it isn’t needed because solar power is abundant at the same time — usually late afternoon.
But the energy storage piece changes the whole dynamic. Now instead of forcing the companies to accept electricity when they don’t need it, the companies are happy to accept electricity when they do need it. The voltage and frequency modulation aspects of a virtual power plant is just the icing on the cake.
By taking a risk, sonnen succeeded in creating a marketing opportunity where none existed before. It also gave utility companies a chance to experiment with new technology without putting up any of their own money. Utility company executives talk to each other and so the lessons learned in Utah will propagate throughout the country. sonnen deserves a reward for moving the renewable energy revolution several paces forward.
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