Full Title: Real Reliability: The Value of Virtual Power
Author(s): Ryan Hledik and Kate Peters
Publication Date: May 3, 2023
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Maintaining power system resource adequacy is a major investment. Over the past decade, the U.S. added over 100 GW of new capacity intended largely to maintain resource adequacy. This amounted to over $120 billion of capital investment, primarily in gas-fired generators and lithium-ion batteries.
Virtual Power Plants (VPPs) are an emerging alternative to conventional resource adequacy options. A VPP is a portfolio of actively controlled distributed energy resources (DERs). Operation of the DERs is optimized to provide benefits to the power system, consumers, and the environment. Within a decade, analysts forecast an inflection point in the trajectory of DER ownership. VPPs already are beginning to be deployed across the U.S. and internationally.
We explore the ability of VPPs to reliably reduce resource adequacy costs in the coming decade. We model the economics of a residential VPP for a representative U.S. utility system in 2030. The utility system is 50% renewables, with both summer and winter resource adequacy needs. The VPP in our study is composed of commercially available residential load flexibility technologies. VPP operations are based on actual observed performance of DERs, accounting for operational and behavioral constraints. The net cost of providing resource adequacy from the VPP is compared to that of a gas peaker and utility-scale battery. Net cost accounts for additional value from energy, ancillary services T&D deferral, resilience, and greenhouse gas (GHG) emissions.