NY’s ConEd took a giant leap forward in clean energy integration with their Virtual Power Plant (VPP) plan. The drive comes from the recognition of the need for storage as more solar panels are being installed that provide power at a different time than peak demand. Storage can help offset peak demand infrastructure. It is a product of NY’s Reforming the Energy Vision (REV). It will have a size of 4 MWH of storage across 300-400 homes. The project is aimed to practically implement storage into the grid.
The set-up is to take battery systems distributed across residential houses and aggregate them into a resource dispatchable by the utility. Solar panels will supply energy, and a technology platform will aggregate the control of the units. This forward-thinking project extracts the benefits of both distributed and centralized systems for increased resiliency, control, and cleanliness.
It’s important to remember that this project is not designed to be profitable. As a pilot project, its main purpose is to determine the demand for resiliency services and demand for clean energy. It will try to learn what price and price structure customers are willing to pay for resiliency services. It wil try to learn how to best target potential users. And, it will discover how to best aggregate the resources. It will hopefully set up storage to be profitable in the future.
I will investigate the details of the plan, particularly the cash flow, in order to try and make more sense out of them. They will be very important for future implementations of similar projects. In addition they hold they key to who benefits from the value provided by storage. If set-up in the most efficient and optimal manner, the cash flows will allow storage to succeed.
The important entities are the characters, devices, and flows. The characters consist of the utility the consumer, and 3rd party companies. The two most relevant devices in this study are the battery and the solar panels. The cash flows between and for these entities will be espoused upon.
The plan will be implemented in 3 stages and I’l map out the cash flows in each stage.
Phase 1 – Implementation
Phase 1 consists of targeting consumers, financing, and implementing. Battery storage will be paid for and owned by the utility. Each units capacity will be 19.4 kWH with a 6 kW power rating. During regular use, the utility will be able to control and make use of storage as they best see fit. Solar panels will be part of each home’s implementation. The 7-9 kW panels will be financed by the consumer whether through upfront payment or leasing. Either way, the output will go to the consumer. It’s unclear where excess output will go, if there is any.
The customer will make regular payments to SunPower or ConEd for resiliency services. (I’m not sure why payments would go to SunPower when ConEd owns the assets, but it seems to be for managing the system.) In return, consumers receive first priority to the energy in the batteries if the power goes out. There is a question of what happens if the battery’s energy is depleted. What state of charge level of the battery needs to be maintained? There is also a question of what level of reliability the grid should already ensure. New York has targets in place for frequency and duration of interruptions. If these targets aren’t met, the utility is subject to a negative rate adjustment. This additional reliability would be above this target. Should some people get access to and be promised additional because they are more able to pay for it.
In stage 2, aggregation of the storage resources will occur. This will create the VPP allowing the utility to control each battery unit. This will be an important step in attaining the benefits of a centralized system including better control, planning, and dispatchability. SunPower and Sunverge
Stage 3 is meant to integrate the system into wholesale or distribution power markets. In New York, this would be the New York Independent System Operator (NYISO) wholesale markets. Wholesale energy markets are the buying and selling of generated energy. Distribution power markets refer to the buying and selling of moving power. This will give an additional cash flow to ConEd when making use of these resources in the market.
One important consideration is that ConEd is starting to charge a standby tariff. This is an important change to the rate structure to assist utilities with the advent of distributed energy. As more distributed energy comes about the classic problem is that fewer payments are being made to pay for the same grid maintenance. At the same time, it inhibits the growth of distributed energy by adding an additional cost. There are many contentious intricacies and exemptions which are discussed by Marc Rauch in the Environmental Defense Fund’s blog.
All in all, ConEd’s VPP is a huge advancement in the practical implementation of clean power. Energy storage will be essential for any sizable solar panel implementation. While distributed storage has been done before and utility scale storage has also been done before, the novelty in this project lies in the aggregation of the distributed units at a utility level. This allows for both the resiliency benefits of distributed resources and system optimization of centralized control. The interests of the utility and consumer are put into alignment. This is a huge step forward for clean power.