Shelter Valley, a small community in San Diego County’s eastern desert, has become San Diego Gas & Electric’s test bed for technology that might one day relieve California as a whole from the effects of crippling heat waves.
The utility chose the community near Julian as the site of a “virtual power plant” that can change electricity supply and demand when extra hot days tax the power grid.
The abbreviation for the technology is VPP.
Instead of a conventional power plant, a VPP is a distributed source of electricity, coordinated by advanced software.
A VPP network can consist of a range of devices and resources: everything from home appliances such as electric vehicles and chargers to HVAC equipment and solar plus battery energy storage systems.
Software programs run VPPs in concert with grid operations to dispatch communications signals to devices in the VPP network to either power down or discharge electricity from existing resources back to the grid.
Nine months into the trial, SDG&E says it is getting positive results.
The pilot project first came online in December 2022 and it will run through December 2023.
Financial details of the project were not disclosed.
A Growth Market
Research and Markets reported earlier this year that the global VPP market, currently valued at $3.4 billion, will likely grow at 16.9% to reach $12.3 billion by 2030.
As of late August, SDG&E had tested its VPP through 17 simulated demand response events.
Participants in the pilot include single-family homes with existing rooftop solar and the Shelter Valley Community Center, which serves as a resource center for the community during emergencies. The center received free installation of two batteries onsite.
“We can use this equipment to maintain a place for people if the power goes off and keep the center cool and hope we can provide food if needed for our community residents,” Shelter Valley Community Center Board President Steve Bassett said in a statement distributed by SDG&E.
Getting the Message
Prior to the VPP’s activation, VPP participants receive a message about the potential for their devices to be turned off or discharge electricity to support the grid. Participants can opt out for certain devices, except battery storage. So far, SDG&E said, the opt-out rate has been very low.
In an online Q&A, the utility says the system can change the setting on a participant’s thermostat, but a participant can override that command.
During the hot days of August, SDG&E deployed its VPP pilot three times to support the grid during peak demand periods. Connected devices functioned as expected. Because of how well the pilot project has performed, SDG&E said it is considering bringing the program to other areas.
VPPs are in use in other parts of the United States.
Pacific Gas & Electric (NYSE: PCG) has created a VPP in a partnership with Tesla (NASDAQ: TSLA), utilizing the tech company’s Powerwall product.
Farther afield, the Public Utilities Commission of Texas announced on Aug. 23 that it was launching two VPPs.
SDG&E’s Virtual Power Plant project is funded and administered by the Demand Response Emerging Technologies Program, which is authorized by the California Public Utilities Commission. The state commission directs investor owned utilities, such as SDG&E, to identify and evaluate technologies that have the potential to reduce energy demand when needed.
An Eclectic Approach
SDG&E said its VPP pilot is different from most other VPPs because of the diversity of devices it has integrated into a centralized system. Most VPPs typically involve only one brand or one type of device (e.g., battery energy storage). SDG&E’s VPP involves multiple brands and types of devices including smart thermostats, well water controllers and battery energy storage systems.
“The beauty of a virtual power plant is it can leverage existing resources to provide significant grid reliability benefits – with zero incremental emissions,” SDG&E Chief Commercial Officer Miguel Romero said in a statement. “When hundreds or thousands of businesses or homes are connected to a VPP and their resources are flexibly managed to charge or discharge electrons, they can help keep the lights on during hot summer days.”
SDG&E is a business of Sempra (NYSE: SRE), based in San Diego’s East Village neighborhood.
One year ago, SDG&E unveiled the San Diego region’s first vehicle to grid project, also called V2G. The project hooked eight electric school buses to the grid through six bi-directional chargers.
San Diego Gas & Electric
FOUNDED: 1881
CEO: Caroline Winn
HEADQUARTERS: San Diego
BUSINESS: Utilities
REVENUE: $915 million in 2022; $819 million in 2021
EMPLOYEES: Approximately 4,700
WEBSITE: sdge.com
CONTACT: 800-411-7343
NOTABLE: The utility uses goats as a firefighting tool; by grazing in designated areas, the goat herd clears brush and helps to prevent wildfires
