Downing: DOE accepted 'VPP' because it couldn't erase market terminology
Jen Downing · Virtual power plants: the ‘sandwich’ for the grid · Feb 15, 2024 · at 1:47
Jen Downing, an official at the U.S. Department of Energy, explains why the DOE chose to use the industry-standard term 'virtual power plant' despite internal debate over the word 'virtual'.
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“We may have influence at the Department of Energy, but we didn't think we had so much influence we could erase the term VPP from the market.”
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More from Jen Downing
Downing: VPP peaking capacity can be 60% cheaper than gas peakers
“For a utility, procuring peaking capacity from a VPP can be 60% cheaper than procuring it from a natural gas peaker plant.”
Downing: Utility CapEx return models heavily disincentivize low-cost VPP adoption
“The utility business model of compensating CapEx spending with maybe a seven to nine percent margin and passing through OPEX at cost to the consumer does not give utilities the right incentives to choose low-cost options such as VPPs”
Downing: US electric grid must serve 200 GW of new peak demand
“Well, we have the need to serve 200 gigawatts of new peak demand between now and 2030.”
Downing: Tripling US VPP capacity by 2030 would save $10 billion annually
“But if we can triple the capacity of VPPs between now and 2030, we could serve 10 to 20% of peak load nationally through virtual power plants. And if we did that, because they are a lower cost solution, we'd be saving about ten billion dollars per year.”
Downing: Utilities will increasingly procure virtual power plants directly
“And so I think what you'll end up seeing is utilities recognizing the value that they can get out of these VPPs and procuring VPPs directly.”
Downing: VPPs are hard physical assets aggregated via software, not abstractions
“People misunderstand the word virtual to mean, you know, not real. When these are hard assets on the grid, it's not phone calls anymore. It's software integrations, and it's large aggregations of small resources that really add up to something very valuable.”