A Harvard Law School group is urging Massachusetts regulators to test virtual power plants – possibly as part of microgrids – as the state moves to modernize its electric grid.
The school’s Emmett Environmental Law and Policy Clinic raised the idea of utilities demonstrating virtual power plants in comments filed last week before the Massachusetts Department of Public Utilities. The DPU is reviewing grid modernization plans proposed last year by its investor-owned utilities.
Akin to microgrids, virtual power plants are a collection of intelligently controlled distributed energy resources that can act like a single power plant in relation to the grid and energy markets. They often serve a group of customers that are either identified by a utility or aggregated by a private entity.
Still an evolving concept, virtual power plants take on various forms, and may include a range of distributed energy resources — from home energy management devices to energy storage and full-scale power plants.
Their newness leaves regulators grappling with some of the same regulatory and revenue issues that face microgrids, such as proper payment streams and legal use of utility wires.
In this case, Emmet suggested that the utilities test urban virtual power plants whose customers might be universities, municipalities or large corporations. They would buy their electricity directly from the VPP’s distributed generators at a rate negotiated with the utility, likely close to retail prices.
On another gnarly issue for both microgrids and virtual power plants – use of utility lines — Emmett cites Massachusetts law that it says gives them access to the lines.
Specifically, Emmett says that if the virtual power plant owns or leases distributed generation it qualifies for access to the lines as a generation company. The VPP also qualifies as a competitive retail supplier, since it would sell electricity directly to customers, according to Emmett.
The virtual power plant would pay a fee to the utility for use of the lines. But the Emmett clinic suggested the rate be discounted because the virtual power plant would use only distribution wires, not the full distribution system.
“Such demonstration projects could include microgrids that use wires owned and operated by distribution companies and technology that is similar, if not the same as that used in VPPs,” said the Emmett clinic.
Benefits of virtual power plants
Massachusetts stands to gain several benefits from virtual power plants, according to the Emmett clinic. These include greater resiliency, lower greenhouse gas emissions, and more efficient use of energy. In addition, VPPs could help avert construction of costly infrastructure since virtual power plants are located close to their customers, according to the filing.
A virtual power plant also might be able to earn wholesale market revenue; it would have the opportunity to participate in ISO New England forward capacity, demand response and ancillary service market as single entity.
Emmett pushed for the virtual power plants as part of its larger call for social justice within energy modernization. The group pointed to a 2014 study that said the average Massachusetts household with earnings at less than 50 percent of the federal poverty level spent 42.6 percent of its income on energy.
“Energy burdens are higher for low-income households than other households primarily because their income is lower, but also in part because their homes tend to be older and less energy-efficient. The disparity increases when heating costs are considered,” the Emmett clinic said.
The DPU is reviewing the comments filed by the Emmett clinic and several other parties before issuing a final grid modernization order.
