California is experiencing an energy revolution, with a network of homes transforming into a groundbreaking virtual power plant (VPP). Sunrun, a leading residential solar and energy storage company, has linked over 56,000 customers’ homes, totaling approximately 75,000 batteries, into the largest VPP in the United States. This initiative, known as CalReady, is designed to provide critical energy to California’s grid during peak demand, heat waves, and other grid emergencies, while simultaneously lowering energy costs for all ratepayers.
What is a Virtual Power Plant?
A virtual power plant (VPP) is a network of decentralized energy resources, such as solar panels, battery storage systems, smart thermostats, and electric vehicles, that are aggregated and coordinated through software and control systems. Instead of relying on a single, large-scale power plant, a VPP harnesses the collective energy capacity of numerous smaller sources to provide power and grid services.
VPPs offer a flexible and responsive approach to managing electricity supply and demand, enhancing grid reliability and supporting the integration of renewable energy sources. They can quickly supply power to the grid, take power from the grid, or lower energy consumption during critical times to reduce grid strain.
CalReady: A Customer-Led Energy Revolution
Sunrun’s CalReady program exemplifies the potential of VPPs to revolutionize the energy landscape. By linking together thousands of home batteries, CalReady can provide up to 375 megawatts (MW) of backup power to the grid. This is enough to power approximately 280,000 homes, equivalent to all of Ventura County, California.
“Sunrun is leading the transformation of the energy grid with a customer-led revolution to a more reliable, energy independent way to power their homes while at the same time being a solution to help other Californians who rely solely on the grid,” said Sunrun CEO Mary Powell.
How CalReady Works
CalReady operates by tapping into a network of customer-owned battery storage systems, which are typically paired with solar panels. When the grid is under strain, CalReady can draw energy from these batteries and send it back to the grid, helping to prevent blackouts and stabilize the electricity supply.
The program is particularly valuable during peak demand hours, typically between 4 pm and 9 pm, when electricity demand spikes and fossil fuel plants are often used to meet the increased need. By providing a clean energy alternative, CalReady helps to reduce reliance on fossil fuels and lower pollution.
Benefits for Customers
Participating in CalReady offers several benefits for Sunrun customers:
- Compensation: Customers can earn up to $150 per battery for sharing their stored solar energy. In 2024, Sunrun customers made over $1.5 million from the program, and this year, they could potentially earn nearly $10 million.
- Energy Savings: By using battery power to alleviate stress on the electrical grid during peak hours, customers can save money on their monthly utility bills.
- Backup Power: Enrolled batteries retain at least 20% backup reserve to ensure power availability at customers’ homes in the event of a power outage.
- Contribution to a Cleaner Grid: By participating in CalReady, customers contribute to a more sustainable energy future and help to reduce California’s reliance on fossil fuels.
The Growth of Virtual Power Plants in California
CalReady is just one example of the growing VPP movement in California. The state has been actively promoting the development of VPPs through various policies and programs, including the Demand Side Grid Support (DSGS) program.
The DSGS program incentivizes customers with home solar-and-battery systems to participate in virtual power plants, providing backup power during extreme events. As of October 2024, the program had enrolled 515 megawatts (MW) of capacity, with over 265,000 participants.
California’s Virtual Power Plant Potential
A recent report by The Brattle Group for GridLab highlights the significant potential of VPPs in California, estimating that they could cover about 15% of the state’s peak power demand by 2035. This could be achieved by leveraging various distributed energy resources, including orchestrated electric vehicles (EVs), behind-the-meter batteries, smart thermostats, water heaters, and demand response programs.
California is considering a mandate for virtual power plants (VPPs), with a potential capacity of 7.7 gigawatts by 2035. This initiative builds upon California’s existing goal of achieving 7 GW of flexible demand by 2030. This aim is set to reduce consumer electricity demand during grid stress periods.
Overcoming Challenges
Despite the significant potential of VPPs, there are also challenges to overcome. One key challenge is ensuring the reliability and consistency of VPPs, as they rely on the participation of numerous individual customers. Utilities and regulators need to be confident that VPPs can consistently deliver the promised power and grid services.
Another challenge is addressing regulatory barriers and streamlining the process for VPPs to participate in energy markets. This includes developing appropriate compensation mechanisms and ensuring that VPPs can compete fairly with traditional power plants.
Other Virtual Power Plant Initiatives in California
Besides Sunrun’s CalReady program, other companies and organizations are also developing VPPs in California.
- Pacific Gas & Electric (PG&E): PG&E launched the Seasonal Aggregation of Versatile Energy (SAVE) program, a virtual power plant that harnesses residential distributed energy resources to reduce local grid constraints. The program includes up to 1,500 electric residential customers with battery energy storage systems and up to 400 customers with smart electric panels.
- MCE Clean Energy: MCE, a community choice aggregator serving parts of the northern San Francisco Bay Area, has a VPP program for low-income residents of Richmond. The program offers low- to no-cost energy efficiency and electrification equipment to participants who allow MCE to control their devices to ease grid stress.
- Sonnen: Sonnen, a global market leader in smart energy storage, has launched the sonnenConnect program in California. This program combines smart sonnen batteries with sonnenVPP software to encourage customers to use their energy storage systems for more than just backup power. Sonnen has also partnered with SOLRITE Energy to offer “virtual power plant PPAs” in California.
The Future of Energy in California
The rise of virtual power plants represents a significant shift in the way we generate and consume electricity. By harnessing the power of distributed energy resources, VPPs can create a more resilient, sustainable, and affordable energy future for California.
As technology advances and regulatory barriers are addressed, VPPs are poised to play an increasingly important role in the state’s energy mix. With innovative programs like CalReady leading the way, California is demonstrating the potential of customer-led energy revolutions to transform the grid and create a cleaner, more reliable energy future for all.
