A recent Bloomberg opinion piece contrasted the massive growth in distributed energy resources (DERs), such as rooftop solar and electric vehicles, with sluggish deployment of other clean energy solutions, such as wind power and transmission upgrades, as the world races to reach net zero emissions. While the author was spot on in many respects, the piece failed to account for the role that Virtual Power Plants (VPPs) can play in augmenting the ability of DERs to support the entire grid, and how utility mindsets are shifting.

VPPs aggregate and coordinate distributed energy assets like flexible load assets, rooftop solar, stationary batteries and electric vehicle chargers. This turns these DERs into a reliable block of flexible capacity that can support a variety of grid needs. With VPPs we can harness the rapid expansion of DERs for the benefit of all and continue driving greater decarbonization and energy reliability while we work through longer timelines for other necessary pieces of the new energy economy.

Furthermore, VPPs provide grid benefits at a far lower cost than alternatives. A study released earlier this year found that the net cost to a utility of providing resource adequacy from a VPP is roughly 40% to 60% of the cost of alternatives, which translates into a 60 GW VPP deployment meeting future resource adequacy needs while saving $15 billion to $35 billion.

There is growing public and private support for VPPs. Recently, the day before the opinion piece was published, the U.S. Department of Energy released its Pathways for Commercial Liftoff report for VPPs. The report found that tripling the current scale of VPPs to 80-160 GW by 2030 could expand the U.S. grid’s capacity to reliably support rapid electrification while reducing overall grid costs by $10 billion per year. Not only that, but there are up to $100 Billion in loans available to support VPP deployment.

Utilities can’t afford to ignore these cost savings, and are highly motivated to gain better visibility and control of DERs to maintain the stability of the grid. Therefore, we have many reasons to be optimistic about the rapid growth in VPPs over the next decade. Any forward-looking energy system analysis that doesn’t include VPPs is incomplete.

VPPs can increase the impact of DERs and buy precious time for technologies like wind generation and transmission upgrades to progress. VPPs won’t solve the climate crisis alone, but they are a promising tool to accelerate the clean energy transition. With their flexible capacity, they can bridge the gap created by the sluggish deployment of technologies such as wind power by leveraging existing resources until large-scale renewables can fully deliver.

Michael Smith

Michael Smith is a visionary and innovative leader who brings more than 25 years leadership experience in the energy industry to CPower as its CEO. Michael joined CPower from ForeFront Power, where he was the CEO of the company’s North American solar and energy storage business, responsible for strategy and all business areas across the U.S. and Mexico.

Prior, Michael served as Senior Vice President, Distributed Energy, at Constellation, the retail energy subsidiary of Exelon Corp., where he was responsible for Constellation’s distributed solar, energy efficiency, and energy asset operations businesses across the U.S. He also served as Vice President, Innovation and Strategy Development, for Exelon Generation, and led Constellation Technology Ventures, Exelon’s venture investing organization. Earlier, Michael was Vice President and Assistant General Counsel for Enron Energy Services and a trial lawyer at Bricker & Eckler, LLP.

Photo Credit: New York Independent System Operator

A summer like this year’s could be trouble for New York City in 2025.

Earth’s hottest summer on record lingered into early September in the Big Apple, as the city posted its first official heatwave of the year with three consecutive days of high temperatures exceeding 90 degrees Fahrenheit.

Should the summer two years hence also be especially hot, New York City could grapple with blackouts or brownouts. The New York Independent System Operator (NYISO) has projected a deficit of as much as 446 MW on the peak day during expected weather conditions (95 degrees Fahrenheit).

The baseline summer coincident peak demand forecast for New York City (Zone J) in 2025 increased by 294 MW in the past year, primarily due to the increasing electrification of transportation and buildings, NYISO noted, in identifying a “reliability need” in its Q2 Short-Term Assessment of Reliability (STAR).

Also, NYISO noted, as of May 1, 2023, 1,027 MW of affected peak generation plants have deactivated or limited their operations under the New York State Department of Environmental Conservation’s (DEC’s) “Peaker Rule,” which provides for a phased reduction in emission limits, in 2023 and 2025, during the ozone season (May 1-September 30). An additional 590 MW of peakers are expected to become unavailable for summer 2025, all of which are in New York City, thereby resulting in a total unavailability of 1,617 MW of peaker generation capability.

In terms of possible relief, the DEC regulations include a provision to allow an affected generator to continue to operate for up to two years, with a possible further two-year extension, after the compliance deadline if the generator is designated by the NYISO or by the local transmission owner as needed to resolve a reliability need until a permanent solution is in place. So, at least some of the peaker generation capacity that is currently expected to be unavailable could instead remain available through a two-year extension, and an additional two years thereafter if an additional extension were granted, thus perhaps mitigating the near-term reliability need for New York City.

Also, “The New York City transmission security margin is expected to improve in 2026 if the Champlain Hudson Power Express (CHPE) connection from Hydro Quebec to New York City enters service on schedule in spring 2026, but the margin gradually erodes through time thereafter as expected demand for electricity grows,” according to NYISO’s STAR report.

Looking beyond 2025, NYISO warned that the forecasted reliability margins within New York City may not be sufficient if the opening of the CHPE, which will deliver 1,250 MW of renewable power into the New York metro area, is significantly delayed. Reliability margins also may not be sufficient if additional power plants become unavailable or demand significantly exceeds current forecasts, NYISO noted.

“Without the CHPE project in service or other offsetting changes or solutions, the reliability margins continue to be deficient for the ten-year planning horizon. In addition, while CHPE is expected to contribute to reliability in the summer, the facility is not expected to provide any capacity in the winter,” according to NYISO.

In the meantime, Con Edison, as the Responsible Transmission Owner, is solely responsible for developing a regulated solution to the near-term reliability need that NYISO has identified for summer 2025. NYISO has also solicited market-based solutions.

Per NYISO: “If proposed regulated or market-based solutions are not viable or sufficient to meet the identified reliability need, interim solutions must be in place to keep the grid reliable. One potential outcome could include relying on generators that are subject to the DEC’s Peaker Rule to remain in operation until a permanent solution is in place.”

A reliability need could also drive up capacity prices for New York City in summer 2025, if the possible conditions that NYISO has warned could be created by a combination of escalating demand and the retirement of generators come to fruition.

As this is an emerging and evolving situation, CPower will follow it closely. If you have immediate questions or would like information in the meantime, please contact us online or at 844-276-9371.

Keith Black

As CPower’s Regional Vice President and General Manager for the Northeast, Keith has leveraged his unique combination of sales and operations expertise, energy business relationship development, channel development, sales opportunity identification and solutions management, backed by his intrinsic talent for building winning business strategies, to help the company and its customers achieve strong and sustainable financial gains.

In leading CPower’s business and growth strategy for New England and New York, he has helped in expanding New England’s leading edge of solar, storage, and residential monetization and capturing market share in all aspects of the evolving DER landscape in New York. Succeeding in these exciting and cutting-edge DER opportunities has come with a complex array of technologies, controls and partner integrations, as well as a demanding and high touch for his team.

A versatile, high-energy executive, he has extensive experience in leading high-performing teams, at businesses from Fortune 500 organizations through start-ups, and guiding companies to profitable growth. With more than 30 years of experience in the energy industry, he has become a trusted energy advisor to both prospects and customers, enabling them to reduce risk, lower costs and use renewable resources when possible.