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The Need for Virtual Power Plants Heats Up When the Weather Cools Down
*This article first appeared on Environment+Energy Leader on Feb. 25, 2025. Click here to view.
As a blast of Arctic air swept through the U.S. on Jan. 22, PJM’s winter electricity demand reached an all-time high of 145,000 MW, breaking its 2015 record. The new record may not last 10 years though, as extreme cold and disruptive winter storms, from Uri (2021) to Elliott (2022), to Enzo (2025), have become the new norm in the U.S., increasing demand for electric heating and straining the grid when supply falters.
As our national demand for electricity surges and extreme weather intensifies, we can expect to see more winter consumption records, like that of PJM’s, broken in the coming years. We could also experience dangerous blackouts if we don’t improve the grid’s ability to handle ever-greater peaks in demand.
Grid Strains Worsen as Extreme Weather Intensifies
Intense winter weather further strains an aging grid that is already struggling to keep up with demand as utilities and grid operators retire near-end-of-life generation resources faster than they bring replacement generation online. When winter storms topple power lines and disrupt generation resources, the grid’s capacity is stretched even thinner, and this can result in higher energy costs and potentially dangerous outages when temperatures plummet.
Just a few months before experiencing its record-setting winter demand in January, PJM had expressed concern about maintaining adequate supply if extreme weather conditions were to persist this winter.
Winter grid strategies must evolve beyond the playbook of centralized generation if we are to guard against interruptions in supply as demand surges. This evolution has begun with the rise of distributed energy resources such as onsite generation and variable load (DERs), but we can—and should—do more to strengthen the grid with the DERs available to us now.
The Role of Virtual Power Plants in Grid Resilience
Virtual Power Plants (VPPs) offer a perfect solution due to their immediate availability and unique flexibility. A cost-efficient way to balance the grid with existing DERs, VPPs have emerged as an increasingly valuable resource for making the grid more resilient, regardless of the season.
Traditionally focused on meeting peaks only on the hottest summer days, utilities and grid operators now grapple with surging demand year-round. As weather patterns shift, the grid faces vulnerabilities from extreme cold and winter storms as well as heat waves and triple-digit temperatures.
VPP operators can cheaply and efficiently reduce consumption during any period of peak demand by aggregating DERs and collectively dispatching hundreds and thousands of megawatts of distributed energy from customer variable loads and onsite generation resources and batteries.
This decreases the reliance on gas peaker plants, which have been shown to cost 40% more than a VPP and are at risk of failing during extreme cold due to mechanical problems, fuel supply issues, downed trees, or heavy snow bringing down power lines and transformers. By eliminating the reliance on peakers, utilities can pass cost savings to customers, driving down energy bills.
Furthermore, customer-powered VPPs are an immediate way to maintain a consistent and reliable energy supply when the traditional grid is struggling to accommodate demand growth in winter weather conditions. Because of their inherent flexibility, VPPs can adjust to meet fluctuations in supply or demand. They can also be deployed locally where they’re most needed during emergencies.
Proven Impact: How VPPs Have Helped in Past Winters
VPPs have rescued the grid in previous winters. On Christmas Eve 2022, customer-powered VPPs helped prevent blackouts in the Northeast and Mid-Atlantic regions during Winter Storm Elliott. The Texas grid operator, ERCOT, has similarly turned to them for help, using the integration of VPPs and an increase in renewable energy to improve its preparations for major winter weather, after Winter Storm Uri devasted the state in 2021, leaving 4.5 million residents and businesses without power.
As pressure on grids mounts nationwide, these examples serve as blueprints for other regions to follow in leveraging VPPs to strengthen the grid’s ability to handle extreme weather.
Expanding the Role of VPPs in Future Grid Planning
As winter storms grow in frequency and strength, our power infrastructure weakens with age and wear. Meanwhile, the full extent of demand growth has yet to be realized. Therefore, we need innovative, flexible strategies to take us reliably into tomorrow.
One of the most flexible strategies, VPPs are an affordable and adaptable solution for managing demand response during summer and winter months and integrating DERs into the grid at any time.
Most importantly, while infrastructure upgrades and large-scale power plants will take years to deploy, VPPs can bridge the gap between our aging grid and the modern, resilient energy grid of the future.
With winters growing more severe, VPPs are ready to improve resilience.
Michael Smith is an innovative leader with more than 25 years leadership experience in the energy industry. 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.
CPower Execs Predict 2025 Energy Trends
The energy industry faces uncertainty as 2025 draws near but key trends and issues provide some predictability.
For instance, as in 2024, demand for electricity will accelerate while generation capacity constricts. As a result, virtual power plants and other immediately available sources of clean, affordable and reliable energy will continue to expand as new generation is built.
Recognizing the importance of planning ahead to stay ahead, The Current asked CPower executives Mathew Sachs and Ken Schisler for their thoughts on the energy trends to watch in 2025. Their responses have been edited here for clarity and conciseness.
What industry challenges are likely to become a more important topic of discussion next year?
Mathew Sachs (Senior Vice President, Strategy & Product):
If it takes too long to improve the rules for VPPs or interconnections or fill in the blank with anything else that has a chance to solve our problems, the grid could move towards less-than-ideal states.
Customers in other countries are already going off the grid entirely because they don’t feel they can trust their grid and we’re starting to see that here in the U.S. too, like with data centers. Or maybe people will lose trust in the free markets and deregulated states could go back to regulated with vertically integrated utilities. So, we should focus on reducing the friction that could lead to suboptimal outcomes by making it too hard for things to work, whatever that reason may be.
Ken Schisler (Senior Vice President, Law & Policy):
Roadblocks that were erected by the regional transmission organizations (RTOs) and independent system operators (ISOs) in their efforts to facilitate participation by distributed energy resources (DERs) under FERC Order 2222 will become evident and participation will be slow.
Although you may hear that DER participation models have been approved and implemented and that participation will be starting in the next year or two, the fact is that those models are far from being perfect and fulfilling FERC’s vision. And because the RTOs’ and ISOs’ implementation of Order 2222 have fallen well short of that vision for promoting participation in VPPs, the impacts will start to be seen.
What will drive growth in virtual power plants (VPPs) in 2025?
Sachs: The #1 driver for VPPs is going to be load growth driven by computing load for AI and data centers. AI is like a modern-day Manhattan Project. It’s the U.S. versus the rest of the world, particularly China. Maybe the federal government will even get involved in ensuring there is enough power for AI.
Wherever the supply comes from, we will have to deal with transmission and distribution constraints within the existing grid infrastructure. However, we can’t rapidly build out infrastructure, so we’re going to have to rely on resources we already have in the near-term. That means turning to VPPs, which can meet increases in demand now.
Schisler: Improving access to data is a key enabler of growth that is often overlooked in VPP deployment. However, data access issues have become a federal and state concern. The more that states and the Federal Energy Regulatory Commission (FERC) do to make data accessible, the more scalable VPPs will be across the country.
States such as California, Illinois and Texas have become smarter about how to give customers access to their electricity data, but it needs to be architected into systems if we are to scale. We need the ability to query 500 accounts at once instead of using unique logins for every individual customer, for example.
It’s not just a matter of making it seamless for the customer. It’s about making it seamless for energy agents too.
What trends do you see by industry segment?
Sachs: Everywhere I go, the number one talking point is how data centers are driving demand growth. There will be a particular focus on making sure we stay competitive with the Chinese on AI and don’t get hampered by a scarcity of power.
Schisler: Heavy industrial makes up a significant part of U.S. load and will be an important part of national energy strategy under the new president. For, an energy strategy geared toward increasing the global competitiveness of America’s manufacturing industry may include allowing manufacturers to make their flexible loads available in electricity markets. Leveraging their flexible loads would make them more efficient and be vital to re-energizing our country’s manufacturing base.
What will happen with energy demand and grid reliability?
Sachs: As much as the consumer doesn’t want electricity prices to go up, they really don’t want their grid going down—and one of those two things happening is inevitable. Higher prices signal a need for more generation and there could be a major grid failure in 2025 if we don’t take significant steps to maintain reliability amidst increasing demand.
Schisler: I expect to see electricity prices rising in the next year and then over the next several years as increasing demand from new sources of load like data centers and AI outstrips the ability to build the generation resources and transmission needed to keep up.
What do you foresee happening with policymakers and regulators?
Schisler: If grid operators don’t fix their problems, politicians will and they’re paying attention. We saw it in the past in Texas when the leaders of its grid operator, its board members and the commissioners of the state’s regulatory board all resigned after widespread power outages during Winter Storm Uri a few years ago.
Now, governors of several states in PJM have called upon the grid operator to help cut costs because they worry about soaring electricity prices impacting consumers. Meanwhile, across the country, the governor of California has signed an executive order to curb rising costs for consumers there, like by trimming state programs that could be inflating electricity bills.
When prices get out of control, politicians will do something to change it up.
To learn more about VPPs and how CPower can help you monetize your energy assets while supporting sustainability, improving grid reliability and increasing energy resiliency, call us at 844-276-9371 or visit CPowerEnergy.com/contact.
Beyond Backup Power: How Energy Storage Optimizes the Grid and Reduces Energy Costs
We’re excited to have our technology partner Lithion Battery contribute this guest column for The Current.
Large energy users like commercial and industrial customers have long benefited from backup batteries that have kept their operations running when the grid goes down or electricity prices go up. Way up.
However, C&I customers, governments, hospitals and other large energy users can do more with energy storage. When energy users tie behind-the-meter batteries into virtual power plants (VPPs), they earn revenue while helping keep the lights on in their communities.
VPPs prevent power outages by balancing supply and demand with dispatchable distributed energy resources (DERs) such as batteries, which can quickly increase or decrease the power supplied or consumed when the other shifts. For example, customers can use battery energy storage systems from Lithion to make and save money by providing grid services through CPower, which is the nation’s largest VPP operator.
Batteries and other DERs are increasingly important—and valuable—as grid operators struggle to supply enough electricity to keep up with accelerating demand.
Demand for electricity has never been higher and continues to reach new heights. The drivers of the increase, like new data centers and adoption of electric vehicles, are expected to persist for decades to come. So much so that the DOE’s recent VPP Liftoff Report forecasts peak demand to grow by over 60,000 MW by 2030 alone.
Peak demand occurs during the periods when energy consumption is at its highest and is at least partially served by power plants built to supply power during just peak periods. Power from these “peaking plants,” which run less than 15% of the year, comes at a much higher cost than electricity generated by baseload power plants that usually run over 90% of the time.
In addition to driving up electricity costs, peaker plants require significant time and money to build, meaning they alone cannot alleviate the strain that surging demand growth is exerting on existing grid assets. We need significant deployment of energy storage and other demand side solutions.
Peak Demand and Power Pricing
Rapid growth in peak demand is especially difficult to manage for utilities and system operators and drives higher power prices during peak periods. Energy is priced in real time within wholesale markets and when demand outpaces supply, prices increase.
These fluctuations are often significant, especially during periods when heating or cooling demands are highest. This volatility creates a large difference in power pricing between peak and off-peak periods and is especially impactful to customers in deregulated energy markets (i.e., summers in Texas or winters in the Northeast).
However, the ability to shift demand around peak and off-peak pricing periods can create massive value for both utilities and energy consumers—and batteries in particular unlock this value. Unlike intermittent on-site generation like solar energy, batteries give utilities and consumers complete control of the flow of energy.
They also allow maximum flexibility around charge and discharge periods versus other storage resources like electric vehicles. And they impact consumers less by maintaining energy levels to the site versus demand curtailing options like smart thermostats.
Batteries and Energy Storage
Energy storage has always been used to create resiliency and increase reliability of the grid. At the outset of the electricity industry, energy storage was reliant on geographical factors, like hydro power or mechanical features of power plants, like flywheels. Rechargeable chemical batteries like lead acid have existed for over 150 years. However, their low energy density and power could not meet the demands of large-scale energy storage. Only with the advent of lithium batteries did large scale energy storage make practical sense. The higher energy density of lithium decreased the space requirements and lowered long-term costs which made battery storage a viable solution.
Lithium Iron Phosphate (LFP) batteries, like those incorporated into Lithion Battery’s HomeGrid residential storage and GridBox commercial and industrial storage products are generally considered the best battery chemistry for energy storage systems (ESS). This is due to multiple factors including their high-cycle life and safety features, cost effectiveness, and other environmental benefits based on readily available materials. The modularity of Lithion’s batteries also allows consumers to scale systems up or down to maximize their benefit.
Benefits of Batteries to the Grid
Batteries have multiple grid benefits when installed in various applications. Installations can generally be categorized as either in-front-of-the-meter by utilities or power producers or behind-the-meter, which lie on site with customers.
Front of Meter (Utility or Power Producer Owned Batteries)
Front-of-the-meter batteries are installed by utilities or independent power producers and tied to power plants or transmission lines. These batteries are meant to optimize the grid assets they are tied into.
Renewable power resources like solar and wind are intermittent generators. Batteries allow the smoothing of that supply by shifting demand to pull from the stored energy when wind and solar aren’t producing. Batteries installed at transmission and distribution nodes can allow quicker balancing, minimize transmission losses and provide voltage control. Even fossil fuel plants can benefit from battery storage by providing supply coverage during the time it takes to ramp up facilities and allow plants to operate at capacities where efficiency is maximized.
Being that front of meter storage is tied directly into the grid, there are potential security concerns around foreign-made batteries in the US. In response to these concerns and the growth of the energy storage market, Lithion Battery has built a facility with 2GWh of battery manufacturing capacity in Henderson, NV to provide US made batteries to customers when system or grid security is a concern.
Behind-the-meter (DERs and VPPs)
Behind-the-meter batteries are installed at customer sites as either standalone backup power, or when accessible by a utility or aggregator as part of a Virtual Power Plant (VPP). Behind-the-meter batteries are installed on a customer electrical supply panel and not tied directly into the grid. When not tied into a VPP, batteries allow customers to peak shave (decrease consumption during expensive “peak” times) and provide backup power during outages.
Again, while these alone are beneficial, the greatest value of the stored energy is unlocked when aggregated into a VPP. Aggregation of many distributed resources allows electricity consumers to participate in several incentive programs being offered by utilities and system operators across the country. Batteries can maximize returns by making energy available for both demand response and other ancillary services sold into wholesale energy markets.
Although backup power is a good beginning, more value is to be had in VPPs.
Arizona Public Service (APS) Customers Benefit from Helping the Grid
Commercial and industrial energy users in Arizona can earn revenue and reduce costs while helping the people in their communities keep cool amidst sweltering summers.
The APS Peak Solutions program available through CPower rewards customers for conserving electricity when the power grid is stressed. Customers earned more than $870,000 during the 2023 program season.
“This is a no-out-of- pocket cost program in which we incentivize APS business customers to reduce electrical usage to relieve strain on the grid periodically. You never get a bill from CPower for participating in the program,” said Matthew Pool, Account Executive for CPower.
Nationwide, CPower has distributed more than $1 billion to customers nationwide since 2015.
Rewarding Demand Response Customers
For APS, CPower recently presented Royal Paper with a check for nearly $85,000 for its participation in the APS Peak Solutions program last summer. In total, Royal Paper has earned over $230,451 since 2021 by voluntarily implementing energy conservation measures when demand peaks on the power grid.
The APS Peak Solutions program pays business customers to reduce electrical usage when asked between June and September. The electrical load reduction strategies are always at the customer’s discretion.
For example, Royal Paper reduces its production load when called, participating in the Day Ahead option, meaning it is notified by noon the day before an electrical demand response ‘event.’
Helping Arizona Communities with Demand Response
Commercial and industrial customers that participate in the APS Peak Solutions program are good neighbors as well. Not only do they help maintain affordable, reliable power for all customers, but by reducing their loads businesses reduce the need to use carbon-emitting, fossil-fuel-powered peaker plants to meet demand peaks.
They further their own sustainability goals by participating in demand response as well, thereby further helping the environment and their communities. They also advance APS’s commitment to 100% clean, carbon-free electricity by 2050.
A leader in delivering affordable, clean, and reliable energy in the Southwest, APS serves approximately 1.4 million homes and businesses across 11 of Arizona’s 15 counties. APS launched the Peak Solutions program in 2010, and it is open to customers who can reduce at least 10kW of flexible load. All industries are eligible.
Customers need to partake in a test event. Enrollments can be adjusted monthly during the summer season and may vary for weekdays, weekends and holidays.
If you would like to learn more about how to earn revenue, reduce costs and help your community by participating in the APS Peak Solutions program offered through CPower, visit APS Peak Solutions Program – CPower Energy. You can also contact CPower online or at 844-276-9371 for a no-cost facility assessment and earnings estimate today.
Democratizing Decarbonization with Cloud-Native Building Automation
We’re excited to have our technology partner 75F contribute this guest column for The Current.
Buildings are the fourth leading cause of greenhouse gas emissions worldwide, with HVAC systems accounting for about half of a building’s energy use. While technology to make HVAC more energy efficient exists, most buildings aren’t using it.
The reason? Traditional building management systems are offline, complicated and expensive, putting them out of reach for many commercial building owners.
According to the U.S. Energy Information Administration’s Commercial Buildings Energy Consumption Survey (CBECS), over 99% of commercial buildings in the U.S. are smaller than 200,000 square feet and 85% do not use automation.
This absence of smart technology isn’t due to a lack of interest in energy efficiency. Rather, it’s because sophisticated building controls have traditionally been the domain of large facilities with substantial budgets and dedicated technical staff.
The Game-Changer: Cloud-Native Building Automation
Enter cloud-native building automation — a technology that’s commonplace in our homes but has yet to see widespread adoption in commercial spaces. This innovative approach is poised to revolutionize how we manage and optimize building energy use, helping businesses, communities and the environment.
Unlike traditional building management systems that rely on complex, wired infrastructures, cloud-native solutions leverage wireless technology and the power of cloud computing, making them well-suited for smaller and mid-sized commercial buildings. Key features include:
- Mesh networks for device communication, eliminating the need for physical wiring and reducing installation complexity and costs.
- Pre-programmed control sequences compatible with most common HVAC equipment, allowing for plug-and-play functionality that doesn’t require extensive customization.
- Cloud-based data storage enabling remote monitoring and control from any internet-connected device.
At the core of these systems lies digital twin data adhering to industry standards. This standardization unlocks the potential for accurate and actionable real-time information, seamless integration with other systems and AI implementation.
Combining clean data and AI makes sophisticated building management accessible to a much wider audience, breaking down the barriers of expertise and technical knowledge that have long frustrated users and limited widespread adoption.
Decarbonization will become democratized as automated building management systems that make HVAC more energy efficient become more common, particularly among the 85% of smaller and mid-size commercial buildings that now lack automation.
For example, more businesses will have the power to reduce emissions through automated demand response via participation in virtual power plants (VPPs), where they automatically curtail their load to ensure there is enough electricity supply to meet demand without firing up fossil-fuel-powered peaker plants.
The advanced controls available in cloud-native building automation make participation in VPPs and demand response easier because the facility’s systems automatically respond to requests to conserve electricity, by imperceptibly dimming lights or adjusting temperatures by a few degrees without occupants noticing.
Tangible Benefits to Building Owners and Operators
The features of cloud-native building automation also translate directly into tangible benefits for building owners, including earning and saving money with automated demand response. By participating in VPPs including demand response, building owners can capitalize on incentives that grid operators and utilities offer customers to use less electricity when the grid is stressed.
The tangible benefits begin with the simplified installation process, which thanks to wireless mesh networks and pre-programmed control sequences significantly reduces upfront costs and installation time. This means less disruption to daily operations and a quicker path to reaping the benefits of smart building management.
Also, the cloud-based nature of the technology allows for real-time monitoring and adjustments, leading to rapid optimization of energy use. Building owners often see a quick return on investment, with energy savings accruing from day one.
Additionally, the predictive capabilities of these systems can preemptively address comfort issues, eliminating hot and cold spots before occupants even notice them. This proactive approach to comfort management not only improves the occupant experience but can also lead to increased productivity in office spaces and higher customer satisfaction in retail or hospitality environments.
The AI capabilities of cloud-native systems are a significant leap forward in building management as well. Imagine managing your building’s energy use through simple voice commands — adjusting temperatures, analyzing data, and optimizing performance with unprecedented ease.
With user-friendly interfaces and AI assistants capable of responding to voice commands, building owners no longer need to rely on specialized technicians for every adjustment or analysis. This empowerment leads to more responsive and efficient building operations.
Perhaps most importantly, cloud-native systems future-proof buildings against evolving energy regulations and market demands, creating grid-interactive efficient buildings that the U.S. Department of Energy envisions operating dynamically with the grid to make electricity more affordable while meeting the needs of building occupants.
As sustainability becomes increasingly important to tenants and regulators alike, buildings equipped with flexible, updatable cloud-native building management systems are well-positioned to adapt and comply with new requirements without the need for costly hardware overhauls.
So, not only is cloud-native building automation democratizing our approach to decarbonization by making sophisticated tools accessible to properties of all sizes, but it is also ushering in a new era of energy management in commercial buildings.
In this future, benefits like energy savings, demand response revenue, operational flexibility, improved occupant comfort and future-readiness in an evolving energy landscape will be accessible to the many not the few.
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