Weighing Solutions to Increase Grid Flexibility – Excerpts from Grid Forward Forum

What does grid flexibility even mean, and how can it improve how we advance and manage the electric grid? The GridForward Forum podcast, sponsored this year by Virtual Peaker, recently took on the challenge of answering these questions.

Our very own CEO, Dr. William (Bill) Burke, joined Jessica Matlock, CEO of PNGC Power, and Darren Murtaugh, Director of Electric Distribution Strategy at ICF, in a discussion regarding increasing grid flexibility to meet rapidly rising demand while maintaining reliability and affordability. Prompted by questions from Grid Forward executive director and CEO Bryce Yonker, they explored the use of demand flexibility initiatives like virtual power plants, demand response, and energy storage. Between AI and data center developments, supply chain and tariffs issues affecting both construction and energy market costs, and the increased occurrence of extreme and volatile weather events, can virtual power plants and other flexibility initiatives help?

The Need for Grid Flexibility

Bryce Yonker: Jessica, you guys are looking to build out all kinds of infrastructure. What role does flexibility play in the stack for you all? Are you guys prioritizing it as a type of thing that you’re looking to achieve?

Jessica Matlock: Bryce, as you well know, the Pacific Northwest is facing pretty big capacity deficits. So we are looking towards what Bonneville in the region is going to be doing for this under the Western Resource Adequacy Program (WRAP) compliance. In particular, we are really looking to bring in about 500MW in the next few years just to meet those requirements. But some of those issues that we have are transmission constraints.

There are a lot of folks thinking that we can build a lot of solar and wind in the eastern states and bring that back over to Washington and Oregon. In reality, there are huge transmission bottlenecks. So we’re really looking for more localized areas where we can develop generation or other ideas that we can think through, like the virtual peaker power plants, DERs, [and] just really looking at any opportunity to kind of reduce that strain on the grid, but also building new generation to meet these huge capacity requirements in the region.

Bryce Yonker: Bill, you wrap up this intro: why is it so important that we add these capabilities to the system?

Bill Burke: I think it’s interesting to think about the transmission side and the distribution side. Utilities have traditionally been using virtual power plants and finding a lot of value out of the capacity benefits. And in order to go into the transmission and distribution sides of the grid, I think utilities are going to have to think a little bit differently, and virtual power plants are going to have to act a little bit differently. There’s a lot of value streams that we can capture through virtual power plants and through DERs.

But the virtual power plants are typically operated at the program level, and the program people are mainly focused on capacity. Distribution and transmission are generally operated by different people than the people who run the program, by operations teams or maybe power purchasing, and those people don’t trust virtual power plants today. We’ve been asking why they don’t trust them. We’ve been asking that question for about ten years now, and it’s really because virtual power plants don’t provide the visibility, and they don’t provide the predictability that they’re used to in traditional power plants.

So we’ve been trying to build technology, and I think fairly successfully, that gives utilities the analogs to central generation. And we’ve developed this new technology called Topline Demand Control. We call it TDC for short. Everything’s got to have an acronym, right? So TDC is our three-letter acronym for it.

It’s really about providing utilities really granular forecasts of what the available capacity is, allowing them to specify a target output, and then the technology works to coordinate all those devices to hit that target and give the operations people the analogs to generate effectively. It gives them the ability to see what’s going to happen and then count on the virtual power plant. We think that’s the paradigm shift that’s needed to really take DERs into the control room, into power purchasing, and help unlock those transmission and distribution use cases.

The Efficacy of Virtual Power Plants

Bryce Yonker: Bill, I was going to ask you the question because I’ve long remembered you comparing virtual power aggregated distributed resources to a dispatchable gas plant. Are we getting to a place where that’s truly an alternative at the scale that matters for the system?

Bill Burke: Well, that’s a great question. Why the alternative? I think virtual power plants traditionally can be built much quicker than a natural gas power plant. We’ve seen them grow very quickly in certain of our deployments. In particular, you know, megawatts online within a year or less, very rapid deployment, which is great.

They can also be used for a lot of other distribution and transmission use cases. I don’t think we’re unlocking them totally today, but there are a lot of different use cases for them. And time to value is critical. I think there are some things to figure out along the way. How do you pay for them? You know, you don’t get paid the same way as you do with traditional power plants, although maybe that’s not as big an issue for Jessica, being that she’s at a co-op. It’s still a reality for a lot of utilities.

Bryce Yonker: Because the value streams of these things, these virtual aggregated resources, are so distributed and numerous, how do you bring them together cohesively and rationally?

Darren Murtaugh: The first thing I’d say is the most mature means of valuing, and the most established way of valuing is at the bulk energy level. Bill, you referenced already how these demand response programs have been built historically. They were all designed around avoided cost generation capacity. And particularly when you’re talking about utilities that operate in competitive wholesale markets, and you have an independent system operator, I feel like the price here is arrived at through an open market. An open market is going to find the right price.

Where things get really challenging, I feel, is when we’re not talking about the bulk energy level. We’re talking about retail distribution services and how do we value the contributions that DER and flexibility can contribute to the distribution system. That’s, I would argue, not really an open market. That is working with a local distribution utility that needs to figure out, well, what is the value? What am I willing to pay to get these services?

I’m going to tie back to another comment that Bill said: you need dependability of the resource. That’s the biggest barrier in distribution. If you don’t have a resource that a distribution planning engineer, let alone a distribution operator, can dependably count on time and again, then they’re going to be hesitant about relying on that resource in their plan. If they don’t rely on it in their plan, then the value is actually zero. And if the value is actually zero, then how does it make sense to compensate for that? We can continue to go on and on about the millions of complexities.

Virtual Power Plants & Grid Flexibility – Conclusion

From construction costs to an increasingly unpredictable energy market, meeting rising demand while balancing operational expenses is challenging for all electric utilities. Fortunately, virtual power plants and other grid flexibility programs provide an affordable alternative to new power plant construction or high peak energy costs, while helping mitigate operational expenses. Listen to the full conversation at the link below or on your favorite podcast app, and consider subscribing to the GridForward Forum podcast today.

About The Guest Author

David Smith serves as Marketing Director for Grid Forward, a 501(c)(6) non-profit, member-driven trade association dedicated to promoting and accelerating innovation on the regional electric system. He oversees marketing programs ranging from producing the Grid Forward Forum podcast and to managing branding and promotions around Grid Forward’s events and initiatives.