By Valerie Volcovici
WASHINGTON (Reuters) - Companies including GM, Ford, Google (NASDAQ:GOOGL) and solar energy producers said on Tuesday they would work together to establish standards for scaling up the use of virtual power plants (VPPs), systems for easing loads on electricity grids when supply is short.
Energy transition nonprofit RMI will host the initiative, the Virtual Power Plant Partnership (VP3), which will also aim to shape policy for promoting the use of the systems, the companies said.
Virtual power plants pool together thousands of decentralized energy resources like electric vehicles or electric heaters controlled by smart thermostats.
With permission from customers, they use advanced software to react to electricity shortages with such techniques as switching thousands of households' batteries, like those in EVs, from charge to discharge mode or prompting electricity-using devices, such as water heaters, to back off their consumption.
VPPs are positioned for explosive growth in the United States, where the 2021 Inflation Reduction Act has created or enlarged tax incentives for electric cars, electric water heaters, solar panels and other devices whose output and consumption can be coordinated to smooth grid load.
RMI estimates that by 2030, VPPs could reduce U.S. peak demand by 60 gigawatts, the average consumption of 50 million households, and by more than 200 GW by 2050.
"Virtual power plants will enable grid planners and grid operators to (better manage) growing electricity demand from vehicles, from buildings and from industry, and make sure that the grid can stay reliable even in the face of ongoing extreme weather challenges and aging physical infrastructure," said Mark Dyson, managing director with the carbon-free electricity program at RMI.
Rob Threlkeld, director of global energy strategy at General Motors (NYSE:GM), told Reuters that VP3 would be able to "show that EVs can become a reliable asset to the retail utility and or the retail transmission operator" and "can be an asset to a homeowner and to fleet customers."
VPPs have already improved grid reliability in such countries as Germany and Australia and in some U.S. states.
During an extreme heat wave last August, wholesale market operator California Independent System Operator avoided blackouts by calling on all available resources, including VPPs, to dispatch electricity. Google Nest smart thermostats contributed to easing the load.
"That is increasingly going to be required to make sure that the grid remains resilient, that we avoid blackouts and that we enable the grid to become cleaner and greener," said Parag Chokshi, director of Google's Nest Renew.
Other founding members of VP3 include Ford, SunPower (NASDAQ:SPWR) and Sunrun (NASDAQ:RUN).