The leading U.S. providers of rooftop solar, home batteries, and grid-responsive smart thermostats have combined forces to create what could be the country’s biggest virtual power plant — or, more precisely, a lot of VPPs in data center hot spots.
On Wednesday, Sunrun, Tesla, and Renew Home announced an agreement to “deliver more than 16 gigawatts of flexible energy capacity” to tech giants and utilities around the United States. Those gigawatts will be produced by hundreds of thousands of home battery systems managed by Sunrun and Tesla, as well as more than 8 million smart thermostats and devices managed by Renew Home.
These batteries and smart thermostats are already installed in homes and businesses across the country, Paul Dickson, Sunrun’s president and chief revenue officer, told Canary Media. Some are enrolled in utility or grid programs that call on batteries to discharge, or thermostats to turn down energy use, during the handful of hours per year when grid demand is at its peak, he said.
But he noted, “Most of the constructs for these distributed power plants are tapping into the resources a fraction of the time they could be realized.” This new partnership is meant to “further legitimize these devices as core dispatchable, capable resources.”
To make that happen, VPP companies need to coordinate with — and convince — utilities, regional grid operators, and state and federal regulators that distributed energy resources can do the work of traditional power plants. That’s easier said than done. The grid has been designed to deliver electricity from central power plants, not to rely on thousands of customer-owned devices turning on and off in unison to keep supply and demand in balance.
But traditional ways of managing the grid are falling short in the face of booming demand from the massive data centers that tech giants like Amazon, Google, Meta, Microsoft, and Oracle are building to fulfill their artificial intelligence ambitions. Some states are already seeing big spikes in energy costs due to data center growth. Across the country, lawmakers and regulators are demanding that developers of these facilities find ways to finance their own energy resources to avoid pushing more costs onto everyday consumers.
Wednesday’s announcement is just the latest — and biggest — proposal for solving the country’s rising energy costs and grid congestion challenges through the power of distributed energy.
The aggregated energy-injecting and load-shifting capacity of batteries, smart thermostats, electric vehicle chargers, and remote-controllable appliances such as water heaters could add 80 gigawatts to 160 gigawatts by 2030, or roughly three to five times what’s now available across the country, according to analysis from the U.S. Department of Energy. VPP deployment at that scale could save U.S. utility customers about $10 billion in annual grid costs, the DOE estimated.