Chris Rauscher is the head of grid services and virtual power plants at Sunrun.
His company runs CalReady, the biggest single-owner virtual power plant (VPP) in the United States, comprised of more than 16,000 home solar and battery energy storage systems. It’s the most robust aggregator enrolled in California’s Demand Side Grid Support program, administered by the California Energy Commission as part of the state’s Strategic Reliability Reserve to boost energy supplies during times of need like heat waves or wildfires. Enrolled customers are compensated for sharing their stored energy and Sunrun gets a cut for dispatching the batteries.
Formerly known as Sunrun’s Peak Power Rewards program, the VPP supplied Pacific Gas & Electric Company (PG&E) with up to 32 megawatts (MW) during peak times last summer and averaged 48 MW during a heatwave this July, topping out over 50 MW.
As CalReady expands and its impact increases, Rauscher has learned a little about what works and what doesn’t when aggregating distributed assets.
“I think the biggest thing is that customers don’t care about virtual power plants,” he offers with a laugh. “There’s an old saying that they spend six minutes total each year worrying about their electricity. Customers just want hot showers and cold beer.” (Editor’s note: Try them together!)
And if they can support a more reliable grid and make a couple of bucks at the same time? Everybody wins.
To opt-in or opt-out?
Because Sunrun is a third-party ownership (TPO) company, it can auto-enroll customers into virtual power plant programs rather than relying on them to opt in themselves. In lieu of a bunch of paperwork, Sunrun pushes communications to its customers via email and its app giving them the option to opt out.
“Our opt-out rate is vanishingly small,” reveals Rauscher, who strongly favors this method. “Auto-enrollment works.”
Sunrun started the season with about 16,200 CalReady customers and will end the season (at the end of October) with nearly the same amount, “plus or minus 50,” he estimates.
Rauscher contends customers want a fundamental value proposition from solar and batteries. Specifically, a lower bill from solar, access to backup power from their battery, and for the battery to be capable of time of use management.
“And then if you give them additional money for virtual power plant services, then that’s really a compelling value proposition,” he adds.
Vice president of engineering at Standard Solar C.J. Colavito faces a similar quandary when considering how customers should be signed up to reap the benefits of community solar projects. He, too, favors the opt-out methodology, especially as it applies to low and moderate-income households when there are guaranteed savings and there’s no cost to be engaged. Colavito calls it an important and essential policy.
“We need to be able to serve the community,” he told me. “There’s a million other things that are way more important to families and ratepayers than figuring out how they can save 10 to 30% on their electricity.”
Colavito thinks opt-ins should be handled at the regulatory level. In the case of VPPs, regulators can decide how one should work, who qualifies, and what the rate structure looks like, then administer savings/payments directly on-bill.
“If somebody doesn’t want to do it, they can opt out,” he suggests. “It’s pretty easy to say I want to cancel. It’s harder to get all these people engaged.”
“I just don’t think that it’s important on their hierarchy of needs,” Colavito continued. “You have a lot of other problems, a lot of other things to work out. So if you don’t have an opt-out program, it’s hard to see the success.”
Seeking standardization
Meghan Nutting, Sunnova’s executive vice president of government and regulatory affairs, gets why customers may be skeptical of VPPs.
“Nobody understands these systems,” she laughs. “It’s totally understandable that no one knows what’s going on.”
Yet Nutting recognizes it’s in utilities’ best interest to make VPP programs work, just as it’s in the ratepayers’ interest to participate.
According to a 2023 study by the Brattle Group, a Distributed Power Plant (DPP) costs around 40 to 60% less than alternative options to provide power. An estimated 60 GW of DPP deployment would save ratepayers $15–$35 billion over the ensuing decade. A recent DOE report focused on broader adoption of the technology also suggests billions of dollars can be saved annually by scaling up VPPs to three times their current scale by 2030.
Sunnova worked with Solar United Neighbors on model VPP legislation, which Nutting feels will benefit adoption. She finds it frustrating that virtual power plant programs are largely one-offs.
“There’s nothing standardized, so we have to fit into every program and manage our engagement in every program individually,” she explained. “And that takes a lot of people and a lot of work.”
Nutting points out that most VPP programs don’t exist at the point of sale, so they can’t be used as an incentive for people to go solar or purchase an accompanying battery. It can also be tough to estimate how much money a customer can expect to make.
“Everything is so bespoke and sort of uncertain. Nothing is a standard piece, and I think that’s the problem,” she asserts.
The Department of Energy agrees with that assessment.
According to the DOE, the pathway to commercial liftoff for VPPs requires progress on five imperatives: Expanding distributed energy resource adoption with equitable benefits, simplifying VPP enrollment, increasing standardization, integrating into utility planning and incentives, and integrating into wholesale markets.
Nutting also thinks benefits have to be made clearer to enrollees and they need to get paid faster than most currently do.
“All of these have to be gotten over,” Nutting says, referencing the various hurdles outlined above. “It needs to be more mainstream, and it’s not. We’re really early in this whole concept.”
The future of VPPs
Speaking of early… Sunrun debuted the nation’s first vehicle-to-home power plant this summer, unveiling a regulator-approved bidirectional charging pilot in partnership with Maryland’s largest utility, Baltimore Gas and Electric Company (BGE). Participants pair their F-150 Lightning truck with Ford Charge Station Pro and Home Integration System, sold exclusively through Sunrun, to support Maryland’s power grid during peak demand. Those customers are paid $200 per kilowatt month, and all they have to do is plug in their trucks in the evening to charge as they’d normally do.
“Effectively, we’re taking the home load off of the grid during peak times,” explains Sunrun’s Rauscher. “We have one customer who would normally have both his Lightning and his second electric vehicle plugged in to charge in the evening, and through this program, the Lightning is supplying power to run his house and to charge his other EV. And the utility sees zero impact from all of that demand.”
Rauscher points out that the energy capacity of a Lightning F-150 is ten times that of a Tesla Powerwall, giving utilities a lot of power to play with.
“If you only dispatch two Tesla Powerwalls worth of energy, your numbers are really big, and you’ve still reserved 80% of your battery charge,” Rauscher calculates.
The pilot has a 100% enrollment rate, a perk of only having three eligible customers in BGE territory. Although it’s (very) small scale now, Rauscher envisions it going mainstream.
“I really believe that in a five and 10-year time horizon, this is going to be massive because automakers are already starting to see that this is going to be a table-stakes feature for EVs. You have to have bi-directionality.”
Right now, only Ford’s technology allows for bi-directional charging. It’s included in the F-150 Lightning’s battery warranty.
“Ford is years and years ahead of everyone,” contends Rauscher. “Nobody else has any offering commercially available in the market.”
“Once the hardware is commoditized and not just proprietary, you will see it be ubiquitous,” he predicts. “This fleet is going to be just enormous over the coming years.”
When discussing bi-directional charging programs with utilities and regulators, Rauscher treats EV batteries just like stationary batteries.
“If there are differences, then we can process through them. But by and large, it’s really just the same as a stationary battery, except that the battery is not always available. It’s the only difference.”
Nutting foresees the need to adopt a whole-home approach to VPPs. Her company opened the Sunnova Adaptive Technology Center (ATC) earlier this year, a state-of-the-art energy testing and integration center that includes a microgrid system powered by a grid simulator and a solar array simulator. The ATC features interchangeable inverter and battery test beds and a fully-functioning model home equipped with full-sized appliances, including a range, oven, refrigerator, and HVAC system. The goal is to give Sunnova’s engineering teams a playground to perform system-level validation to integrate disparate technologies for reliable, smart operation as part of a larger system.
“It’s going to take some management on someone’s part. That’s going to be hard for individual homeowners to do,” surveys Nutting, who intends on visiting the ATC soon. “And then when you aggregate all of that, you have a huge power plant.”
She believes we need to focus on matching demand to supply to integrate more utility-scale wind and solar systems.
“We’ve always done it the other way around,” Nutting explains. “You know just ramp up a peaker to meet whatever people want. But if we match demand to supply, you can handle fluctuations in wind or solar.”
What’s next?
Sunnova is also participating in the creation of VPP programs. Nutting says they provided feedback to the state of Connecticut on how to orchestrate its Energy Storage Solutions program, a more robust version of its previous battery bonus program.
“They want to do upfront incentives, but a clawback if you don’t participate,” she explains. “But customers don’t like clawbacks. It’s hard to ask people to give money back. Like, how do you implement that?”
Sunrun is applying its CalReady findings to more VPP programs, including two in Texas- one with Tesla Electric and another in partnership with Vistra/TXU Energy.
“TXU is a competitive supplier in Texas, and so we’re providing batteries to customers and then partnering with Vistra to have those customers be on Vistra supply, and then using the batteries to reduce the cost to serve and lower Vistra’s overall energy procurement costs,” Rauscher explains. “So it’s really a win, win, win because it also helps bring down overall grid costs in ERCOT.”
Sunrun is also expanding its dispatches in Puerto Rico.
“We’re starting to do hour-ahead dispatches when Luma, the utility operator, sees that the supply is going to falter and they might have to issue rolling blackouts around the island. They send us a dispatch notice we push full power to the grid, and that allows them to go into contingency planning and not have to shut off power to people on the island,” Rauscher details.
In the meantime, Sunrun’s head of grid services and virtual power plants is sharing his vision of the future- one in which EV batteries are taking tremendous strain off of the grid. He tells me about a conversation he had with an Uber driver the previous night. Rauscher informed the EV driver that through his company’s bi-directional charging pilot, he could make money by plugging in his car to charge.
“His mind was just like, blown. And then after we talked about it, he was like, this is obvious,” Rauscher shared. “That’s what I feel like. We’re at this moment here where no one’s really seeing it. I think this is going to become blatantly obvious in the next couple of years.”
