Last week, Sunrun announced that its bid to supply 20 MW of residential solar + storage capacity into the New England ISO Forward Capacity Market for 2022-2023 was approved. According to Chris Rauscher, Director of Policy and Storage Market Strategy for Sunrun, this is not a pilot project or an experiment in any way.
“I would see this as the tip of the spear,” he said, adding “and there is a big spear behind us.”
The forward capacity market (FCM) was originally designed for large-scale centralized fossil fuel generation plants to compete against each other. The FCM is the grid operator’s insurance that there will be enough energy capacity in the market during a given timeframe. FCM auctions are held three years in advance to give developers time to build new energy capacity and this is the first time that residential solar + storage will be part of it.
“Sunrun has found a pathway for individual home solar and battery systems to participate together in this market and form a sizeable resource that can go head-to-head with those traditional centralized fossil plants and actually compete on price and win on price to provide the same service,” said Rauscher.
Sunrun’s avenue in was to bid the solar + battery systems it installs on homes and businesses across New England as a demand resource.
“Aggregated batteries and solar on homes provide the energy right where it’s needed with no line losses and no added infrastructure,” he said.
“So for us it represents a really game-changing point in how we view our electricity system realizing that we can start solving [problems] from the grid edge out.”
The system – one virtual power plant
In total, Rauscher expects about 5000 systems will be part of the virtual power plant (VPP) depending on the size of the batteries. They will all be tied together through software and managed at Sunrun’s network operations center. Customers buy the energy from Sunrun via its PPA-model and Sunrun supplies the demand capacity to the grid when it’s called upon to do so. As an added bonus for customers that participate, should the grid go down, Sunrun will be able to continue to supply the homes with energy through the batteries. So, they will never lose power.
“We always maintain a sufficient state of charge in the batteries to provide backup power,” said Rauscher.
Further, residential solar in New England reduces the need for energy on the system as a whole, thereby reducing the overall cost of energy for all customers in New England, whether they have solar or not.
“The ability [for Sunrun] to bid in at a low price helps reduce the market cost for everyone. Whether or not they go solar and batteries with Sunrun,” said Rauscher.
Participants will be a mix of existing customers and new customers that Sunrun expects to sign up in the next couple of years.
Do we even need the grid?
If Sunrun can provide all of energy services that its customers need through solar and batteries, is there a day coming when the grid won’t exist anymore?
Probably not, said Rauscher. He said that Sunrun believes the future is one where utilities focus on what they are good at, which is knowing and managing their systems, predicting peaks and sending dispatch signals, and companies like Sunrun focus on what they are good at, which is managing customers.
“We think the future is brighter when utilities and companies like Sunrun work together to make a cleaner, more efficient, more resilient grid” he said, adding, “So it’s not the case that we want to pull everyone off because we think that keeping everyone on and providing two-way value is the best way forward so we’re looking for partners in utilities to do that.”
Is this the future?
Overall, however, residential solar and batteries have never played in the wholesale energy market before so this is a whole new world and must be viewed as somewhat of an experiment. Sunrun is making a very big bet that it can control its batteries virtually and according to Rauscher, it’s really not a stretch. He said the company has more than a quarter million solar systems installed across the U.S. and has been maintaining them without issue for quite some time.
“We manage this stuff every day, every week and we’re really good at knowing how much charge we need to leave in the battery to meet all of the commitments so we ensure that there’s enough energy to provide backup power and to do peak reduction,” he said.
And if it works, it will no doubt portend an exciting future for aggregated distributed energy resources.
“As far as I’m aware, we are going to be the only resource participating in this market that provides the capacity service during peak need when the grid is up but also should the grid go down, we’ll still be up and running and providing that necessary energy to our customers,” he said.
“Large scale power plants can’t do that. Just a solar array with a battery off in a field can’t do that, traditional demand response can’t do that. We are the only resource as far as I’m aware that can give that security to individual families in New England every day while also providing peak reduction services.”
“This is not a proof of concept. This is starting to stack up virtual power plants that are coming online and you are starting to see a shift in how the system is set up,” he said.
Distributed energy resources were a major topic of discussion at the recently concluded DistribuTECH 2019. Mark your calendars for the 2020 show, which takes place in San Antonio, Texas, January 28-30.