Portland General Electric Jumps Into Virtual Power Plant Business

Portland General Electric, the largest utility in Oregon, is jumping into the cutting-edge business of turning home batteries into grid resources.

The company announced this week that it has received approval from regulators to link up 525 homes with solar-storage systems into a controllable fleet, often referred to as a virtual power plant. The five-year pilot will study how to optimize the use of these batteries for the grid, while ensuring the customers get what they want out of participating.

The fleet of small batteries will only add up to 4 megawatts. But it could lay the groundwork for expansion under PGE’s ongoing grid modernization plan, which envisions around 200 megawatts of “distributed flexibility” to balance supply and demand.

“This is part of our overall efforts to really understand distributed resources on our system,” said Andy Macklin, director of Smart Cities & Grid Products. “We’re looking at a decarbonized future. As we add renewables to our system aggressively, we need a flexible distribution system where customers are excited to bring some of their flexibility to the system to help balance those renewables.”

Linking home batteries into a fleet is still a new grid practice. Vermont utility Green Mountain Power has harnessed several thousand batteries to lower consumption during peak hours, saving money for its customers. Solar installer Sunrun said last month it will assemble 300-home battery fleets for Southern California Edison and New York’s Orange & Rockland, a unit of Con Edison.

Those programs use an event-based demand response paradigm: on special occasions, the utility tells the batteries to turn down customers’ grid consumption. The Oregon pilot is different: the utility will take complete control of customer batteries, and use them for a range of roles including frequency response, volt-VAR control, generation capacity, energy arbitrage and distribution grid upgrade deferral.

Different ways to get paid

Four residential storage brands are cleared to participate: Generac, sonnen, Tesla and SolarEdge’s StorEdge, which typically uses LG Chem batteries.

Three types of customers can enroll for the program launch this fall:

Households that already have a battery can join. They receive a bill credit of $40 per month if PGE can charge the battery from the grid, or $20 per month if the battery is restricted to charging from rooftop solar (for instance, to comply with the investment tax credit). The charging constraint limits the value to the grid, and therefore gets paid less.
People living in PGE’s Smart Grid Test Beds, three neighborhoods used for demonstrating new grid tools, can get more compensation for the value of clustering storage in one part of the grid. These customers will get a rebate on a battery purchase that starts at $3,000 and steps down over three tranches. They also earn the monthly credit.
Low- and moderate-income families that qualify for Oregon’s Solar Within Reach program can receive a $5,000 rebate to buy a battery and participate. They also earn the monthly credit.

Oregon is not known for a bustling solar market, but customers are showing more interest — especially as the climate warms and the summer grows longer, Macklin said.

Batteries appeal to a smaller subset of solar customers. PGE does offer time of use rates, which incentivize using a battery to shift solar production into more expensive evening hours — but that’s optional for solar customers. The threat of major earthquakes is driving a growing interest in backup power.

Preparing for a distributed grid future

PGE contracted with Louisville, Kentucky-based startup Virtual Peaker to supply a semi-custom software platform to onboard customers. The approved battery systems will communicate wirelessly with that software over wifi or cellular signals. The utility will then be able to dispatch the fleet alongside its other energy supply options.

“We’re bringing them all the way into power operations, where they’ll be controlled along with other distributed resources,” said PGE senior product developer Audrey Burkhardt.

The plan is to dispatch the home batteries based on an experimental framework crafted by a Ph.D. researcher on staff, to put different use cases in conflict with each other and see which ones emerge as most valuable.

A central tension is how to maximize the benefit for the distribution grid while treating customers well enough for them to participate.

“We’re going to have full control of the battery and we’ll be operating it to optimize grid value,” Burkhardt said. At the same time, “We really, really want to be cognizant of what is the best way for us to share this resource with the customer.”

Handing control to PGE means the batteries won’t necessarily discharge at times best suited for minimizing a customer’s bill. But the bill credits for participating should make up for if not exceed the savings a customer would have achieved by economically optimizing battery operations, Burkhardt said.

The batteries will never dip below 20 percent state of charge, or whatever level the warranty recommends. And whenever intense weather conditions prompt PGE to put its crews on standby for potential blackouts, the utility will charge up the batteries so they have a full tank to ride out any outage.

“Ultimately, this is the customer’s asset,” Burkhardt said. “It’s their choice to enroll if they think it’s worth it.”

Understanding what kind of compensation customers want and expect is one of the study goals, as is enrolling all 525 customers. The utility also hopes to gain an empirical sense of the value of residential batteries and how to use them, to inform future resource planning.

“It’s going to be an exciting future in the energy storage landscape, and we want to make sure that PGE is ready for what comes next,” Burkhardt said.