202222 Nov

How Virtual Power Plants Have Gone From Geek To Must-Have Chic

Summary

One of the geekier concepts that frequently does the rounds at renewable energy conferences is the virtual power plant or VPP for short.Put simply, it revolves around the idea that an electricity grid can virtually link up hundreds, if not thousands, of homes with solar and energy storage facilities already installed and use them collectively to act as a back-up when demand soars, or take excess power off the grid should the need arise.The idea has been floating around for a couple of decades and there have been numerous small-scale tests and pilot projects, which have tested the concept and the software platforms that would needed to run such a network.But with power walls becoming more affordable, soaring energy prices and the rising need to provide more resilience in case grids fail due to extreme weather events, the VPP concept is set to go from geek to must-have chic.One of the companies at the forefront of this revolution is Swell Energy, which has just announced it has raised $120 million to further its virtual power plant programs.The round was led by SoftBank Vision Fund 2 and Greenbacker Development Opportunities Fund I, LP, with participation from an Ares Infrastructure Opportunities fund and Ontario Power Generation Pension Fund.The funding will support Swells development of 600 MWh of VPPs through the deployment and aggregation of 26,000 energy storage systems located at homes and businesses across the United States.Suleman Khan, CEO of Swell Energy, admitted that when he left Tesla in 2015 to co-found the cleantech firm, there was not much talk about home batteries, let alone virtual power plants.Many of the companies back then believed that the home battery was like the proverbial fries with your solar panel burger, he recalled. We approached people who already had solar and started upselling the batteries to make their systems complete.Khan said another issue back then was that some utility companies had a somewhat adversarial attitude towards home customers having solar panels on their rooftops.He added many utilities thought solar would impact their top line and congest their grids with excess energy.Khan said the game-changer for many utilities was the realization that once you add home batteries into the mix, a home with solar panels becomes an asset to the utility. With the right software system in place, solar paired with batteries could be used to ease the pressure or balance the grid at key moments.Swell is also pursuing development in otherwise underserved markets where critical grid services are necessary to strengthen and modernize infrastructure.In regions where local grids must evolve to accommodate more renewable energy and electric vehicle adoption, Swells VPP programs can provide increased grid flexibility while precluding significant investment in new fossil fuel generation.For these utilities, Swell increases the stock of dispatchable behind-the-meter assets, aggregates these assets for grid services participation, and dispatches distributed energy resources to create ongoing value for the grid, all while creating an improved experience for the customer.Swell analyzes and identifies each regions distinct utility needs and grid stresses, then delivers the appropriate grid services through flexible energy storage solutions, helping with load management, renewable energy balancing, and ancillary grid services.This latest financing round brings Swells total equity capitalization to date to $152 million, including prior investments made by an Ares Infrastructure Opportunities fund, Aligned Climate Capital, Third Sphere, and others. Now were seeing batteries actually pull in demand for solar.And as we get to 2024, I think you will see more utilities in the Southeast and Northwest adopt virtual power plants. Its like an imperfect storm, where potential outages and a capacity shortage have come together to create this massive need for new dispatchable energy services.

Source: Forbes

Funding

$120M
Amount
Nov 22 2022
Date
-
Investor
Swell Energy
Company

Classifications

Companies