VPPs Can Help Improve the Resilience of the Texas Power Grid

VPPs Can Help Improve the Resilience of the Texas Power Grid

Texas is growing accustomed to experiencing system-wide power grid disruptions. The first recent major event was winter storm Uri in February 2021, which left 4.5 million homes in the dark, cost $195 billion in property damage, and caused the deaths of over 50 people due to a combination of factors stemming from generation technology failure (natural gas, coal, nuclear, wind and solar), natural gas shortages, transmission and substation outages, frequency issues, planned generator outages, and a lack of reserve capacity.1 Despite this stark warning sign of a lack of power grid resilience, climate change, along with electrification, economic growth and other geopolitical drivers, has caused increasing uncertainty in business as usual for the Electric Reliability Council of Texas (ERCOT).

Since restoring power after Uri, winter storm events and spring/summer heat waves have caused a continuous cycle of outages, requests for energy conservation, and volatile electricity markets. And now, heading into summer 2023, the Public Utility Commission (PUC) and ERCOT have issued warnings that supply may not meet demand under certain circumstances.2 Clearly, business as usual is not working for Texas, but there are no-regret resilience strategies that can minimize the impacts of these disruptions.

One especially promising strategy is a virtual power plant (VPP), or aggregated distributed energy resources (DERs) that are coordinated with the grid to serve the same function as a power plant. These DER portfolios can be actively controlled by utilities and may include rooftop solar, smart thermostats, smart water heaters, electric vehicles and batteries.3

VPPs Can Help Improve the Resilience of the Texas Power Grid
Photos courtesy of ERCOT.

In contrast to a traditional power plant, these resources are decentralized, providing power sources closer to the end user and can be controlled and coordinated in near real-time response to the grid’s current performance. VPPs are powerful tools for ancillary services (such as providing reserve resources), emissions reductions, transmission and distribution investment deferral, and resilience. In Texas, they would bypass three critical weaknesses of the ERCOT power grid as demonstrated by recent outages: The inability to construct new centralized (dispatchable and renewable) generation facilities, transmission congestion, and distribution network outages.

Centralized generation facilities have traditionally served as baseload and peaking energy supply. In order to mitigate acute and chronic demand increases to the Texas grid, additional power generation is necessary. Traditional generation facilities can take a decade to plan, permit and build, requiring land not just for the facility itself, but also for new substations and transmission lines to connect to the existing grid infrastructure. These costly facilities also need an energy source available. For Texas, this would likely entail the delivery of natural gas which, due to recent climatic events, would need to undergo strict winterization. Grid scale renewable projects, such as wind, solar and batteries, also face similar siting and land management issues.

All megawatts added to the grid are not created equally. VPPs do not face the same infrastructure siting and land management challenges since their components are dispersed throughout the existing network. This also means cost savings. According to a recent study by Brattle, compared to natural gas fired plants and grid scale batteries, VPPs can provide the same resource adequacy at a significant cost discount. This makes sense as DERs do not require large infrastructure investments or land use changes and are intended to maximize energy efficiency, leading to a no-regrets resilient generation capacity expansion.

Transmission congestion is also at the heart of some of ERCOT’s recent system-wide disruptions. A lack of network “backbone” has led to calls for energy conservation and the severe electricity price swings during times of unanticipated disruptions. Transmission congestion occurs when electricity demand is located far away from generation sources and the transmission system does not have enough capacity to supply electricity to the end user. Traditional measures of alleviating this rely on building dirtier “peaker” plants in urban areas that avoid the transmission bottlenecks, building new transmission lines or implementing other costly transmission line upgrades that do not provide long term solutions.

VPPs Can Help Improve the Resilience of the Texas Power GridVPPs are, by definition, located in areas of electricity demand and are generally able to bypass the transmission system. In so doing, they do not require extensive transmission planning, but are able to supply clean and reliable power during times when the grid would not otherwise be capable of transmitting enough electricity to meet demand. This no-regret resilience strategy for alleviating grid congestion also leads to a more efficient and less resource intensive system, while avoiding the need for congestion pricing.

After the traditional steps of centralized generation and transmission, comes distribution. The distribution network is the more localized set of electric poles and lines that directly bring power to the end user. These lines are commonly built overhead in Texas and increasing storm severity from climate change, along with aging infrastructure and urban development, will likely bring increasing disruptions to this network, causing more localized power outages. A common response to this issue is undergrounding the lines. However, this comes at a high cost and may incur other issues as climate change is also impacting groundwater levels and salinity content.

Networks of DERs can help alleviate distribution network outages by ensuring that more sources of energy (e.g., solar PV, microturbines), stored energy (e.g., batteries, thermal storage) or smart metering systems (e.g., demand response systems) are connected throughout the distribution network so that damage to any one line or pole is less likely to cause cascading power outages. In other words, with VPPs, there is more likely to be a way to isolate the disruption and reroute the electricity without compromising overall grid performance and other stakeholder objectives such as low carbon electricity. Implementing VPPs as a distribution network safety net is also a no-regret resilience strategy.

It is no surprise then that given the decreasing resilience of the Texas power grid, ERCOT and state regulators approved a pilot VPP program in late 2022, making Texas one of the first states to begin implementing the technology.3 Now ERCOT has a chance to flip the narrative and exemplify power grid resilience strategies while serving as a case study for the many grid operators in similar  positions. In its 2023 Summer Reliability Assessment, the North American Electric Reliability Corporation (NERC) concluded that should summer temperatures spike, two-thirds of North America will have an inadequate supply of electricity. As our old grid infrastructure begins to feel the stresses of changing electricity consumption patterns, climate change, and other cyber-physical threats, smarter means of optimizing power flow through the grid need to be leveraged. VPPs are one no-regret strategy that can make our grid more resilient.

1 energy.utexas.edu/research/ercot-blackout-2021
2 www.fox4news.com/news/ercot-warns-about-tight-power-grid-conditions-this-summer

Author Profile

Maureen S. Golan is a PhD candidate in the Department of Civil, Architectural and Environmental Engineering at the University of Texas at Austin, researching power grid resilience and effective quantification methods. She has a Master of Science in Civil and Environmental Engineering from Carnegie Mellon University and is a returned Peace Corps volunteer (Vanuatu). She can be reached at mgolan@utexas.edu.

Author Profile

Javad Mohammadi is an assistant professor in the Department of Civil, Architectural and Environmental Engineering at The University of Texas at Austin. Prior to joining UT, he was a faculty member in the Electrical and Computer Engineering department at Carnegie Mellon University (CMU). His research is focused on developing optimization and machine learning techniques to address energy systems’ resiliency and decarbonization problems. Dr. Mohammadi’s research efforts have been supported by the federal (Department of Energy), institutions (Sloan Foundation and CMU’s Block Center for Technology and Innovation), and industrial (Portugal’s national grid operator) sources. Dr. Mohammadi frequently disseminates the findings of his works to the public through print media, radio broadcasts and live televised interviews. Dr. Mohammadi is a senior member of IEEE and a member of the academic council of Grit Venture. He can be reached at javadm@utexas.edu.

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