Power Shift

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - Virtual Power Plants (VPPs) could constitute over 20% of US peak capacity by 2030, providing a flexible solution for grid management amidst growing challenges [13][24] - VPPs can reduce net generation costs by 20%, translating to approximately $140 savings per household annually, while also achieving a 7% reduction in emissions [17][54] - The integration of VPPs into grid planning can unlock their full potential, enhancing reliability, affordability, and decarbonization efforts [14][19] Summary by Sections Executive Summary - VPPs present a deployable solution for managing grid needs, addressing challenges such as projected load growth, retiring generation capacity, and extreme weather events [13][24] - The report highlights the potential of VPPs to deliver affordable, reliable, and low-carbon power, focusing on their role in reducing emissions [14][30] Key Findings - VPPs can provide a reliable, lower-cost, and cleaner resource mix compared to portfolios without VPPs, with a 17% reduction in net generation costs and a 47% reduction in carbon emissions when a carbon reduction policy is in place [17] - Nationwide, VPPs could avoid 12 to 28 million tons of carbon dioxide emissions by 2035, representing 2% to 4% of projected US power sector emissions [17] - VPPs can reduce the need for new gas capacity by 75% or 1.5 GW, enabling the integration of 200 MW of additional renewables [17] Background - VPPs are defined as grid-integrated aggregations of distributed energy resources, such as batteries and smart devices, which can provide various grid services [22][30] - The report identifies the growing demand for electricity, interconnection challenges, and extreme weather as key factors driving the need for VPPs [24][26] Analysis of VPPs' Role - The analysis compares two portfolios: a Baseline portfolio without VPPs and a VPP-Enabled portfolio, demonstrating that the latter can achieve significant cost savings and emissions reductions [43][49] - VPPs enhance the value of variable renewable energy and can provide resilience benefits for participants, while also being rapidly deployable [47][50] Results - The VPP-Enabled portfolio meets annual reserve margin requirements using less gas and utility-scale storage capacity, demonstrating improved reliability [52] - VPPs provide cost-effective flexibility, avoiding the need for gas capacity and substituting for energy storage, leading to reduced emissions [58]