Supporting a Reliable Grid: The Opportunity for Virtual Power Plants in Michigan

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Michigan's grid faces significant challenges, including reliability issues, resource adequacy, and the need for decarbonization. Virtual Power Plants (VPPs) are identified as a viable solution to address these challenges while maintaining cost-effectiveness [2][7]. Summary by Sections Michigan's Grid Challenges and the VPP Opportunity - Policymakers and utilities can incorporate VPPs as part of a broader strategy to tackle Michigan's grid challenges, which include aging infrastructure and increasing demand [7]. Distribution System Reliability and Affordability - Michigan experiences frequent and prolonged power outages, costing customers an average of $1,272 annually from 2013 to 2022, which is approximately$600 higher than the average in other Great Lakes states [8][10]. - The state ranks poorly in reliability metrics, with significant room for improvement in system average interruption duration index (SAIDI), average interruption frequency index (SAIFI), and customer average interruption duration index (CAIDI) [10][11]. Resource Adequacy - The retirement of coal plants and projected load growth could lead to resource adequacy risks, with a potential summer capacity deficit of 1 to 3.7 GW projected for the MISO North/Central region in the planning year 2025-26 [26][27]. Decarbonization - Michigan has set ambitious clean energy targets, aiming for 80% clean energy by 2035 and 100% by 2040. Achieving these goals will require a significant shift in utility investments and operations [30][41]. Michigan's VPP Readiness - Michigan has made strides in deploying distributed energy resources (DERs), with a notable increase in electric vehicle registrations and a growing interest in battery storage [33][35]. - The state has a supportive regulatory environment, with the Michigan Public Service Commission (MPSC) actively working to improve distribution system resilience and affordability [38]. Near-Term Actions for Michigan Decision Makers to Scale VPPs - Decision makers are encouraged to advance policies that promote DER adoption, utilize best practices in program design, and enable VPP participation in wholesale and retail markets [45][48]. - The MPSC can facilitate the aggregation of residential and small commercial customers to enhance participation in VPPs [50].