Electric Appliances as Virtual Power Plants

“We’re thinking we can turn water heaters, refrigerators, thermostats, electric vehicles and batteries into virtual power plants [VPPs]” to help balance the grid's increasing clean electricity, Jigar Shah, director of the DOE Loan Programs Office [LPO] said in a September 2021 interview (https://www.canarymedia.com/articles/policy-regulation/jigar-shahs-big-idea-for-getting-rooftop-solar-and-smart-appliances-to-low-income-americans).  The LPO are offering loan guarantees for companies that produce grid-responsive, energy-efficient appliances and equipment and low interest, long term loans for low-income buyers, a $4 billion per month market, for joining a distributed energy resources [DER] system to act as a modular, virtual power plant [VPP].

In a June DOE podcast (https://www.energy.gov/podcasts/direct-current-energygov-podcast/lpos-new-look-conversation-jigar-shah) Shah said, 

"Well, I think these distributed energy programs [DER] are the most straightforward way that we’ve thought about it [environmental justice]. And when you think about appliances, it’s not just refrigerators, air conditioners and water heaters. It also includes solar plus storage, but it also includes electric cars. Right? So electric cars are DER-enabled appliances as well, right? So when you think about, when you look at the Texas polar vortex, there were some people who actually were able to power their whole house off their car. And so, you know, in fact, I’d say a car battery is probably the cheapest way to get a battery these days, because it’s, you know, 90 kilowatt-hours for I think, $14,000 or $15,000 for a used Chevy Bolt.  So I think that there’s a lot that we can do there. I also think that the scope and the scale that we’re trying to get after is pretty large. And, you know, I think we need to find large pockets of opportunity, right? So when you think about appliances, appliances alone — not counting electric vehicles — is about a $10 billion a month — a month — business. Right? And roughly 40% of those purchases are made by low-moderate income households. Right, so that’s $4 billion a month. So if we can shift $4 billion dollars a month of purchases, from, you know, like some form of payday lending to low-interest loans with long durations, that’s going to save a tremendous amount of money for the average consumer. And if those appliances are plugged into distributed energy resources, all of our modeling shows that it’s the only idea that we have that can actually reduce electricity rates. Not reduce the growth of electricity rates, but actually reduce electricity rates…."

“We can insert ourselves there and help people get 6…or 7 percent interest rates,” Shah said. ​“But in exchange, they have to opt in their air-conditioning system into a distributed energy resources project and…get paid to provide grid flexibility...” 

"California spilled about 1600 gigawatt-hours of renewable energy last year [2020], and they could have captured a lot of that if they had demand dexterity in the grid. So they could, you know, make people’s houses a little bit cooler than they had set it for, and use some of that power then, and then not used it later in the afternoon when they would have turned it on, right? And so starting to time the loads in the homes with  when there’s overproduction of electricity is something that does qualify for Loan Programs Office, and a lot of the residential solar players are in the best place to, you know, promote those services.”

This is one way that using electric appliances as VPPs and DERs "can actually reduce electricity rates. Not reduce the growth of electricity rates, but actually reduce electricity rates…."