Roughly one-third of Americans report having a side hustle to supplement their income. Side hustles range from delivery drivers to social media influencers and may soon include something surprising—electricity providers. That’s the promise of a Virtual Power Plant (VPP), letting consumers sell their unused energy back to the grid and get compensated for it. A VPP is formed when distributed energy resources – like solar panels, batteries, and EVs – are combined, or “aggregated” together and managed as a single resource like a power plant. 

VPPs turn electricity consumers into power producers by connecting distributed energy resources, like home solar panels and batteries, and managing them like a single power plant. Image by Advanced Energy United.

Texas made headlines last year when it launched two VPPs that provided power to the state's electric grid. The VPPs are part of a pilot project managed by the Electric Reliability Council of Texas (ERCOT) and facilitated by the Aggregated Distributed Energy Resource (ADER) Task Force, a group of businesses, utilities, and research organizations providing expertise. I represent United’s state chapter, the Texas Advanced Energy Business Alliance, as a member of the task force. 

The ADER Pilot Project is a testing ground for allowing consumers to contribute energy to the electricity market, thereby becoming prosumers, or entities that both consume and produce electricity. This ultimately enhances grid reliability and creates value streams for Texans. To ease these resources into the market, the maximum energy the pilot can provide is 80 MW. 

While 8 ADERs have registered to participate in the project, only two have been approved since late August 2023. Although this showcases the feasibility of VPPs, the registered ADERs represent only 16% of the pilot project energy cap and the approved ADERs represent even less—just under 12%. While there is positive momentum, several challenges exist that, if resolved, could unlock the untapped potential, and energy, of the ADER Pilot Project. 

In this phase of discussions, the Task Force identified critical aspects of ADER participation that need to be addressed, for example: 

• Interoperability; 
• telemetry validation processes and requirements; 
• compliance metrics for ADERs; and 
• alternative participation models and dispatch strategies. 

 Allow me to translate.  

Achieving interoperability will allow customers to enroll more of their eligible devices, e.g. a Google smart thermostat, a Sunrun rooftop solar system or a Ford electric vehicle, in a VPP program, because the devices can “talk” to each other and share relevant data. Without this, people may have to pick and choose which devices to enroll in the program, which may minimize how much energy they can provide and how much money they can make. The importance of interoperability is illustrated well in comments from AutoGrid, a subsidiary of Schneider Electric and Octopus Energy, a retail electric provider in Texas. 

The Task Force will also need to ensure that the pilot project framework encourages participation, appropriately values ADERs and addresses barriers to entry for businesses and prosumers. For example, ERCOT requires ADERs to send, or “telemeter”, data to them every few seconds which may be feasible for a power plant but can be costly and onerous for ADERs. Difficult compliance requirements like this can discourage participation, raising the question: Does ERCOT need to establish alternative participation models and dispatch strategies for VPPs to lower barriers and improve participation?   

On January 12, the Task Force began building consensus amongst members on these challenging topics as they reviewed the governing document for the project, recently updated by ERCOT. 

Most substantive recommendations touched on four key topics: 1) ensuring processes as described in the governing document align with workflows in practice, 2) making progress towards increasing avenues for participation for ADERs, 3) codifying open communication standards which are seen as a prerequisite to ubiquitous and inclusive customer participation and 4) allowing ADERs to provide another ancillary service, the ERCOT Contingency Reserve Service or ECRS. 

Next, the draft governing document heads to the ERCOT Technical Advisory Committee (TAC) for review and consideration of ADER Task Force member comments and recommendations. 

The ADER Pilot Project exemplifies the evolving energy landscape in Texas and signifies that the state is on the precipice of a more innovative energy future, leading the way for the rest of the nation.  

Entities serving electric customers in the ERCOT region are encouraged to explore joining the ADER Pilot Project.