Texas to activate its first virtual power plants

The Public Utility Commission of Texas (PUCT) announced that two virtual power plants (VPP) are now qualified and able to provide electricity to the grid managed by the Electric Reliability Council of Texas (ERCOT), marking the first active VPPs in the state.

VPPs allow for virtual aggregation of distributed energy resources. Consumer-owned devices like solar-plus-batteries, electric vehicles, appliances, and backup generators can be aggregated to participate in the wholesale electricity market.

By enabling these coordinated resources to participate in powering the grid, VPPs can improve grid reliability and balance the grid. VPPs can support a Texas grid that has struggled operate reliably under extreme weather events.

“Small energy resources found in homes and businesses across Texas have incredible potential to continue improving grid reliability and resiliency by selling the excess power they generate to the ERCOT system,” said PUCT commissioner Will McAdams. “It’s a win-win for Texas. Home and business owners get paid for power they supply and consumers in ERCOT get more reliability.”

PUCT said there are currently 2.3 GW of distributed resources of less than 1 MW each across the state. Over 300 MW was added in 2023 alone.

The VPP rollout is part of the Aggregate Distributed Energy (ADER) pilot project series run in the ERCOT region. ADERs are formed and operated by retail electric providers or utilities that sell electricity to homes and businesses. In this pilot project, compensation terms and participation requirements will vary depending on the provider operating the ADER.

To qualify for the pilot project, an ADER must be able to produce at least 100 kW, and each individual device in the ADER must be less than 1 MW. The average residential battery is about 5 kW. The pilot project is currently capped at 80 MW of total participation to ensure a safe and controlled rollout. Customer participation in the program is voluntary.

There are currently eight ADERs totaling 7.2 MW in the pilot project. Six have completed the initial registration steps and are in the commissioning process.

Two ADERs are approved involve Tesla customers with Powerwall energy storage systems. One is an aggregation of Houston-area CenterPoint Energy customers and Dallas-area Oncor customers. Additional information on the projects can be found here.

“As generation and distribution technology continues to improve, we expect to see more Texans taking advantage of these small energy resources in the future,” said ERCOT president and chief executive officer Pablo Vegas. “This pilot project is an opportunity for us, the electric industry, and participants to learn how to harness these resources to support reliability in the ERCOT market.”