Virtual Power Plants to Provide Power to Texas Grid for the First Time

by Paul Ciampoli
APPA News Director
August 23, 2023

Two virtual power plants are now qualified and able to provide dispatchable power to the Texas electric grid, which is operated by the Electric Reliability Council of Texas, the Texas Public Utility Commission said on Aug. 23.

This marks a first for the state’s electricity market and is part of the Aggregate Distributed Energy Resource (ADER) pilot project the Public Utility Commission of Texas directed ERCOT to begin developing in June 2022.

The pilot project tests how consumer-owned, small energy devices, such as battery energy storage systems, backup generators, and controllable electric vehicle chargers, can be virtually aggregated and participate as a resource in the wholesale electricity market, strengthening grid reliability.

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 of the eight (both represented by Tesla Electric) have completed required testing and are qualified to participate.

Texans are increasingly investing in small energy resources, such as backup generators or solar panels connected to battery energy storage systems, for their homes and businesses, the PUCT said.

There are currently 2.3 GW of these small (less than 1 MW each) resources across the state, with 300 MW added so far in 2023 alone.

An ADER represents the aggregation of devices that are located at multiple sites as a single resource.

The ADER coordinates the operation of individual devices to collectively reduce demand or feed power to the grid. Through an automated process, the ADER responds to specific ERCOT instructions, allowing participating customers to sell their surplus power to the grid when called upon or reduce use. This is an additional source of dispatchable power for the ERCOT grid.

ADERs are formed and operated by retail electric providers or utilities that sell electricity to homes and businesses.

In the 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.

“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 CEO 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.”

The two ADERs announced on Aug. 23 involve Tesla Electric customers who have Powerwall storage systems in their homes and have agreed to sell their surplus power in the ERCOT market.

One ADER aggregates Houston-area CenterPoint Energy customers and the other ADER aggregates Dallas-area customers served by Oncor Electric Delivery Company.

These two VPPs are the first to participate in the ERCOT wholesale market as ADERs.

Participating in the PUCT’s pilot project is voluntary, and any entity that serves electric customers in ERCOT is encouraged to learn about the project and plan for future participation.

ADERs participating in the pilot project must include power generation devices, such as battery energy storage systems or generators, and may also include demand response devices like smart thermostats, controllable EV chargers and smart water heaters that can be controlled to reduce electricity use.

The ADER Pilot Project and a 20-member task force were established by two PUCT Commissioners.

The task force assists the PUCT and ERCOT by ensuring public transparency, providing subject matter expertise and facilitating stakeholder collaboration with ERCOT.

The pilot project “will continue to collaboratively develop solutions until permanent rules are developed for ADER participation in the market or until the PUCT and ERCOT deem the lessons-learned from the pilot project are complete,” the PUCT said.