VPPs: Making SolarEdge Home Batteries an Even Better Investment

UK news outlets like The Standard, The Daily Mail and The Independent recently reported on the value SolarEdge Home Battery customers received from last year’s participation in Great Britain’s Electricity System Operator (ESO) DFS program –our British version of a Virtual Power Plant (VPP). SolarEdge Home Battery customers in other countries are also benefiting from VPP participation and, even if you don’t yet have a VPP in your region, it’s time to find out about the additional incentives your customers can enjoy, including economic awards and quicker ROI on their system. This is especially significant since according to a 2023 report published by RMI “VPPs are on the cusp of significant market growth”.

So what is a VPP?

Quite literally, VPP stands for “Virtual Power Plant” which means a network of decentralized and interconnected power sources, managed to function as a unified power plant, improving grid stability. This can include solar panels, batteries, electric vehicles, water heaters, smart thermostats, and other connected devices. But with diversified energy sources, the grid can get out of balance; perhaps too much energy will come in at certain hours – and too little at others.

Balancing this out is where VPP programs come in.

Depending upon the requirements in the region, participants who opt into a VPP program can be asked to refrain from using grid electricity during certain specified times or can enable the energy provider to import additional energy from their home battery in order to support the needs of the grid. Each request from the grid to program participants is called an “event”. Events can vary in length, from seconds in some grid frequency support programs to hours in peak-shaving demand response programs.  Homeowners are sometimes alerted ahead of events and are almost always compensated for their successful participation.

Some of the programs offered by VPP operators require a battery to enable participation. In these cases, SolarEdge Home Battery participants with a meter can take part in these programs without requiring manual adjustments or any additional third-party equipment. They simply sign up to the program, participate and can begin reaping the rewards.

Programs that need participants to reduce electricity consumption during an event do not necessarily require a battery for participation. In these cases, participants will need to change their behaviour when requested in order to earn rewards. On the other hand, SolarEdge Home Battery participants don’t have to do a thing when an event occurs. The battery can be automatically triggered to save energy in advance of the event so that the home can be charged from the battery during the event itself, reducing grid consumption.

Why VPPs are important for our future infrastructure

As cities and governments seek to increase electrification and reduce carbon emissions, the grid must prepare to handle the additional electrical demand, while managing a growing list of diversified sources both from private entities like businesses and homeowners and from utility-grade installations. VPPs enable grids to handle this additional load without requiring massive infrastructure upgrades, thereby keeping costs down. VPPs help ensure grid reliability and involve citizens in the power system, giving them a voice. And of course, by enabling increased green resources, VPPs help support a cleaner, greener energy system that reduces pollution and supports local health.

It is important to note that the needs of grids in different locations vary and therefore the programs they offer consumers can differ from region to region. Homeowners with a SolarEdge Home Battery (with a meter and a SolarEdge Home Hub or Wave inverter) can participate in a variety of different VPP programs without requiring additional equipment.

Practical Examples from London and Los Angeles

Great Britain’s Demand Flexibility Service:

Developed by the Electricity System Operator of Great Britain (ESO) which manages electricity for England, Scotland and Wales, the Demand Flexibility Service (DFS) allows customers with qualified smart meters to receive compensation for reducing their electricity usage at specific times when supply may be short. Consumers who opted in were alerted in advance to reduce electricity usage during a specific peak time and those who participated received financial compensation, such as payment, credit or other awards. While some system owners who signed up for DFS had to change their behaviour and turn off appliances when an event occurred, SolarEdge Home Battery owners who participated were not inconvenienced at all. Batteries were automatically programmed to charge when necessary and to discharge during the event. System owners sold the energy back at a much higher rate of £2.50 per kWh and earned up to £26 in a one-hour event.

The DFS programme was introduced during the winter of 2022-23. About 1.6 million households and businesses participated in the programme, saving over 3,300MWh of electricity - enough to power approximately 10 million homes across the UK. More importantly, the success of this programme can mean that the ESO will not need to employ polluting – and expensive – generators to continue to provide smooth service for peak times. The programme can also benefit the environment and reduce costs for consumers.

Each DFS event generally lasts about one hour, but it can exceed this. The programme is completely voluntary and there is no penalty for not participating in a specific event, even if you are signed up.

Following the success of last year’s initiative, the ESO has launched the Demand Flexibility Service again this winter, 2023-24. If you are from the UK and want more information on participation, click here.

United States – California

“Energy needs in the 21st century demand innovative thinking and that is what the California Energy Commission is embracing today,” said Bernadette Del Chiaro, executive director of the California Solar & Storage Association. “California must do more to encourage consumers to adopt solar and battery technologies at the local level so that we can keep the lights on and the air clean.”

The California Energy Commission (CEC) adopted a new initiative as part of its Demand Side Grid Support program that would enable privately owned batteries to support the grid during specific instances, like during heat waves, when demand for energy was at its peak and energy pricing skyrocketed. During these high-demand instances, the grid would be able to draw energy from fleets of storage units in homes and businesses connected to the grid. This program enables the grid to avoid outages and reduces the need for infrastructure investment that would raise energy prices and increase carbon emissions. The commission sees this program as a gateway to a future where millions of households and businesses could be supporting the grid for a greener, and more cost-efficient program for all.

SolarEdge Home Battery owners were able to participate in this program for the first 2023 summer season. Those who wished sign up, gave permission for their batteries to be discharged during the event. Many families opted into this program and received compensation. The experience was seamless for participating homeowners: their SolarEdge Home system automatically prepared for the event by storing energy in the battery and automatically discharging to the grid when requested. They needed no additional third-party equipment to participate, and no adjustments were required – with their SolarEdge Home Hub Inverter, SolarEdge Home Battery and SolarEdge Home Inline Meter, they were good to go.

A Bright Future for Battery Owners

As the California Energy Commission noted, they are embracing innovative thinking and in favor of encouraging solar and battery technologies. VPPs in different locales assist the grid, while compensating homeowners and giving them an opportunity to participate. Owning a SolarEdge Home Battery can give your customers access to this energy future, and another way to gain benefit from their solar investment.