As hyperscalers pour billions of dollars into new power plants for data centers, Google is also investing in something different: making better use of the existing grid.
The tech giant announced a new deal today for a gigawatt-sized virtual power plant (VPP), which appears to be the largest deal of its kind from a hyperscaler. The approach shrinks overall power demand at key moments. Voltus, Google’s partner, pays businesses and homeowners to use less electricity at times of day when the grid is under strain. A big box store might automatically adjust its thermostat by a couple of degrees; a factory might temporarily run part of its production on a battery. At a house, the electric vehicle in the garage might adjust its charging schedule.
In many cases, the changes might not even be noticeable. But in aggregate, they can provide a major source of new capacity—and that can happen faster and more affordably than building new power infrastructure.
“Virtual power plants are the clean, firm resource that we have available today,” says Ellen Zuckerman, head of energy market development for North and South America at Google. “So this is really our way to assist the grid, especially one like PJM, which is facing capacity shortages.” It has another critical benefit, she says: It can help bring down costs for everyone on the grid.
The company is racing to deploy a range of solutions, from state-of-the-art geothermal technology to new types of long-duration batteries. But virtual power plants are an important part of the picture. Google first announced a smaller agreement with Voltus in June for 100 megawatts (one-tenth the size of the new deal). That VPP was quickly oversubscribed, and that “really gave us the confidence that there was more to do here,” Zuckerman says. Both agreements are being deployed on the PJM grid, the grid that sprawls across the Middle Atlantic and parts of the Midwest and South, and that faces massive capacity constraints. (Google has not disclosed the cost of the project).
Voltus, a 10-year-old company that raised $225 million in a Series D round of funding earlier this month, is quickly growing. “It’s really just a perfect product-market fit,” says its CEO, Dana Guernsey. After decades of flat growth, there’s sudden demand for capacity on the grid, and virtual power plants are an affordable and fast way to meet that demand.
Businesses that sign up to be part of the VPP work choose how flexible they want to be. “We do take a very consumer first approach,” she says. “If they want to flex a little bit, that’s great, and then over time what we see is that people do go deeper.” In June, Voltus acquired the energy storage company Brightfield. Now, the thousands of companies that are part of the virtual power plant have the option of adding batteries to help save more energy. In some cases, companies have been able to offset their entire energy bill through participation in the program. Voltus also partners with companies like SunRun and Octopus to work with residential customers.
The approach even helps customers who aren’t a part of the virtual power plant. If there’s a heat wave and demand surges, energy prices go up; by responding en masse at the right moment, the virtual power plant can help avoid those extra costs. “You don’t need to take all of the load off the grid to relieve that constraint,” says Guernsey. “You can take some of it off, and now you’ve reduced the really dramatic high prices to that grid.” Last year, a U.S. Department of Energy report estimated that virtual power plants could meet 10%-20% of the grid’s peak demand, and save customers around $10 billion a year.
Voltus aims to expand to 20 gigawatts by 2030. That’s a huge number, but the demand may exist, both on the part of hyperscalers and virtual power plant participants, to make it happen.
In the meantime, the company is already helping the grid. Last week, unseasonably hot weather in the PJM grid meant there was a surge in electricity demand at the same time that some power plants had been taken offline for fall maintenance. The grid operators activated an emergency load response program—and the virtual power plant stepped in to help fill the gap.
