Frontier Forum: Why utilities should go big on VPPs

In the next five years, Arizona Public Service estimates peak demand will grow by 40%. In order to meet that peak, the utility is increasingly turning to demand-side flexibility. A few years ago, APS started working with EnergyHub to experiment with smart thermostats as a resource to manage peak demand. The initial resource was modest – a few megawatts, and then 20 megawatts. That program eventually turned into a 190-megawatt virtual power plant made up of smart thermostats, behavioral demand response, commercial and industrial demand response, and some batteries. And the APS operations team now treats the VPP as a valuable resource. “We had to really build trust in this as a real resource. As it got bigger and you could see a noticeable difference when we called on these devices, that trust really began to build,” explained Kerri Carnes, director of customer-to-grid solutions at APS. This week, we’re featuring a conversation about the value of VPPs with APS’ Kerri Carnes and Seth Frader-Thompson, co-founder and president of EnergyHub. It was recorded as part of Latitude Media’s Frontier Forum series. What does APS’ experience tell us about what is working in VPP program design? How do we convince utilities that VPPs are reliable? And what is their role as load growth rises? “A VPP is actually more capable in some ways than a traditional power plant,” explained Frader-Thompson. “My guess is that over the next few years we'll probably come up with some more nuanced things to call VPPs.” This is a partner episode, produced in partnership with EnergyHub. This is an edited version of the conversation. You can watch the full video here that includes audience questions about VPP design and implementation.