The California utility MCE isn’t the first to create a virtual power plant -- distributed energy resources and energy management tech that can act as a replacement for big gas-fired or coal power plants. But they may be the first to use the technology to tackle energy inequality and housing.
In Richmond, Calif., the community-based, climate-friendly utility provider is using “virtual power plants,” or VPPs, to provide energy for homes and businesses and cool down the region's overheated housing market.
VPPs describe when a company uses software to coordinate a network of decentralized energy systems and energy efficiency tools — like batteries, and automated, lighting, heating and cooling systems — to export power to the grid or reduce demand simultaneously. The outcome is a power plant that can participate in any state power market to sell electricity or curb demand when the energy grid is stressed and prices are steep.
“A virtual power plant is decentralized, decarbonized, and democratized,” Alexandra McGee, MCE’s manager of strategic initiatives told Inside Climate.
While there are many VPPs in development around the country, from utilities like Pacific Gas & Electric Company (PG&E) and energy and mobility businesses like Tesla, MCE may be the first to add a scheme to alleviate pressure on the housing market in its territory.
The utility's plan is to renovate abandoned properties, retrofit them to be energy-efficient VPP style, and then sell them at subsidized prices to first-time homebuyers with qualifying incomes.
Each home will be equipped with smart appliances and cost-saving equipment, including rooftop solar, battery energy storage, and heat pumps. The plan, MCE says, will reduce grid strain, increase reliability and efficiency and lower the chance of power outages, all while decreasing energy bills.
The need is there. Residents of Richmond, a city in the California Bay Area, suffered for decades from pollution emitted by Chevron's big oil refinery. While the majority of residents are lower-income, housing prices continue to climb due to undersupply and the city’s proximity to one of the most affluent areas in California: Berkeley.
“37% of our residents are enrolled in the CARE [Consumers Affordable Resource for Energy] discount program, which is 12% more than the state average,” said Tom Butt, MCE Board Chair and Mayor of Richmond in a statement. “MCE’s partnership with our city on the VPP and ZNC Homes will enhance equity in the community by revitalizing our housing stock and decreasing energy costs for our residents.”
A project that combines electricity and housing is “really a sweet spot” for the organization, McGee said. With about 575,000 customers across the region, MCE is able to have a socioeconomically diverse service pool. Among its partner organizations, MCE is working with ZNE Alliance, a nonprofit that is serving as the project developer.
With about 120 customers and $3 million in funding from the California Energy Commission, plus money from other sources, the initial phase of the project will take about three years to get up and running and is slated to launch in 2025, according to the company’s website. MCE says the lengthy lead time is to allow their team to account for any potential delays in acquiring and renovating the properties.
“This is a first-of-its-kind project that will combine clean energy technologies with tangible community benefits through integration with the California grid,” said David Hochschild, chair of the California Energy Commission, in a statement. The company says that its virtual power plant will include smart, clean energy technologies such as energy storage, smart thermostats, rooftop solar, heat pump space, water heating, and EV charging.
The immediate effects of the grid will be small, however, producing about 1.25 megawatts of the territory’s peak demand of 1,200 megawatts. If successful, MCE and its partners plan to expand the project to a much larger scale. For now, the initial phase is a test in reducing local emissions, while providing people with an affordable place to live. In the next phase, MCE chief operating officer Vicken Kasarjian says their plan could extend to including MCE’s entire service territory, with hundreds of megawatts, and possible further expansion depending on funding.