The Biden administration set an ambitious target for power grids in the United States: Operating on 100% clean energy by the year 2035.
Reaching this target is no easy feat. The distribution systems we have today are not optimized for distributed energy resources (DERs) — like electric vehicles, heat pumps, solar panels, and smart thermostat — or electricity spikes due to unprecedented weather. Implemented over a century ago, 70% of transmission and distribution lines in the US are in the second half of their lifespans.
The biggest obstacle boils down to utilities having enough resources to upgrade grid infrastructure to support the integration of renewable energy resources and proactively control loads during peak demand. Without measures to optimize these costs, a carbon-free grid by 2035 could cost between $330 billion to $740 billion.
One of these cost-saving measures is deploying virtual power plants to manage DERS. The Department of Energy is capitalizing on this opportunity with its recent announcement on plans to triple the capacity of VPPs by 2030 — a move that could reduce grid costs by $10 billion annually.
Why the emphasis on virtual power plants?
Virtual power plants (VPPs) are not a new energy initiative — but the immense urgency for flexible sources of renewable energy definitely is.
The COP28 climate summit ended with nations approving a roadmap for “transitioning away from fossil fuels.” Negotiations were made to triple the capacity of renewable energy and double energy efficiency by 2030. The impact of decentralized customer-owned renewable energy sources is a no-brainer for accelerating efforts toward this goal.
The idea of aggregating DERs into ‘virtual utilities’ was first introduced in 1997. Over the past 20 years, virtual power plant programs have undergone large shifts thanks to learnings from early experiments and pilot projects, more diverse DER portfolios, and the maturity of software interoperability between DERs and energy infrastructure.
An analysis of virtual power plants from 2000 to June 2022 maps out this progression into a few phases, each with distinct goals:
There are a few notable trends we can see in these developments.
- Electric vehicles are a core energy resource driving investment into new programs.
- Proactive and coordinated load control are seen as necessary initiatives for grid resilience.
- Cloud software sits at the center of efforts to simplify the management of diverse DERs, elevating the importance of virtual power plant software.
With strict targets on the line, the energy transmission system would need to expand by 50-90% to support a transition to 100% clean energy. VPPs can significantly reduce these costs by tapping into aggregated pools of power from DERs, replacing the need for physical power plants and large system upgrades.
EVs are necessary to expand virtual power plant programs
EV charging is a big asset for VPPs because of its flexibility as an energy source.
But the ideal VPP program can look very different for each consumer depending on their driving habits, budget, location, household energy usage, and more. Virtual power plant software benefit from using a standardized EV API platform because of its agility to support different charging preferences while catering to a growing market of EV makes and models.
The need to personalize energy programs for maximum customer engagement is why we believe the Department of Energy should mandate automakers to let drivers enroll in third-party virtual power plant solutions.
It’s unrealistic to pigeonhole drivers to a specific demand response or VPP program. Giving consumers a choice on how they use their EV charging data helps them tap into the benefits of financial rewards, grid reliability and resilience, and environmental health.
EV APIs accelerate virtual power plant software deployment
How does an EV API lead to more comprehensive, EV-friendly virtual power plant software?
Streamline EV data access and management
In the US, EV sales were up almost 50% in Q3 2023 compared to that of 2022. However, Tesla’s market share fell 50% last year while brands like Volvo, Mercedes, and Hyundai saw a 200% increase in sales. The same trends are expected in Europe despite Tesla strongly leading the pack. An EV API platform helps future-proof VPP programs against these market changes. A ‘build’ strategy that requires developers to develop one integration at a time limits the number of EV brands the program can support.
This may suffice for short-term goals, but programs will be forced to reevaluate their offerings as EV market share fluctuates and continues to diversify with new models. Having a single point of accountability for EV integration management was critical in helping Rolling Energy Resources connect their customers to 95% of EVs on the road in the US.
Smartcar does the heavy lifting of connecting to the vehicles themselves in a reliable and consistent manner. This is difficult work, especially since the EV market changes quickly.
— Bill LeBlanc, Chief Catalyst at Rolling Energy Resources
Reduce dependency on EV charging hardware
Without EV API integrations, drivers typically require a Level 2 charger to support communication between EVs and the grid. But many drivers can get by without the charging speed of a Level 2 charger — research shows that only 35% of households with EVs have these chargers installed. Reliance on EV chargers introduces more limitations by forcing drivers to opt for a more costly, complex, and time-consuming process that is also inaccessible for renters and residents of multi-unit housing. Software-based integrations through APIs allow virtual power plant software to maximize customer enrollment by emphasizing a frictionless user experience.
We see this in how grid optimization platforms like Amp X use EV APIs to minimize drop-offs during the onboarding process. With secure access to an EV’s telematics unit, Amp X can eliminate any concerns about hardware installation and increase customer engagement from their very first interaction with their program’s mobile application.
Gain consistent insight into an EV’s state of charge
Level 2 chargers also don’t provide enough data for virtual power plant software to understand a vehicle’s state of charge. This visibility is critical for all DERMS and VPP providers to optimize EV charging demand and supply.
With up-to-date visibility into an EV’s state of charge, VPP software providers can accurately shift charging schedules and incentivize customer behavior without requiring vehicle owners to stop what they’re doing and take action themselves. These small changes to the customer experience go a long way in helping VPP programs increase EV participation, aggregate more stored energy, and adjust charging patterns in real-time.
Automate proactive load control
EV APIs help VPP programs easily coordinate and automate EV charging actions such as remotely starting or stopping charging sessions and setting EV charge limits. These hardware-agnostic integrations are also better suited for programs to collect accurate battery data from enrolled EVs at specific times, even if they’re not plugged into a charger. These automated actions power real-time load shifts, introduce more convenience for drivers, and provide consistent data for load forecasting and modeling efforts.
Evolve programs with a flexible data infrastructure
Energy retailers and consumers are still figuring out what the future of distributed energy will look like as EV adoption continues to climb. Driver incentives will have to change, reflecting new energy infrastructure and legislation. The capabilities of vehicles themselves will also evolve as EV manufacturing matures and more EV applications emerge in the market.
EV API platforms like Smartcar will serve as an agile foundation for developers to upgrade existing programs with new offerings without having to uproot customer hardware or dedicate hundreds of developer hours to backend EV integrations.
Today's virtual power plants challenges
Despite virtually all EVs being shipped with the technology to communicate with grid software, virtual power plant programs are held back by challenges that ripple across the entire energy industry. EV APIs aim to help VPP providers avoid common pitfalls by:
- Keeping costs low for distributed energy resource adoption and VPP deployment: Scaling VPPs is feasible and realistic only if governments, utilities, and non-profit organizations can effectively access the necessary resources required by their distribution system planning efforts. DERMS providers optimize resources for EV deployment by minimizing hardware installation to access data, implementing driver-friendly acquisition and adoption processes, and minimizing people resources for managing EV integrations and supporting customers on-site.
- Strengthening DER adoption with the right incentives: VPPs are dependent on customer-owned devices, hence putting customer adoption strategies at the forefront of the conversation. Building suitable incentive structures and engagement tactics is imperative to the success of a VPP. Operators can personalize programs with rewards that align with EV charging behavior and customer preferences, such as electricity bill savings, emissions savings, and power reliability.
- Simplifying VPP enrollment: Friction in VPP enrollment will significantly limit the number of customer-owned devices in a VPP. Customers should be able to easily opt their devices into the VPP programs of their choice and have the flexibility to configure their experience to suit their daily behavior. VPPs must encourage OEMs to enable VPP functionalities for customers across a wider range of DERs. Not only does this mean equipping EVs with VPP support, but it should also encompass giving consumers the freedom to choose the types of VPP programs they want to enroll in.
- Standardizing EV data for efficient VPP operations: EV battery and charging data differ greatly across EV makes and models. Standardized EV data, user authorization workflows, and integration management practices can help organizations spend less time designing VPP pilots and programs. These guidelines also allow VPPs to efficiently expand support across more EV makes and models without compromising data privacy and the user experience.
What to look for in a virtual power plant software
If you’re looking for an EV API platform to scale your VPP program, you’ll want to find a partner that can help you maintain EV data privacy and security, tackle resource-intensive projects on your roadmap, and visualize long-term success at scale.
How do these qualities add up in terms of platform features and capabilities? Use this vendor selection checklist to help you evaluate and select the right EV API vendor. Book a demo with Smartcar today to review this checklist and discover what an EV API platform can look like for your program.
