How Virtual Power Plants May Be Key Solution to Energy-Generating Capacity Problem in U.S.

Most of the world's largest economies continue to push the transition to clean energy forward through a variety of ways that offer a plethora of avenues to invest in the future. One estimate pegs the renewable energy market at $1.1 trillion in 2022 with a compound annual growth rate of 16.9% through 2030.

This news update brought to you by Ideal Power offers a round-up of some of the most important headlines on renewable energy and the market opportunities associated with them. This month, we'll discuss how virtual power plants can save utility companies billions of dollars while providing environmental benefits, what New York is doing to push forward the transition to clean energy, and the International Energy Agency's outlook for electric vehicle sales in 2023.

Virtual power plants could save utilities billions

A recent study found that virtual power plants could save utility companies $15 billion to $35 billion on capacity investments over the next decade. Virtual power plants (VPPs) are networks of decentralized, medium-scale power-generating units such as rooftop solar panels and electric vehicles with bidirectional charging capabilities that can send power back to the grid.

In a study prepared for Google, The Brattle Group looked at the costs associated with virtual power plants and whether the power they provide would be adequate to meet the growing needs of the U.S. electric grid.

The firm found that the net cost of VPPs to utility companies for providing enough capacity and reserves for the power grid is about 40% to 60% of the cost of other options. Putting this another way, Brattle said 60 GW of VPP deployment could meet future U.S. power needs at $15 billion to $35 billion less than the cost of those other options over the next decade. Those other options include a natural gas peaker and a transmission-connected utility scale battery.

The study also found that 60 GW of VPPs could prove over $20 billion in other benefits like reduced emissions and improved resilience of the grid over the next 10 years. Additionally, when including those additional benefits, VPPs are the only power resource that could provide enough capacity at a negative net cost.

Finally, The Brattle Group found that VPPs that leverage residential sources could be just as reliable as conventional power sources while contributing to the capacity on a similar scale.

New York State's public utility must switch to 100% clean energy by 2030

The clean energy transition in the U.Ss continues with new legislation in New York state that requires the state's public utility to generate all of its electricity via green energy by 2030.

The Build Public Renewables Act is included in the state's latest budget and enables the New York Power Authority (NYPA) to build renewable energy capacity as it phases out fossil fuels. The bill also requires all government-owned properties like schools, public transit, hospitals, and public housing to switch to 100% renewable energy by 2035.

NYPA provides cheap electricity to over 1,000 customers that include state and local government buildings, non-profits, businesses, and electric cooperatives. The utility also sells some of its power-generating capacity to the wholesale market, allowing other utilities to buy it.

NYPA is the largest state public utility in the U.S., and it already generates more than 80% of its electricity via hydropower. The utility had already agreed to shut down its six plants that utilize natural gas by 2035, but the new legislation advances that timeline five years earlier than the previous plan.

The plants are located in New York City's Queens and Bronx boroughs. The neighborhoods in the Bronx have some of the highest death rates due to asthma in the U.S.

How clean is the energy electric cars are using?

The International Energy Agency (IEA) released its Global EV outlook for 2023 toward the end of April, announcing that sales of electric cars soared 55% between 2021 and 2022. More than 10 million EVs were sold in 2022, including battery-electric vehicles and plug-in hybrids.

According to the IEA, over 26 million EVs were on the roads around the globe — a 60% year-over-year increase. China led the way in EV purchases, accounting for about 60% of global EV sales in 2022, followed by Europe, where EV sales rose by more than 15% last year. EV sales in the U.S. jumped 55% in 2022.

The IEA reported that electric vehicles accounted for about 4% of total vehicle purchases in 2020. However, EVs' share of the total vehicles bought rose to 14% in 2022. Going forward, the IEA estimates worldwide EV sales of almost 14 million this year and predicts that EVs will account for about 18% of total vehicle purchases in 2023.

The agency also estimates that electric vehicles will save at least 5 million barrels of oil per day by 2030. However, while driving electric vehicles saves oil, the push toward EVs in many countries is aimed at reducing carbon emissions from transportation, but a new study suggests they might not be as clean as is widely believed in some parts of the world. The Wall Street Journal analyzed data from Ember, an independent think tank, on emissions from the power sector. How clean electric cars are depends on where they get the electricity used to charge them from.

In some parts of the world, that electricity comes from burning coal, which is responsible for large amounts of carbon dioxide emissions. For example, in 2022, China pumped over 500 grams of carbon dioxide per kilowatt-hour into Earth’s atmosphere, while the U.S. generated 368 grams per kilowatt-hour. Thus, driving an EV in the U.S. generates significantly less carbon than in China or other parts of the world.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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