ERCOT needs more distribution data to grow VPPs, says executive

Last year, Tesla bid electricity aggregated from Powerwall customers in Dallas and Houston into the Texas wholesale electricity market for the very first time. 

The virtual power plants — part of phase one of the so-called Aggregate Distributed Energy Resources pilot project — were considered a breakthrough for Tesla. Furthermore, it signaled to other aggregators that ERCOT, which is not subject to FERC 2222, could be a lucrative market for DERs.

Immediately following the announcement, DER advocates hoped the public utility commission of Texas would raise the 80 megawatt cap on the project for future phases to test how more behind the meter resources would impact the system.

However, as the pilot enters phase two, the PUCT and ERCOT decided last week to keep the cap in place — and focus on increasing visibility of the distribution grid before enrolling more DERs.

Venkat Tirupati, ERCOT’s vice president of development operations and grid transformation, said at a conference last week that a primary objective of phase two for the grid operator is to collect more data from all the battery home storage systems, smart thermostats, EV chargers, and water heaters currently enrolled in the program.

“The grid doesn’t end at 60 kilovolts — it goes all the way to the plug in your house,” said Tirupati when describing how customer-sited resources are changing power system operations. 

Similar to other market operators, ERCOT is working through information gaps on the distribution grid. These gaps are one of the biggest challenges for scaling VPPs, said Tirupati.

The ADER projects represent a small fraction of the distributed generation available in the ERCOT market. At the end of 2023, ERCOT reported a whopping 2.5 gigawatts of unregistered installed distributed generation capacity. But maintaining the cap on the project size creates an opportunity to address data collection and management challenges on a smaller, more manageable scale before expanding to more devices on the distribution grid.

Tirupati stressed the need for an automated system to collect information from VPP devices, and to integrate that data with existing operations. Currently, ERCOT manually collects device data from aggregators and organizes it via an Excel file. Information about the device type, dispatchable range, and communication standards are submitted via a form on the ERCOT website. 

Once the device information is submitted, ERCOT conducts a telemetry validation test, which involves collecting one-minute interval data on energy consumption or injection for a continuous eight hour period. But the test is only for the aggregate VPP signal, not each individual device. With device-level data, though, ERCOT could track performance more accurately — which could lead to new compensation structures for participants. 

Dan Forman, CEO of Copper Labs, critiqued current DER incentives as lackluster during a panel discussion with Tirupati: customers are likely “not going to let a utility control a $20,000 battery for a $20 incentive,” he said.

Their conversation reflects the industry's growing pains over incentive structures for using and controlling customer-sited generation, a saga kicked off by the rooftop solar boom in California. The net metering wars on the West Coast proved to utilities and grid operators across the country that customers expect to be fairly compensated for their contributions, which Tirupati said are critical for meeting growing power demand. 

During phase two, ERCOT hopes to implement an automated system for registering and collecting data on new DERs which would speed up the process for enabling those devices to participate in the market. Tirupati said ERCOT is currently evaluating distributed energy management systems and developing requirements for the control system.

And the phase two plan for ADER notes that future phases of the project “may include requiring…data recorders located on individual DERs and on the distribution system” to fill in the gaps for devices that don’t have communication capabilities. 

But technology implementations in the power sector take time. While it’s unclear when phase two of the pilot wraps up, the PUCT and ERCOT say in their project document that they will require a task force to produce a report detailing the findings and whether or not the pilot should continue.

As a result, it could be another year until that decision is made — time that may be better spent enrolling more capacity in the program.

Erin Hardick conducts research for Latitude Intelligence, the research organization connected to Latitude Media. She is also a producer for Latitude Media’s partner podcasts.