Exclusive: Solrite and sonnen roll out PPAs for solar plus storage

Solrite is betting the age of the residential power purchase agreement is just getting started. Today, the PPA provider will officially announce a new financing model for solar plus storage solutions it has dubbed “virtual power plant power purchase agreements,” or VPAs.

The company told Latitude Media that the VPA combines traditional third-party ownership of solar assets with smart batteries and VPP software, and provides a solution to the complexities of California’s new net metering rules.

• The top line: Solrite’s VPAs are deployed in collaboration with battery and VPP company sonnen, and offer homeowners access to backup power and energy bill savings while generating revenue by providing a range of grid services to ISOs. The company said it has already signed around 500 VPAs, with 100 currently in service.
• The market grounding: California’s new net billing tariff policy for solar, NEM 3.0, reduced the value of solar sold back to the grid from rooftop setups, in an attempt to mitigate the state’s exaggerated duck curve. Much of the industry has argued that the change, implemented last summer, will kill rooftop solar in the state. Solrite and sonnen are hoping their VPA can keep the sector alive, especially in light of dismal post-NEM 3.0 installation numbers. 
• The current take: In the NEM 3.0 era, a pivot towards residential battery storage was inevitable, said Solrite CEO Regan George. “NEM 2.0 wasn’t sustainable for utilities,” he explained. “The future of our energy transition to renewables is this VPA model, where solar and batteries work together in cooperation with the utilities and grid services operators, as opposed to in opposition.”

Under this new model — which is currently available to households in California, Puerto Rico, and Texas, but which will soon expand to Hawaii, New England, and New York — Solrite owns both the rooftop solar installation and the sonnen battery. By the end of 2024, the company expects to have 15,000 new solar plus storage installations under VPAs.

Sonnen remotely operates the battery systems, linking them into a VPP at the disposal of grid operators and managing them to reduce daily use of peak energy. To do this, the company uses a patented time of use algorithm that analyzes weather and grid events a day in advance.

“The real differentiating factor of what we’ve coined a VPA versus a PPA is that we’re able to use sonnen smart batteries to provide grid services that utilities and grid service operators pay for,” George said. “And because that generates revenue, we’re able to subsidize the cost at which we can do solar and battery in someone’s home, because we’re not relying solely on the homeowner to pay the PPA rate.”

The economics of VPAs pencil out for utilities, solar companies, and homeowners, he added, without relying on subsidies. 

Solrite and sonnen are betting that this model will not only make residential solar profitable under NEM 3.0, but will also provide a serious boost for battery deployment.

That’s an assumption based in part on outcomes in other parts of the world, like Germany, where changes to net metering rules have sparked immense growth in storage installations, reaching around 220,000 new residential storage systems connected to rooftop solar in 2022 alone. 

“There’s a lot of doom and gloom out there in the industry, that the energy transition and solar in California has been ruined, but it hasn’t at all,” George said. “This is just the point in the energy transition where batteries have to come in.”