July heat waves just lengthened VPP season

In a year of record-breaking temperatures, July has been the hottest month of all. In the U.S., several major heat waves have swept the country, beating temperature records everywhere from Washington D.C. to Las Vegas.

Unprecedented heat also brings unprecedented challenges for the still emerging virtual power plant sector. For instance, heat-related dispatches that in prior years came in August and September are arriving weeks early in 2024. Effectively, the season of need is expanding.

For Leap, a software-only VPP platform, July brought record-breaking dispatches from VPPs in both New York and California.

In New York, the company dispatched around 336 megawatt-hours in the first two and a half weeks of the month. That’s across more than 10,00 distinct distributed energy resource sites, with a peak load reduction of 30 MWh, the company exclusively shared with Latitude Media. 

Leap dispatched with ten distinct device partners during the July heatwave over seven event days — a significant jump over last July, when Leap had around half the concentration of events, said chief revenue officer Jason Michaels.

“These programs have not been called historically nearly as much as what we’ve seen this summer,” Michaels said. “To have as many dispatches as we’ve had in July is at best highly unusual.”

The majority of sites on Leap’s platform in New York are participating in a combination of utility, state, and ISO-run capacity programs, Michaels said. Those programs tend to include a diverse combination of device types, he added, including thermostatic controls, energy storage, and EV chargers. In New York in particular, there’s a lower concentration of energy storage due to restrictions in the five boroughs, and the overall balance is more skewed to smart building controls for commercial customers.

In California, meanwhile, Leap dispatched 437 MWh across more than 23,000 unique meters in the first two weeks of July, with a peak load reduction of 46 MW. (That’s a number that rivals PG&E’s VPP capacity for this year.) 

Over those 11 days, Leap dispatched for 49 distinct hours via Community Choice Aggregation and Demand Response Auction Mechanism programs. 85% of dispatched capacity, Michaels said, was day ahead awards, while 15% was hour ahead awards. During the West Coast heat wave, Leap dispatched with 33 distinct partners; around 20% of responding devices were battery storage, 23% were EV chargers, 45% were HVAC, 11% heat pumps, and 1% manufacturing and cold storage.

Preparing for an expanding season

July’s heat may have been unprecedented, but Michaels said Leap’s platform did have some experience participating in heat wave events in prior years — albeit not until much later in the season.

Those events provided lessons that  the company applied this month, especially around predicting and modeling the pipeline of devices.

Disruptions from supply chains, interconnection delays, and financing uncertainty make it more challenging to understand that pipeline, Michaels said, and policy developments like California’s net metering overhaul only complicate things further.

“We’ve seen that connections don’t always stay fresh,” he said. There’s therefore been a push to “use our data in our partner relationships to be able to test and make sure there’s a reliable connection from Leap receiving a dispatch, sending it to the partner and having it go all the way down to the device.”

There’s still work to be done on that front, Michaels said, but Leap’s dispatches in New York and California are positive indicators of the exact role VPPs can play as cities and states adapt to a changing climate.

“DERs are being asked to fit in a world that is designed for large-scale traditional generators and loads,” he said. “If you look at how DERs can add the most value to the grid, it’s actually meeting the point of greatest need.”

Heat wave data from the last five years shows that the mismatch they cause between supply and demand — when the grid is most fragile and blackouts are most likely — is a one to two hour window between 4 p.m. and 9 p.m., not a four or six hour one, Michaels said.

“It’s a scalpel that you need at that point, and not a blunt instrument in order to solve the problem,” he added. 

But Leap’s scalpel is getting bigger. In the last 18 months Leap’s software platform has expanded, tripling the number of customer sites that it can handle at one time. According to Michaels, that’s partly what enabled the company to respond to the jump in July dispatches without any major setbacks. 

And the ability to manage more devices at once will also help Leap expand into markets where the value per kilowatt is lower, he added, but device numbers are still high.

“That’s where being a technology company is a real differentiator for us and a big enabler.”

Editor's note: This story was updated on July 29 with additional data on Leap's deployments.