Lawmakers say ‘virtual power plants’ could help Oregon. Utilities say they’re already here

As Oregon’s energy demands increase, lawmakers are looking for ways to help cut the strain, at least during high peak times.

An Oregon bill would create statewide regulations to increase the use of “virtual power plants,” also known as community-based power, to help harness and distribute energy that’s been generated in homes onto the grid when demand is at its peak.

But some of the state’s major utilities already have programs like these in place, and opponents of the bill say new regulations could disrupt current progress that’s underway.

Many people already have virtual power plants in their homes, even if they don’t know it. Think smart thermostats, solar panels, battery storage or even electric vehicles. Those systems can be set up to respond in real time to send energy to the power grid during peak moments, like extreme weather events when more people turn on air conditioning or electric heating systems.

Some utilities already offer their customers options to enroll in programs that provide incentives if they use less energy at home when the grid is strained.

Senate Bill 1582 would expand these kinds of programs statewide — not just rewarding customers for using less power, but taking electricity generated or stored at homes and businesses and using it elsewhere. The bill aims to reward customers who sign up while ensuring costs remain low for all ratepayers.

It would create rules for how utilities and entities known as “aggregators” work together in a transparent manner. Aggregator companies manage and distribute energy from these devices when needed.

The bill would also direct the Oregon Public Utility Commission, which regulates electric and gas utilities, to create yearly goals to increase the use of virtual power plants.

“This bill is what Oregon needs to get us up and running in this century, and this is an affordability and resiliency bill,” Democratic state Sen. Courtney Neron Misslin, chief sponsor of the bill, said during a public hearing. “Community-based virtual power plants improve reliability and help prevent rolling blackouts, but they also keep costs down.”

The need for more energy leads to distributed energy

Oregon’s decades-old power grid needs major upgrades. The current powerlines are also often at capacity. All while renewable energy developers are waiting years to connect to the grid. This bottleneck is leaving Oregonians at risk of not having enough power to meet the increasing demand, especially during heatwaves or extreme cold snaps when energy use is at its highest.

Last year, Oregon released its first-ever Energy Strategy report, which provided dozens of recommendations on how the state can meet its renewable energy and climate goals. One of those recommendations includes using virtual power plants to play a bigger role in reducing demand for traditionally generated energy.

While the aim is to use power from homes or businesses — generated by use of solar panels or stored in batteries — virtual power plants can also help temporarily solve the costly need to build out more power plants.

“What we need is a full statewide rollout that maximizes the important investments that we’ve already made,” Neron Misslin said at a public hearing. “And when power is shared back to the grid during peak demand, it can replace more expensive options, making the program even more affordable.”

But utilities like Portland General Electric oppose the bill, according to PGE’s director of regional integration, Franco Albi.

“We definitely agree with the intent of this bill to accelerate distributed energy resources and virtual power plants and a customer power grid,” he said. “However, this bill creates duplication. It disrupts real progress and increases costs for all customers.”

According to Albi, PGE first started developing a virtual power plant program back in 1999. This year, 230,000 customers are enrolled, about 25% of its customer base. That’s helping the utility bring in power equivalent to the now-closed Boardman coal plant, which produced about 600 megawatts.

“We have enough to power 13% of our peak load,” he said. “That’s enough power to shift energy from the hottest part of a day for a city the size of Gresham. We do that today, and we have a goal to move that to 25% of peak load by 2030.”

Albi said PGE already provides detailed information about its programs to the Public Utility Commission, potentially duplicating work the bill would delegate to the commission. The legislation could also potentially increase costs to customers.

Although PGE supports paying customers for contributing to virtual power plants, it opposes the approach used in SB1582 — an approach that does not incorporate the fluctuating cost of electricity on power markets, he said.