Tesla Virtual Power Plant in the USA

Those with Tesla Solar Power and Tesla Powerwalls who have opted into Tesla’s Virtual Power Plant program get $2 per kwh when their power utility uses the Tesla Virtual Power plant.

CORRECTION: Matt Smith has indicating that these VPP power emergencies will not be that frequent and Tesla does not take a cut of the program so far.

My assumption of 1 emergency per month is almost definitely too aggressive. The history shows that for just about every year but 2020, these types of emergencies and warnings have been pretty infrequent. And not all of the emergencies and warnings listed here would count as a CAISO AWE declaration which would trigger a payment under the ELRP which the Tesla VPP operates under. And even of those warnings and emergencies that do qualify for a payment, it may not be in all geographies within CAISO.

The Tesla VPP particular program is more expensive than most grids could/should offer, so scaling these economics nationwide is definitely a problematic assumption. Matt Smith ran through some detailed math on this a while ago in the video. He assumed a house with solar and Powerwalls could generate ~$400 / year, which would be split between Tesla and the customer.

There are 2408 fleet homes in the Northern California PG&E Tesla Virtual Power Plant (VPP) program. Yesterday, as the first Virtual power plant event. This was due to high amounts of air conditioning being used for several hot days in Northern California.

About 25 kwh was used from my home during this event. This was about $50 generated from the event.

Powerwalls and solar and have reduced my monthly energy bills from $200-400 down to about $30-50 mainly from natural gas for water heating and a gas stove. This VPP event offset the charge for one to two months of power bills.

The 2400 homes can generate a peak of about 16-18 MW of power. This depends upon the number of powerwalls at each home and how much backup power they reserved. Two Powerwall put out about 10 KW of power or 10 kwh per hour.

The event lasted from 5am to 9pm that day. This VPP was discharging for PG&E from 6pm to 9pm. PG&E was supplied about 42 MWh of power. This meant 42000 kwh or about $84000 paid to VPP supplier homes. Tesla likely also made similar amounts of money.

CAISO study calculates a massive price differential to ensure local reliability in the face of impending plant closures: $299 million for a 262-megawatt combustion turbine, $805 million for a combination of distributed and front-of-the-meter storage.

A $800 million natural gas peaker plant would be kept online even if it was not used. The VPP at 18 MW would be about 8% of a full natural gas peaker plant. However, there may not be the full need for the entire output of the peaker plant. PG&E does not pay the $1000-2700 per kw to support the construction of the peaker plant. PG&E does not pay for the natural gas power when the peaker plant is used. The Tesla solar and powerwalls are all paid and installed by the homeowners. This likely cost a collective $90-130 million. If the program expands to 32000 homes then they would be able to mostly offset a 270 MW peaker plant. It would cost the homeowners $1.45B-2B to install. The homeowners would be doing it anyway. They get repaid for the energy shortage events.

Peaker plants run an average of 2.8 hours every time it starts up and has a capacity factor of 2-10 percent. Most of the plants are 40-80 MW in size. 40 MW for 2% capacity factor would be 174 hours and 6,960,000 KWH. 80 MW for 10% capacity factor would be 868 hours and about 70,000,000 kWH.

If the VPP starts to fully replace a full peaker plant that would mean one to five 3-hour events every week. Annual VPP costs assuming $2 for kwh for homeowners and $2 per kwh for Tesla would be $14M to $140M per year.

About 12 or 15% of the peaker plants are used less than 1% per year or for one event every three weeks. This would mean those plants still have the same construction costs. They are only used for 0.5% of the year. A 40 MW or 80MW plant would be used for 45 hours. This would be $4-8 million per year. It would save the $150-300M construction cost. Annual operating costs would be similar. It would likely make sense for a utility to use a virtual power plant for peak plant usage at less than 1% and perhaps even 2-3% capacity levels.

Across California, nearly 80 gas-fired power plants help meet statewide peak electric demand. These plants include 65 combustion turbines designed to ramp quickly to meet peak demand, and over ten aging steam and combined cycle turbines now used infrequently to meet peak needs.

PG&E supplies about one-third of the power for California.

In the last hour of the event, more homes were dropping out because they had hit the minimum reserve backup power level or their Powerwalls were tapped out.

At the 0.2% usage level or 18 hours per year then the VPP participants would likely get a positive return $420 per year.
At the 0.5% usage level or 42 hours per year then the VPP participants would likely get a positive return $900 per year.
At the 1% usage level or 87 hours per year then the VPP participants would likely get a positive return $1800 per year.

If the VPP program was expanded to five times the total population of California then it would be a $1 billion per year profit for Tesla.

A homeowner would $420 per year per homeowner if VPP is used only one 3-hour event every other month.

 

SOURCES- Tesla, PSEHealthyenergy
Written by Brian Wang, Nextbigfuture.com