Advances in smart technology have made it possible to manage energy in unique ways. For example, the state of Texas has embraced distributed renewable power and energy storage to give customers the ability to supply power back to the grid.

Last October, the Electric Reliability Council of Texas (ERCOT) adopted a policy that will create so-called virtual power plants on the state’s grid. ERCOT is the independent systems operator (ISO) for most of the state. With more than 52,000 lines of transmission and approximately 26 million customers (about the population of Texas), it manages electricity for about 90% of the load for the state.

The so-called Aggregated Distributed Energy Resource (ADER) project adopted by ERCOT’s board will allow virtual power plants to supply up to 80 megawatts (MW) of aggregated power. Virtual power plants are possible when customers have excess power they can sell back to the grid. When a utility manages the excess power provided by these individual consumers, it can aggregate the power into larger quantities. This gives the utility a valuable resource that can be used in much the same way as wholesale power provided by plants and other generating facilities.

This also turns customers into both consumers and producers of power. These hybrid customers are referred to as “prosumers.”

The circumstances that make virtual power plants possible are most often created when a large quantity of customers have distributed generation, such as solar and wind power, combined with storage technology to bank their electricity. Texas now has all the right ingredients.

A mix of stakeholders helped shape this policy in 2022. Now, they are capitalizing on the opportunity to create their own virtual power plants. For example, Tesla, Austin, Texas, has launched Tesla Electric, a program that allows customers that own its Powerwall home battery system to sell excess stored electricity back to the grid. According to the company, Powerwall technology “tracks energy prices in real time and sells excess electricity to the grid when prices are high.”

Another stakeholder, renewable energy retailer Octopus Energy, Houston, recently announced a new partnership with Enphase Energy Inc., a supplier of solar and battery systems based in Fremont, Calif., to create a virtual power plant by flexibly controlling customers’ battery usage and bidding excess power back to the grid.