How businesses are benefiting from Hawaiian Electric's virtual power plant

As utilities face increasing pressure to cut back on fossil fuels and switch to renewable energy sources, many are turning to new technologies — including hardware, software and artificial intelligence — that can help them integrate and control distributed clean resources such as rooftop solar and batteries.  

One idea is to create so-called virtual power plants, an emerging energy and grid services tool that looks and feels more like an online network than a traditional power plant.

Among the first real-world projects to embrace this concept is a 1-megawatt (MW) system in Honolulu, built by Hawaiian Electric in concert with In partnership with 29 of its commercial customers and Stem, a battery storage installer. 

The project, financed in part by a $2.4 million federal grant that opened up in 2016, should help Hawaii reach for its goal of using 100 percent renewables for all its power by 2040.  Parts of it have been online since last year, but the installation is gearing up to facilitate a more seamless integration of the distributed resources.

“We need both customer-sited and utility-scale energy storage to help achieve our renewable energy goals,” said Colton Ching, Hawaiian Electric’s senior vice president for planning and technology. “Projects that test innovative technologies, such as this one with Stem, enable us to evaluate the technical capabilities and cost-effectiveness of customer storage in support of our operations to serve the needs of all our customers.”

Instead of turning on a single, large facility that burns fuel and requires workers to operate and maintain it, switching on a virtual power plant (VPP) often means tapping a network of automated solar panels, electric storage batteries and/or demand-response equipment that reduces the amount of power being used by several buildings. Sophisticated software and monitoring equipment coordinate the resources to act in concert, to add or subtract power from the grid as it is required.

Unlike many microgrids, which are often isolated and islanded, VPPs are meant to be aggregated into the broader grid, wrote Peter Asmus, an analyst for Navigant Research, in one of his many research notes about this emerging technology. Asmus predicted that by 2026, three times as much distributed generation will be coming onto the grid, compared with traditional centralized power plants. VPPs are seen as critical for optimizing those investments.

Aside from the Hawaiian Electric installation, there other early and notable VPP projects are also underway.

Simply Energy, for example, plans to build a second VPP (one that will include 2 MW of power intended for commercial accounts) in Adelaide, Australia. Adelaide’s first VPP, built by AGL, included 1,000 households and businesses. Both projects are pilots to see how the technology works. The state of South Australia said in February it is developing a large VPP that could include as many as 50,000 homes, using Tesla batteries.

In the United States, Southern California Edison is working on several VPP-type projects, spread across the Los Angeles basin, at various stages of development. Advanced Microgrid Solutions and the Irvine Co. recently completed a 10-MW VPP project that will serve both the Irvine Co., at 21 of its office buildings where Tesla batteries are installed, and the local utility, Southern California Edison. In New York, Consolidated Edison is building out a 52-MW demand management project in Brooklyn and Queens, New York, using batteries, solar panels and other equipment.

Hawaii’s VPP project is unique in that one of its primary objectives is to find a way to better manage Oahu’s large amounts of rooftop solar power generation, while also using new power control technologies to reduce peak demand and reduce stress on the island grid.

The first stage of the project involved installing batteries, software and power control equipment at 29 commercial properties in the Honolulu area that are hosting the resources for the virtual power plant. Those installations were completed last year.

Now, Hawaiian Electric and Stem are gearing up to integrate the systems into a single network that the utility can use to see how much power is available, in real time, at a local level, on its grid and control the resources to provide extra power or free up space on the grid during times of heavy power demand.

Stem, which built a business on installing battery storage systems and software at commercial properties to save property owners money on their power bills, is working with utilities to network those customers and offer their excess, unused stored energy to provide services to the grid.

“We help customers manage peak demand on the grid that can be a significant charge on their bill,” said Larsh Johnson, Stem’s chief technology officer. “Reducing their peak load on the grid saves them money and also makes them good corporate citizens.”

[Learn more about Hawaii’s energy transition during VERGE Hawaii: Asia Pacific Clean Energy Summit, June 12-14.]

The batteries often have energy left that can be used for other purposes, such as contributing to a virtual power plant, he added.

In Honolulu, Stem is helping Hawaiian Electric improve its capacity to host solar power generation, particularly at the beginning and end of the day, often called the “ramp,” when solar power generation is coming on at sunrise and when it is diminishing at sunset. The batteries also will be useful for absorbing excess solar power when the sun is shining, and providing spurts of electricity at other times, when the sun is blocked for some reason, Johnson said.

Stem also is building an 85-megawatt VPP in southern California, which serves individual customers as well as Southern California Edison.

While the pieces of Hawaiian Electric’s VPP are still being assembled, businesses that agreed to install batteries and participate in the project early on are already seeing benefits, primarily in the form of lower power bills.

At Wet n’ Wild Hawaii, an amusement water park in Honolulu, Stem installed a battery system with 108 kilowatts and 216 kilowatt-hours of capacity, and a software platform that includes real-time data and predictive analytics. The system tracks the amusement park’s power usage and uses factors such as weather to predict how much electricity the facility is likely to use in the hours ahead.

If the park’s power usage crosses a certain threshold, the batteries kick in and provide extra power, so that the park’s usage of grid power doesn’t rise too high. If it does, the utility will add high demand fees onto Wet n’ Wild’s power bill. The fees act as a deterrent to keep power demand on the grid from spiking out of control.

Wet n’ Wild pays Stem a monthly subscription fee, with an expectation that it will save multiples of that service price each year.

The system has been saving the park money on its power bills, after the batteries and other equipment were fully commissioned and calibrated to work with the park’s appliances, said Jerry Pupillo, the park’s general manager.

“Stem’s monitoring and information software alerted us to some patterns of our energy use that could be improved,” he added. “This enabled us to change our operations to be more energy efficient, and the demand charge management of the battery is even more pronounced on this lower load. The decision to adopt energy storage services, and to rely on Stem’s experience, has been a significant energy cost saver.”

The system is fully automated and controlled by Stem, so that Wet n’ Wild doesn’t have to become involved with its operation to receive the savings benefits, he said.