Virtual Power Plants Just Got Funded — Inflation Reduction Act Includes $4.3B For Residential Energy Flexibility

July 28, 2022

Yesterday, Senators Manchin and Schumer unveiled their newly reorganized budget reconciliation measure, which represents an important step in combating climate change. In addition to health care, manufacturing, and domestic energy production provisions, the proposed legislation also funds residential energy flexibility to the tune of $4.3 billion. The bill includes a national "performance-based, whole-building" program that analyzes and values metered energy consumption changes based on energy savings and the grid value of their impact depending on timing, location, and greenhouse gas emissions.

This "measured-performance program" enables a comprehensive technology-agnostic strategy that integrates various solutions into Virtual Power Plants that can meet grid and decarbonization goals. The energy solution innovation opportunities range from effective insulation and air conditioners to how EVs charge and batteries discharge.

If passed, the proposed $4.3B would flow to state energy offices to distribute as incentives paid out based on quantified performance. Determined by actual results at the meter, these programs ensure investment goes where and when it's needed the most and only for measurable outcomes that benefit customers and the grid. 

"The VPP program in this bill is a win for all stakeholders. It encourages market innovation, supports local jobs, reduces customer energy costs, helps achieves decarbonization goals, and keeps the lights on by improving grid resilience," said Matt Golden, CEO of Recurve and legislation contributor.

The virtual power plant model is already successfully deployed and gaining traction in markets like California. Its statewide Market Access Program (based on Recurve's FLEXmarket) responds to Governor Newsom's grid reliability emergency by paying flexibility providers a premium for saving or shifting loads at peak hours.

Recurve is deploying this approach with major California utilities and community choice resource providers across the state, utilizing both innovative and traditional technologies through a growing network of flexibility aggregators. Measuring performance is already enabling market innovation and customer choice, from helping MCE customers implement battery storage in residential buildings that respond to grid needs to deploying innovative EV charging and smart thermostats.  

Beyond California, grid reliability and greenhouse gas (GHG) emission concerns are quickly escalating. Residential energy use accounts for roughly 20% of GHG emissions in the United States, and the risk of grid failure is imminent from Texas to New York, with the highest risk of energy emergencies during peak summer conditions across much of the Midwest grid. 

"Why are blackouts looming? Blame extreme weather, not wind and solar" Canary Media 2022

One key solution to address these issues is flexible virtual power plants that enable every building and customer to participate in grid decarbonization and achieve our broader climate goals. The funding provided by the Inflation Reduction Act would allow program implementation at scale, making it possible for every household in America to be included in the energy transition. 

Read the full bill here with highlights on energy efficiency and electrification on page 573.

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