This Energy Company Makes a 'Virtual Power Plant' by Using Smart Devices to Shrink Demand

by Adele Peters, Fast Company

For a large portion of our customers, OhmConnect is the first time they’ve really seen a benefit because of the transition to renewable energy and a smart grid. They’re getting paid to participate in the grid in a way that they haven’t had the ability to do. I think it’s really critical that as we build out the next generation of infrastructure to make sure that we’re not leaving anybody behind.

Cisco DeVries, CEO of OhmConnect - an AnnDyl Policy Group client

California has a new power plant, but it doesn’t actually generate any energy itself. Instead, it’s virtual: When the grid needs power, the new system activates a network of smart devices in homes across the state to reduce demand in a coordinated way. At scale, it will be able to shrink energy use by as much as 550 megawatts—roughly as much capacity as the Boardman Coal Plant, a large coal plant that recently closed in next-door Oregon—and help avoid blackouts at crucial moments.

“The electric grid has to be balanced between supply and demand at all times, and normally, what we’ve done for 100 years is anytime there was more demand, we’d burn more fossil fuels to create energy,” says Cisco DeVries, CEO of OhmConnect, the startup that designed the virtual power plant, called Resi-Station—the winner in the energy category of Fast Company’s 2021 World Changing Ideas Awards. In the past, grid operators would turn on “peaker” power plants that often run on coal to satisfy moments of high electricity use. Instead of cranking up supply, OhmConnect focuses on the challenge of demand.

Customers who sign up for the service get periodic texts offering them cash incentives to use less electricity at a specified hour. Customers also get free or heavily subsidized smart devices, such as smart thermostats, and can then opt in to let their energy use be automatically adjusted to save energy when it’s most needed. Utilities pay OhmConnect for the service, and it, in turn, pays customers when they save energy.

Utilities have used a demand response model in the past, but the new system is designed with a focus on customers and an ability to scale up. It also works throughout the year, rather than only during a crisis. “Instead of turning an air conditioner off, we’ll change the setting, and we’ll change it quietly over time in the background,” he says. “Sometimes we’ll do that day after day after day. You might not even know what’s happening—we’re just quietly adjusting the amount of energy being used in your home by your air conditioning, or your refrigerator, or whatever else it is, and paying you for it every time we do it.”

In August 2020, when California was hit by record heat waves and wildfires and millions of people turned on air conditioners, some electric utilities began rolling blackouts. “We were able to provide a lot of energy savings even in a situation in which we were having a heatwave and the grid was in crisis,” DeVries says. “Fossil fuel power plants were struggling. Some went offline. Transmission lines were failing. OhmConnect showed up, and I think that’s been an important part of proving that we can be even more reliable than fossil fuels.” OhmConnect paid its customers $1.3 million, over a week, to reduce demand by nearly one gigawatt-hour.

One of the challenges, he says, is that potential participants are often skeptical that they can be paid for essentially doing nothing. To date, the company has created a network of 150,000 homes. But over the next two years, it plans to grow to 700,000 homes, making it the largest virtual power plant in the country. A recent $100 million investment from Sidewalk Infrastructure Partners will help subsidize the smart devices sent to customers.

It’s a system that can particularly help lower-income households who might not otherwise have been part of the transition to clean energy because they couldn’t afford solar panels (or they rent, and don’t own a roof) and don’t yet drive an electric car. “For a large portion of our customers, OhmConnect is the first time they’ve really seen a benefit because of the transition to renewable energy and a smart grid,” says DeVries. “They’re getting paid to participate in the grid in a way that they haven’t had the ability to do. I think it’s really critical that as we build out the next generation of infrastructure to make sure that we’re not leaving anybody behind.”

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