Utilities Can Leverage Solar for Demand Flexibility Initiatives

While the cultural zeitgeist has shifted, the AESP 2024 State of Demand Flexibility Report found that 93 percent of utilities prioritize demand flexibility initiatives like demand response, EV charging, and more, with 66 percent of respondents surveyed attributing that interest in increasing grid resiliency. The combined pressures of increased electric demand from AI and data centers, volatile and erratic weather conditions, and supply and demand issues continue to challenge electric utilities struggling to meet electric demand without high peak energy purchases or costly grid infrastructure improvements. Fortunately, the proliferation of behind-the-meter distributed energy resources (DERs) like solar, battery energy storage systems, electric vehicles (EVs) and EVSE chargers, and smart devices like thermostats and water heaters provides opportunities for utilities to meet rising demand without incurring high costs.

Of these potential DER assets, photovoltaic solar energy — especially as coupled with battery energy storage systems — is uniquely positioned to provide decentralized power that utilities can aggregate using Grid-Edge distributed energy resource management systems (DERMS) to enact any number of demand flexibility initiatives. In the first half of 2024, the U.S. installed approximately 14.1 GW of energy storage to the grid, the largest first half for solar on record. That confidence continues today, as clean energy executives are appealing to the Trump administration that solar, wind, and other forms of renewable energy are complementary to current energy policy. Read on to learn how utilities can benefit from including solar in their demand flexibility initiatives. 

Demand flexibility & virtual power plant support

According to the Department of Energy (DOE), the U.S. needs between 80-160 GW of virtual power plant capacity by 2030 to meet growing demand. Currently, the U.S. has around 30-60 GW of virtual power plant capacity, largely attributable to demand response programs. Solar supports the expansion of virtual power plant capacity by providing a clean, renewable energy asset that utilities can employ for demand flexibility programs to meet demand, shifting load to where and when it's needed the most. 

Why solar?

Solar provides a path to scalable, cost-effective grid solutions as utilities prioritize demand flexibility. Last year, the U.S. Energy Information Administration (EIA) reported that solar and wind were projected to lead growth in U.S. power generation until the end of 2025. According to the Berkley Lab, solar yielded $1.1b in economic benefits while outpacing the generation costs. 

As photovoltaic solar panels become increasingly affordable, behind-the-meter solar assets are increasingly common. Through the use of a Grid-Edge DERMS, utilities can include solar in their portfolio of demand flexibility customer programs quickly and easily. Accessing communally generated solar energy provides low-cost energy that utilities can deploy for grid resiliency, and to defray high peak energy market costs. 

Diverse use cases for Solar & demand flexibility

Solar is useful in several demand flexibility initiatives including demand response and virtual power plants. As solar relies on battery systems to store excess solar energy, utilities can call upon these assets to meet demand. For example, utilities can call demand events in advance of particularly high demand days as part of an energy arbitrage tactic. In this case, utilizing ambient stored solar during peak periods of demand decreases the potential for peak energy market purchases, while enhancing grid resiliency. Comparably, utilities can aggregate that otherwise disparate energy into a virtual power plant, redistributing communally-generated behind-the-meter solar assets to meet demand. For both, utilities benefit their customers by reducing grid congestion and defraying the high energy market costs that can ultimately impact customer bills. 

Enhanced grid visibility

Grid-Edge DERMS are built to aggregate numerous devices and device types, including, of course, photovoltaic solar. Additionally, these platforms can control not only solar, but the surrounding accouterment like the solar inverters required to convert energy from direct to alternating current for the grid, or battery energy storage systems. These devices provide real-time and historical data that utilities can use to gain clear insights into solar production. Coupled with forecasting software, grid operators can determine the best opportunities for demand flexibility programs that feature solar, running them at the times they are the most effective while creating minimal customer interference. 

Increased grid reliability

The potential for renewable energy as part of a healthy energy portfolio is significant. For example, last year California provided 10 hours of electricity for 98 days with renewable energies alone. Solar is the most abundant renewable energy source on earth, with the sun providing roughly 173K terawatts of Earth at any given moment, 10,000 times the world’s total energy demand. As of 2023, the average residential solar panel produced between 250-400 watts per hour of direct sunlight. This represents a static figure that will change as the technology evolves: solar technologies will only get better with time, providing increased benefits to homeowners and utilities alike. Considered alongside and as part of demand flexibility programs, solar has incredible potential to increase grid resiliency by providing decentralized renewable energies that utilities can employ in customer programs.

Conclusion

Photovoltaic solar has an enormous amount of potential just waiting to be tapped. For example, floating solar arrays could provide up to 1,476 terawatt-hours of clean energy. Already, the average capacity of solar projects built in 2024 is nearly 6 times greater than it was in the previous decade, a trend that promises to pay off. As one of many DER assets, solar is uniquely positioned to increase grid resiliency without incurring the high costs of infrastructure upgrades, all while defraying high peak energy market costs.

Amber Mullaney brings nearly two decades of dynamic leadership, growth marketing, and strategic communication expertise to her role, spearheading Virtual Peaker's VPP software marketing initiatives over the last four years. A proud Texan native, she graduated from the University of Houston with a public relations and interpersonal communication degree. She is passionate and experienced in driving revenue growth, managing product lines, enhancing brand visibility, and fostering customer engagement.

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