|The Soleil Lofts apartments in Herriman, Utah, include solar and batteries that work as a virtual power
plant. Real estate company Wasatch Group and Shell's Sonnen subsidiary are taking their model to California.
Source: S&P Global Market Intelligence
Building on their battery-backed, solar-powered Soleil Lofts apartment complex under construction in the Salt Lake City suburb of Herriman, Utah, real estate company Wasatch Group and Sonnen Inc., a lithium-ion battery affiliate of oil major Royal Dutch Shell PLC, have unveiled plans for more such software-controlled virtual power plants to provide stored solar electricity for a variety of grid services in California and Utah.
The Los Angeles-based subsidiary of Germany's Sonnen GmbH, which Shell acquired in 2019, will partner with Soleil Energy and Wasatch Energy Group, two recently launched sister companies, to transform roughly 3,000 apartment units at seven locations throughout California into the largest virtual power plant, or VPP, of its kind. The companies also plan to expand into VPPs at commercial and industrial buildings, initially in Utah, top executives of the companies said.
"[We are] looking at both replicating the residential model in what really is going to be the biggest VPP in the world in California ... and then in Utah, [we are] looking at how to figure out the problem for commercial buildings as well," Sonnen Inc. Chairman and CEO Blake Richetta said in an Aug. 26 interview.
With almost five times the power and energy storage capacity as Soleil Lofts, Wasatch's California VPPs are designed to provide resiliency for residents and relief to the electric grid in a state where wildfires, heatwaves and thin generating capacity reserves have resulted in unprecedented power outages over the past year. That includes Pacific Gas and Electric Co.'s precautionary shutoffs to prevent its infrastructure from setting wildfires in Northern California and the recent statewide rolling blackouts that forced a sweeping grid reliability review.
The $130 million, multi-phase residential VPP rollout in California, funded by Wasatch and tax equity investors, includes more than 24 MW of solar power and 60 MWh of energy storage capacity at Wasatch Property Management Inc. apartments. The first retrofit project starts in September at Heron Pointe, a 417-unit apartment and townhouse community in Fresno, Calif. The entire portfolio, scheduled for completion in 2021, stretches from Sacramento to San Diego.
Sonnen batteries are installed inside apartments at Soleil Lofts
Residents will receive a discount on their electric bills compared to conventional retail power supplies and have the added bonus of backup power.
"California is absolutely the perfect place [for VPPs]," Richetta said. The state's "unpredictable, volatile clean energy" requires batteries and software to become more manageable so California can "complete its renewable energy transition," the executive added. "We know how to make it work, and it's by swarming batteries."
At the same time, the companies are "working on proving out this model" at commercial and industrial sites, said Ryan Peterson, president and managing partner of Wasatch Energy Group. Construction on one of those projects, the five-building Soleil Technology Park, recently started in West Valley City near Salt Lake City, Peterson said.
The details on the apartment network in California and business park project in Utah shed additional light on the companies' joint VPP expansion agenda originally disclosed to S&P Global Market Intelligence in late 2019. The companies plan to soon release additional information on Soleil Technology Park, the executives said.
Demand response and beyond
In California, Wasatch's new solar installation company, Soleil Energy, will handle project engineering, procurement and construction at the seven apartment complexes, while Sonnen will supply the battery systems and software to aggregate the stored solar output at each of the complexes into dispatchable assets.
Initially, Wasatch Energy Group and Soleil will deploy the California VPPs for demand response through an auction program managed by the California ISO, the state's primary wholesale grid operator, during peak demand periods and will use the batteries to respond to price signals embedded in California's time-of-use rates.
But the companies have bigger plans for the future, including broad participation in wholesale markets, as foreseen by the Federal Energy Regulatory Commission's landmark storage order. That includes bidding into real-time and day-ahead energy markets, helping utilities and community choice aggregators meet resource adequacy requirements, and providing ancillary services such as frequency response and voltage regulation.
Wasatch Group and Sonnen plan to finish their inaugural collaboration, Soleil Lofts, by May 2021. Berkshire Hathaway Energy subsidiary PacifiCorp, which operates in Utah under the name Rocky Mountain Power, has full control of roughly 250 behind-the-meter batteries now in the VPP. Once complete, the network will consist of more than 600 battery systems totaling 5 MW of 2.5-hour energy storage and more than 5 MW of behind-the-meter solar.
Rocky Mountain Power is cycling the batteries daily to shave peak demand and is dispatching them multiple times a week to relieve congestion at a nearby substation, Richetta said. Utility officials have discussed a range of other planned applications for the distributed solar-plus-storage system, including backup power, frequency response, voltage regulation and participation in the Western Energy Imbalance Market, a real-time energy market operated by the California ISO.
"We're motivated to break into all those markets," Richetta said.