Sunverge Energy Inc. is one of numerous companies offering software to aggregate distributed energy systems, such as this rooftop solar array being installed in Hawaii, into virtual power plants.
Disrupted in recent years by an uncoordinated rollout of distributed energy resources across their service territories, U.S. electric utilities are increasingly exploring how to benefit from rooftop solar arrays, batteries and other small-scale resources by combining them into virtual power plants.
If unsuccessful, utilities and their regulators "will continue to plan on traditional fossil fuel-based generation," said Martin Milani, CEO of Sunverge Energy Inc., a developer of cloud-based energy management systems that control distributed renewable energy resources and tie them into grid operations, enabling their broad participation in wholesale power markets.
"We have the ability to actually respond in real time, in nanoseconds," Milani said in an interview.
To facilitate its supply of virtual power plant software, the California-based company raised $11 million in an investment led by venture capital fund the Ecosystem Integrity Fund, with participation from venture capital affiliates of Midwestern U.S. utility Evergy Inc. and Norwegian energy giant Equinor ASA, Sunverge disclosed Aug. 7. Founded in 2010, Sunverge has raised roughly $65 million, including from investment arms of Siemens AG and TOTAL SA, according to S&P Global Market Intelligence data.
The latest capital injection will help Sunverge enhance its offering and expand its business with utilities, who "are looking at [virtual power plants] as something they want to control for grid services beyond peak shaving," Milani said. Sunverge's utility and grid services platform also offers demand response, frequency regulation, voltage management, operating reserves and time-shifting of variable solar resources.
'The right investment'
Sunverge is collaborating in demonstration projects in New York with Consolidated Edison Inc. and Washington with Puget Sound Energy Inc., the company announced in early 2019. Other utilities on its client roster include Arizona Public Service Co., the Sacramento Municipal Utility District and the Glasgow Electric Plant Board in Kentucky.
"All the programs we are doing will expand over the next 18 months," Milani said.
While Sunverge first developed software to manage its energy storage system hardware, its future growth will center on software for utilities, the CEO said. The company's new investors appear sold on that strategy.
"We believe the Sunverge platform can play a critical role in transitioning our existing power system from fossil fuel to reliable and clean distributed generation," Geoff Eisenberg, partner at the Ecosystem Integrity Fund, said in a news release.
The platform "proves the value of the baseload power generated by [distributed energy resources] and will ultimately help utilities convince both public utilities commissions and consumers that assets like solar and energy storage are the right investment for the future of our energy markets," added Gareth Burns, managing director at Equinor Energy Ventures.
Several other California companies are also ramping up efforts to squeeze more value out of distributed resources through virtual power plants.
Sunrun Inc. is setting up residential virtual power plants in Northern California and New England, while Advanced Microgrid Solutions is supplying a network of battery-backed commercial buildings in Southern California. Stem Inc. has also developed a software platform for solar-plus-storage arrays and virtual power plants.
In addition to expanding its business with U.S. utilities, Sunverge is looking to demand for virtual power plants abroad, especially in Europe and Japan, according to Milani. The company already has a foothold in Japan, supplying its software in a pilot project with Kyushu Electric Power Co. Inc. Project participant Mitsui & Co. Ltd. is also an investor in Sunverge.
With its dense population, limited domestic energy resources and ongoing questions related to its reliance on nuclear power, Japan may become "a major hotbed of [virtual power plant] innovation," according to a recent Navigant Research white paper commissioned by Vancouver, British Columbia-based virtual power plant technology supplier Enbala Power Networks Inc.
Another software developer, AutoGrid Systems Inc., in June announced it was working with ENERES Co. Ltd. on a sprawling virtual power plant project in Japan, involving the addition of more than 10,000 distributed energy assets between 2020 and 2021, including behind-the-meter solar, energy storage and combined heat and power resources, and electric vehicles.
Australia is emerging as another early hotbed. Tesla Inc. is building a virtual power plant consisting of up to 250 MW of solar power and 650 MWh of energy storage on 50,000 homes in South Australia. Enbala is supplying its cloud-based platform for a project in South Australia with AGL Energy Ltd.
Virtual power plants in the Asia-Pacific region as could grow to roughly 12,637 MW by 2029, up from about 1,045 MW in 2019, making it the world's fastest-growing market for the technology, according to Navigant.