Dive Brief:

• Two virtual power plants comprised of residential Tesla Powerwall batteries have completed testing and been qualified to participate in wholesale markets managed by the state’s grid operator, the Public Utility Commission of Texas announced Wednesday.
• A total of eight virtual power plants totaling 7.2 MW will participate in the Aggregate Distributed Energy Resources pilot, known as ADER. The other six have completed initial registration steps and are in the commissioning process, the PUCT said.
• The pilot is overseen by the Electric Reliability Council of Texas, or ERCOT. Texas has a growing number of small battery systems, backup generators and other distributed resources located at homes and businesses. Customers have added about 300 MW so far this year, the PUCT said. 

Dive Insight:

Texas regulators tasked with improving electric grid reliability began working on the ADER program in June 2022. The project was launched after Tesla expressed interest in aggregating Powerwall batteries in Texas homes.

The work is “an example of the electric industry, PUCT and ERCOT developing a pilot to solve issues rather than just studying them,” PUCT Commissioner Jimmy Glotfelty said in a statement. The collaboration “achieved the clear goals outlined by the commission and is a model for future projects,” he said.

The ADER pilot and a 20-member task force is led by Glotfelty and PUCT Commissioner Will McAdams. The commission said their work will continue until permanent rules are developed for aggregated distributed resources to participate in the ERCOT market or until regulators consider the pilot complete.

The commission “deserves a ton of credit for this,” Texas energy market analyst and Stoic Energy President Doug Lewin said in a tweet. “Regulatory entities rarely move as quickly as they did to get this going. Lots more work to be done for it to scale, but this is a huge step.”

The first two ADERs will operate in CenterPoint Energy’s Houston-area service territory and the Dallas area served by Oncor Electric Delivery.

Launch of the Tesla VPP is a “milestone” for the state’s residents, utilities and electric system, Tesla Senior Vice President of Powertrain & Energy Engineering Drew Baglino said in a statement. “Our collective work has allowed Tesla to build a decentralized energy ecosystem that seamlessly integrates stored solar energy from Powerwalls onto the ERCOT grid.”

Resources participating in the ADER pilot must include “power generation devices,” including battery energy storage systems or generators, and may also include demand response devices like smart thermostats, controllable electric vehicle chargers and smart water heaters, the PUC said.

Currently there are about 2.3 GW of these types of resources across the state, regulators said. Participating ADER resources must be less than 1 MW each and the pilot is capped at 80 MW of total participation “to ensure a safe and controlled rollout,” they said.

“Small energy resources found in homes and businesses across Texas have incredible potential to continue improving grid reliability and resiliency by selling the excess power they generate to the ERCOT system,” McAdams said. “It’s a win-win for Texas.”