Dive Brief:

• Battery developer sonnen and real estate and energy conglomerate Wasatch Group announced on Thursday the deployment of a series of residential power plant projects in California for over 24 MW, 60 MWh, building off the model from their Soleil Lofts community in Utah.
• The projects, expected to be completed in 2021, will add solar power and sonnen ecoLinx batteries to about 3,000 residential apartment homes across seven Wasatch communities, starting with a retrofit in September of the 417-unit Heron Pointe apartment community in Fresno, California. In total, the seven projects will cost $130 million — Wasatch will fully fund the Fresno project for an undisclosed amount.
• The developers are working with Pacific Gas & Electric (PG&E) and Southern California Edison (SCE) to figure out the interconnection of the projects. The VPPs will stretch from Sacramento to San Diego.

Dive Insight:

Wasatch and sonnen seek to use the same value stream that they proved out with Soleil Lofts, turning an apartment community into a demand response grid asset. Rocky Mountain Power integrated the sonnen platform into their systems and is actively dispatching the Soleil Lofts VPP almost every day, according to sonnen, Inc. USA chairman and CEO Blake Richetta.

The VPP projects do not currently have plans to be dispatched directly by utilities, but it remains a possibility to work within the California energy wholesale market. In the next 12 months, the developers will establish whether the VPPs are dispatching their energy within the California Independent System Operator or directly through utility partners.

"As far as the utility dispatching our fleet directly, like Rocky Mountain Power does with Soleil Lofts, and potentially not participating in the CAISO, but instead participating, really simply, directly with utility, we're very open to that. We would love that kind of relationship," Richetta said.

Wasatch will fund the first fleet in order to prove out the model. The second fleet will have external investors, and Wasatch Energy Group is currently in discussion with additional potential capital partners, according to Ryan Peterson, president and managing partner of Wasatch Energy Group.

In California, several market mechanisms exist to utilize as a distributed energy resource (DER) aggregator. Wasatch Energy Group and its affiliate Soleil Energy are building out the VPP fleet in the state to create a "full turnkey solution," for other apartment communities to provide this option to their tenants, Peterson said. Wasatch is "really interested in deploying that product in non-Wasatch projects."

"It's obvious that the value of behind the meter, end-of-the-distribution-system energy storage, is adjacent to the customer load," Richetta said, contrasting apartment developments from VPP projects that aggregate solar-plus-storage in a wider area.

The developers remain "very interested in the day-ahead energy market" and participating through other market mechanisms through the California Independent System Operator (CAISO), according to Richetta.

In 2019, Sunrun became the first to bid into a wholesale market — ISO-New England — by aggregating distributed solar and storage. Sunrun's VPP projects across the nation were designed to achieve a number of value propositions, including helping lower costs by deploying energy based on time-of-use rates, and reducing peak demand.

Three community choice aggregators in Northern California announced Sunrun, who has deployed a lot of distributed solar and solar-plus-storage in California, will offer up to 20 MW from of back-up power to about 6,000 homes. Sunrun has also been tapped by SCE to pilot DER aggregation and demonstrate the asset of nearly 300 distributed solar-plus-storage systems.

"Virtual power plants become very interesting depending on the nature of the problem that you're tackling with your project. ... It very much depends on what your product-market fit is, who is your customer, how do they see the value DERs can create, and what commercial structure are they comfortable with," Michael Norbeck, Sunrun's grid services business development director, said.