What are 'virtual' power plants?

STORY: They're being billed as a cleaner and greener way to avoid blackouts.

And they could be one solution to a looming global energy crisis.

But what are virtual power plants - and why are companies like Google and GM getting involved?

Virtual power plants - or VPPs - are pools of decentralized energy resources.

Resources like electric vehicles - or electric heaters controlled by smart thermostats.

The VPPs will - with permission from customers - use advanced software to react to electricity shortages by backing off the consumption of those resources.

It'll use techniques like switching thousands of EVs from charge to discharge mode.

Or prompt electrical heaters to lower their output.

The goal is to back off on unnecessary energy consumption to ease loads on electricity grids when supply is short... and avoid disaster.

Here's Mark Dyson, the managing director of the carbon-free electricity program at the energy transition nonprofit RMI.

"We've seen on display over the last few years significant existential threats to the reliability and resilience of our power system in the United States with blackouts in Texas, blackouts across the Eastern Interconnection. (Flash) We have a reliability crisis in this country, and we need every tool at our disposal, including virtual power plants, to help address it."

RMI will be hosting a new initiative known as the Virtual Power Plant Partnerships, or VP3.

It'll be working with big names like GM, Ford, Google who say they want to establish standards for scaling up the usage of VPPs - together.

"Each of our partners, each of our members has their own business around virtual power plants. What we seek to do in VP3 is use the insights, the experience, the lessons learned from those companies and other companies around the country and around the world to understand how to grow the market for any kind of company who wants to participate in the VPP market."

VPPs have already improved grid reliability in places like Germany and Australia.

They're poised for explosive growth in the United States thanks to new or enlarged tax incentives for sustainable energy efforts in 2021's Inflation Reduction Act.

"Our goal is to educate policymakers and regulators on the opportunity that virtual power plants present in the United States to improve reliability, improve affordability, and accelerate decarbonization of the U.S. power grid."

And RMI estimates that by 2030, VPPs could reduce U.S. peak demand by 60 gigawatts...

That's the average consumption of 50 million households.