Google is funding a one-gigawatt virtual power plant in the Mid-Atlantic to bring its data centers in the region online faster.
The deal is an expanded bring your own capacity contract with Voltus, building on the more than 100 megawatts the aggregator has already developed on Google’s behalf in PJM. Voltus launched the BYOC framework last year, when the region’s record-breaking capacity prices led it to fast-track market reforms.
It’s also a massive jump in size over other VPP deals of its kind. Despite the enthusiasm around distributed capacity, there’s still a massive gap between the current size of the resource and what’s needed for VPPs to become a meaningful part of the grid mix. This deal, said Voltus CEO Dana Guernsey, is designed to help catalyze the market, offering a durable commercial structure others can follow — much like Google has done with the creation of the clean transition tariff for emerging forms of clean firm power.
While the specifics of the deal aren’t public, Guernsey confirmed that Google signed a contract that extends through 2040, and that it will offset load from multiple data centers in PJM. That longer duration is key, Guernsey added. “Part of the commentary of our phase one deal was ‘will it perform?’ and ‘why is it only three years?’” she explained. As for proving the capacity can be contracted, Guernsey said the 100-MW VPP Voltus developed for Google over the summer has already been fulfilled and was “over-subscribed.”
The pair didn’t reach the size of this deal — 1,070 MW — arbitrarily, she added. Instead, that number is the result of an assessment of what and where Voltus could sign assets, the size of the market, and, most importantly, the real-world potential of batteries.
Batteries, batteries, batteries
The VPP that Voltus builds for Google will include a range of assets, but it’s becoming clear that batteries will play a significant role in scaling BYOC, Guernsey said.
“We really believe in the behind-the-meter C&I battery market in particular,” Guernsey explained. She declined to specify exactly how much of the VPP will comprise batteries, but said it will be “a chunk.” Most of those will be commercial-scale, where long-term contracts like the one with Google can help make deployments financeable: “We’re actually creating a market where they don’t need to take merchant risk anymore because we have the longer-term contract here.” (The company also leverages some residential batteries via partners like Sunrun.)
Last summer, Voltus acquired energy storage startup Brightfield, bringing the company’s tools for cutting soft costs and speeding up battery deployments directly into Voltus’ portfolio expansion efforts. Voltus raised a $225-million Series D in the middle of building out that first VPP for Google, in part to fund integrating Brightfield and scaling battery deployments.
Today, that acquisition is a critical part of Voltus’ ability to build a gigawatt-scale VPP in short order.
Tim Hade, who founded Brightfield and now serves as chief operating officer at Voltus, said that with BYOC frameworks now in place, the next big challenge for the distributed energy industry is proving its ability to scale, and quickly.
“If you actually look at this from a technological, engineering, procurement, construction standpoint, we can build distributed capacity faster than we can build centralized capacity in the United States today,” Hade said onstage at Latitude Media’s Flex Summit earlier this month, in the days before announcing the Google deal.
To date, though, the VPP industry as a whole hasn’t actually built that quickly, or at scale; most deployments have been on the order of hundreds of megawatts. That’s just not big enough to help a data center get online quickly.
“What we have to prove over the next three, four, or five years is that we can do this at 10-, 15-, 20-gigawatt levels,” Hade added.
