A leading energy service provider is looking to expand its rollout of virtual power plant services with the support of the U.S. Department of Energy.
Sunnova, one of the country’s largest residential solar providers, has filed paperwork with the Securities and Exchange Commission showing that it is looking to progress its buildout of virtual power plants (VPP) through a $3.3 billion loan from the Department of Energy (DOE)’s Loan Program Office.
Per the Department of Energy, VPPs are “generally considered a connected aggregation of distributed energy resource (DER) technologies, offer deeper integration of renewables and demand flexibility, which in turn offers more Americans cleaner and more affordable power.”
DOE Loan Programs Office director, Jigar Shah, has shown himself to be strongly in favor of VPPs having previously said “VPPs do more than provide decarbonization and grid services – they increasingly give grid operators a large-scale and utility-grade alternative to new generation and system buildout through automated efficiency, capacity support, and non-wire alternatives. By deploying grid assets more efficiently, an aggregation of distributed resources lowers the cost of power for everybody, especially VPP participants.”
VPPs are a cost-effective way for utilities and grid operators to provide resilience against extreme weather events like ice and snowstorms and heat waves. The more that utilities can rely on technologies like these to balance the grid, the less they’ll have to invest in the grid and other energy infrastructure.
Sunnova is seeking an “indirect guarantee of 90% of up to approximately $3.3 billion of solar loans.” A federal guarantee covering up to 90% of the losses on a portfolio of solar loans could expand access to Sunnova’s rooftop solar, battery, and home energy management technology and services to “decrease greenhouse gas emissions and increase the demand response impact of residential power systems,” per the filing.
A loan guarantee from the federal government would give technology providers, and their financial partners, protection from losses they may face when customers default on payments. With that protection, companies can then offer customers lower interest rates or more favorable financing terms.
Such a deal would allow DOE to expand access to rooftop solar and batteries for lower-income customers. Currently, the technologies that allow for VPP’s are higher in price. Typically, the setups have been aimed at the portion of the population able to front high initial set-up costs and therefore may be out of reach for those in lower income brackets or those unable to secure credit. Federal backing would put these newer technologies, which can help keep energy costs low, within reach for a larger pool of consumers.
These types of loans also help meet the goals of the Biden administration’s Justice40 Initiative, which seeks to deliver at least 40 percent of federal climate and clean energy funding benefits to disadvantaged communities.
Both Sunnova and DOE have made it clear that per the filing this is not a done deal. It does, however, align with the LPO’s priorities under Shah, and shows promise for the future implementation of VPPs.