Can virtual power plants lower bills in North Carolina?

North Carolina’s power demand is rising fast, driven in part by energy-hungry data centers and a shift toward electric vehicles and appliances.

Meeting that demand could require billions of dollars in new power plants and grid upgrades — costs that often show up in customers’ monthly bills.

Another option is gaining traction: virtual power plants.

Unlike traditional power plants, virtual power plants do not generate electricity in a single location. Instead, they connect thousands of homes and devices and coordinate them to act as a single source of power.

“It’s essentially software that connects and coordinates devices in homes and businesses, allowing utilities to control how and when they use electricity,” said Molly Bao, North American connected energy lead for Accenture.

Those devices can include rooftop solar panels, home batteries, electric vehicles and smart thermostats.

By adjusting when those devices use or supply electricity, utilities can reduce strain on the grid during peak demand, which can make the system more efficient.

“It makes your bills cheaper, it makes the grid greener and it makes the grid stronger,” Bao said.

Why the idea is gaining traction

Electricity demand is expected to grow sharply in the coming years. Bao said data centers alone could account for about 40% of that increase over the next decade.

Utilities typically meet rising demand by building new infrastructure, including natural gas plants used during peak periods.

Those plants can be expensive and take years to build. In North Carolina, their fuel costs are also passed directly to customers.

Bao said virtual power plants could reduce that need by using existing capacity more efficiently.

“If we can control when we’re running things, we actually have enough capacity in the grid to satisfy that load,” Bao said.

She said virtual power plants can be deployed in months and may cost 40% to 60% less than new gas-fired “peaker” plants.

Where it’s already working

Several states have begun using virtual power plants to manage demand.

In California, utilities have tapped into more than 100,000 home battery systems during periods of high demand, helping avoid blackouts and saving an estimated $200 million in grid costs.

Puerto Rico has relied on distributed solar and battery systems to maintain service through extreme weather and grid disruptions.

In Massachusetts, some customers who allow utilities to use their home batteries can earn between $1,000 and $4,000 a year.

Early steps in North Carolina

Duke Energy has started building pieces of a similar system.

The company’s PowerPair program offers incentives of up to $9,000 for customers who install rooftop solar panels and battery storage.

Those systems can provide backup power for homes and, in some cases, support the grid.

But the program is limited. Participation is capped by regulators, and enrollment is not guaranteed.

Duke has also proposed a nonresidential virtual power plant program that is now under review by the North Carolina Utilities Commission.

Challenges

Even as interest grows, utilities say virtual power plants are not yet ready to meet demand at scale.

Neil Bhagat, who leads Duke Energy’s transmission strategy team, said coordinating thousands of devices requires complex infrastructure and careful testing.

“Having the telemetry, having the sensors, having the backhaul into the system — all of that coordinated is a significant investment,” Bhagat said.

He said the technology has not yet demonstrated the level of reliability required for large customers.

“I haven’t seen it quite achieved at the level that is required to have the capacity, to have the reliability of having 99.99%, which is what data centers want” Bhagat said.

Utilities must be confident the systems will perform when demand is highest, particularly as more large users come online.

Regulation is another challenge in North Carolina, where rules were largely designed for traditional power plants and are still adapting to newer, distributed systems.

Recent changes to net metering, along with limits on program participation and how customers are compensated for sending power back to the grid, can make it harder to scale virtual power plants.

“There are regulatory reforms happening,” Bao said. “Everybody is aware that we need speed to power, and we need clean energy now.”

What it means for customers

At the center of the debate is cost.

Utilities say new infrastructure may be necessary to ensure reliability. But those investments can lock in higher costs for decades.

Virtual power plants rely on equipment already installed in homes and businesses, which could reduce the need for new construction.

Still, participation depends on incentives.

“If the incentives aren’t there, they’re not going to enroll,” Bao said.

For now, virtual power plants remain an emerging tool.

As demand continues to rise, regulators and utilities in North Carolina will face a decision: build more power plants, or find new ways to use the power already on the grid.