Dive Insight:

Duke Energy has seen potential in the distributed power plant model — also known as virtual power plants — for some time, according to Lon Huber, senior vice president of pricing and customer solutions at Duke Energy. But the upcoming pilot in North Carolina could accelerate the pace of adoption — and not just at Duke Energy.

The PowerPair pilot came out of a settlement negotiated by Duke Energy, the Southern Alliance for Clean Energy and Vote Solar following revisions to Duke Energy’s net metering program. Originally, Huber said, the plan was to create an incentive for consumers to buy and use smart thermostats, with the intent of eventually integrating residential storage into a broader distributed power plant program. But the North Carolina Utilities Commission scrapped the original settlement and directed the parties to skip straight to incentives for residential batteries, he said.

The pilot project will help Duke Energy collect the information it needs regarding customer adoption and the performance of residential batteries to eventually launch a full-scale program that will be open to more customers in more states, Huber said. The project is slated to run for ten years, but Duke Energy could move forward with a broader program before the pilot’s official end, he said. In tandem with incentives from the Inflation Reduction Act, Duke Energy estimates PowerPair would cut the cost of a residential solar plus storage system by half.

“This will be a great information gathering exercise for us energy nerds, because, really looking forward, this is how solar energy scales,” Huber said, adding that he can envision a future where most Duke Energy customers have rooftop solar, storage and other devices compatible with participation in virtual power plants. “Solar can’t scale by itself, and energy storage can unlock far more penetration of solar energy.”

The settlement could prove to be a turning point for other utilities as well, said Neal, who helped represent the Southern Alliance for Clean Energy and Vote Solar in the settlement negotiations. Many utilities in the Southeast do not participate in a regional transmission organization. Virtual power plants operated by third-party aggregators who bid into wholesale energy markets have emerged in other regions, but it remains to be seen how the model would play out in a vertically integrated utility, Neal said.

“We think these are really just the first baby steps in what can be a real transformation in how the utility does business,” he said, “and we are excited to work with Duke and the public utilities commission to make that kind of virtual power plant a reality in North Carolina.”