GM and Ford Partner With Google to Promote 'Virtual Power Plants'

General Motors and Ford Motor Company have joined forces with Google – and a collection of businesses focused on solar power – to advance “virtual power plants” (VPPs). If you’re unfamiliar with the concept, it basically entails leveraging distributed energy networks to create a more flexible and efficient power grid. Though the entire concept hinges on networking countless devices together via collective energy rationing whenever demand spikes.

Calling itself the Virtual Power Plant Partnership (VP3), the group seeks to shape public policy in a way that would encourage the utilization of such systems. Though a lot of the heavy lifting has been done already. According to Reuters, the Biden administration’s Inflation Reduction Act (passed in 2022) has created and/or enlarged tax incentives for items like electric cars, electric water heaters, solar panels, and other devices whose output and consumption can be integrated into the energy grid.

Imagine a neighborhood brimming with homes that have solar panels on the roof and electric vehicles in the garage. Let’s assume those occupants also splurged on smart thermostats. Theoretically, those devices could be networked together to help manage grid loads for the surrounding area – potentially helping to mitigate things like blackouts while also tamping down energy prices.

That’s effectively the premise of virtual power plants and something VP3 would very much like to see become ubiquitous.

At present, the group said customers would have to give permission. But their networked homes would become part of a larger grid comprised of thousands of distributed energy sources via software that can automatically have batteries (like the ones found in EVs) discharge energy back into the grid. Similarly, the code can prompt networked devices (e.g. smart thermostats) to scale back energy consumption when electricity is in short supply.

It’s clever and seems like it has the potential to save people money if implemented correctly. But we’ve already seen that smart devices are a double-edged sword under even the most idyllic of circumstances. A smart thermostat may allow you to tweak your home’s temperature remotely. But it also opens up the door to someone else keeping tabs on your energy consumption. At a minimum, customers using smart meters typically open themselves up to habitual offers from their energy providers. But they also might sign onto programs that allow providers to control their thermostats remotely.

Virtual power plants would scale this up to basically every smart electronic device that’s connected to the grid. In this sense, VPPs aren’t power plants but instead massive battery banks that can be used to offset some of the work being done by facilities that actually produce electricity. However, there would be some energy amassed by homes with solar arrays, provided that the skies are clear enough to capitalize on the sunlight.

Unfortunately, the jury is still out on whether smart devices actually save people money or reduce energy consumption. In September of 2022, The Atlantic cited an NBER working paper penned by economists from the University of Chicago alleging that smart meters had a “null effect” on electricity use after 18 months of research. The group maintained that the connected nature of the devices promoted constant tweaking that may even increase net energy consumption for some users. Having someone else control the units remotely could potentially offset this. But then you’re effectively giving complete control of your energy needs to the same people you buy it from.

Whether or not the businesses that comprise VP3 care about that is anybody’s guess. But that’s effectively what they’re hoping to promote, with the obvious benefit being that they’ll be selling more hardware if the public goes along with the scheme. Numerous members of VP3 sell solar panels, Google sells Nest smart thermostats, and GM Energy's Ultium Home division produces home energy solutions while its (and Ford’s) automotive arm manufactures EVs boasting sizable batteries. Meanwhile, all those smart devices being installed into your house under the plan are extracting data to be used for aggregation, sale, or advertising purposes.

Though VP3 members probably want to downplay that aspect and certainly did so when announcing their alliance this week.

"Virtual power plants will enable grid planners and grid operators to (better manage) growing electricity demand from vehicles, from buildings and from industry, and make sure that the grid can stay reliable even in the face of ongoing extreme weather challenges and aging physical infrastructure," suggested Mark Dyson, managing director with the carbon-free electricity program at RMI.

Rob Threlkeld, director of global energy strategy at General Motors, likewise told Reuters that VP3 will "show that EVs can become a reliable asset to the retail utility and or the retail transmission operator" and "can be an asset to a homeowner and to fleet customers."

[Image: Linda Parton/Shutterstock]

Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by  subscribing to our newsletter.