Michigan has an aging distribution grid with high incidents of blackouts. It also suffers from narrowing capacity availability for resources to meet peak demand. Virtual power plants (VPPs) — aggregations of distributed energy resources (DERs) that can provide utility-scale and utility-grade grid services — can help address those challenges while supporting the state in reaching its ambitious clean energy standard of 80% by 2035 and 100% by 2040.

According to the Department of Energy, VPPs can be configured to provide a range of benefits, including reliability and resilience, affordability, greenhouse gas emissions reductions, resource adequacy, and more.

This brief outlines the ways in which VPPs can support grid reliability, affordability, and decarbonization outcomes, with supporting metrics and case study examples from other states. Michigan utilities, regulators, and legislators have laid the groundwork for fundamental technologies, program structures, and market rules that are part of the foundation for VPPs. This brief concludes with a set of actions that Michigan utilities, regulators, and legislators can take to advance VPPs in the state to support affordable, reliable, decarbonized power for all Michiganders:

• Michigan utilities and third parties can apply for grant funding and financing for VPP projects through Michigan’s Department of Environment, Great Lakes, and Energy (EGLE) and the Michigan Public Service Commission (MPSC).
• Michigan investor-owned utilities can apply to the MPSC’s expedited 90-day pilot review program for VPP pilots.
• The Michigan legislature can pass VPP legislation requiring Michigan utilities to implement VPP programs to unlock a key source of system capacity and other grid services, while supporting energy affordability, reliability, and decarbonization outcomes.
• The MPSC can open up aggregation of residential and small commercial retail customers participating in wholesale markets and unbundle existing retail tariff mechanisms.
• The MPSC can open a proceeding to evaluate future advanced metering infrastructure-related planning and procurement strategies to increase transparency and stakeholder engagement, and ensure next generation metering investments have the necessary DER integration capabilities.

We would like to thank The Virtual Power Plant Partnership’s Regulatory and Policy Strategy Working Group, Dr. Laura Sherman of the Michigan Energy Innovation Business Council, and Chloe Holden, John Albers, and Samarth Medakkar of Advanced Energy United for their contributions to this work.