Tesla partners with PG&E to roll out world's largest Virtual Power Plant in California

To stabilize California's power grid, utility company PG&E and Tesla are attempting to build the world's largest Virtual Power Plant or distributed battery, dubbed the Emergency Load Reduction Program.

California has some of the world's most ambitious climate change policies, including reaching 100% fossil-free electricity by 2045. But the state also faces summer blackouts as its fragile power grid comes under threat from heat waves and forest fires burning through power lines.

Part of the challenge is timing: solar power drops in the evening, just as people come home, plug in their EV and turn on the AC. When the strain caused by that peak energy demand risks creating a blackout, a Virtual Power Plant can kick in and save the day.

When demand is low and the sun is out, electricity is stored in a household's Powerwall, Tesla's home battery and back-up protection system. Then, when intense heat or other events drive up demand, that stored power is exported to the grid. All PG&E customers who own a Tesla Powerwall can sign up for the Emergency Load Reduction Program, and they're paid USD 2 for each kWh dispatched from their battery unit.

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Previously, Tesla helped launch a VPP in South Australia, where 3,000 home energy systems were installed in social housing. At the time, that project was also touted as the world's largest. But with 50,000 Powerwalls installed by households in PG&E's service region, the California initiative's potential is a massive scale-up.

Of course, all those 50,000 nodes in the distributed battery are consumers who need to be convinced to participate. Tesla and PG&E aren't pitching the Emergency Load Reduction Program as an opportunity for households to earn a bit of extra cash. They're appealing to people's sense of solidarity (and perhaps their concerns about multiday blackouts), explaining how each Powerwall's extra capacity can help stabilize California's power grid.

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