The competition for the title of "world’s largest virtual power plant" has largely been focused on residential solar-battery systems, like those being deployed by contenders like Australia’s AGL or Vermont’s Green Mountain Power

But according to AMS, formerly known as Advanced Microgrid Solutions, the world’s biggest VPP is already up and running in the form of the 27-megawatt, 142-megawatt-hour fleet of batteries it’s managing today at commercial and industrial sites across the territory of utility Southern California Edison. 

On Tuesday, the San Francisco-based startup announced that its systems, installed as part of SCE’s groundbreaking distributed energy resources procurement in 2014, delivered more than 2 gigawatt-hours of grid services over their first year of operations. 

That’s a record-breaking performance for a battery-based VPP, according to Manal Yamout, AMS senior vice president of external affairs — not only in terms of the capacity of the project, but in terms of how often it has actually been called up. 

Last spring, we covered the unveiling of AMS’ first 11-megawatt, 60-megawatt-hour fleet of batteries located at 21 buildings owned by California real estate developer Irvine Company, financed and owned by AMS partner Macquarie Capital. This was the first set of installations AMS is developing under its 2014 contract with SCE to deliver 50 megawatts of capacity by the end of 2019, to help the utility meet its grid needs in the wake of the closure of the San Onofre nuclear power plant, and the coming closure of once-through-cooled, natural-gas-fired power plants. 

Other companies that won storage contracts in SCE’s 2014 local capacity procurement included Stem, Ice Energy, NRG and AES Energy Storage.

Since then, AMS has expanded its fleet within SCE territory to encompass 27 megawatts and 142 megawatt-hours of energy storage capacity at 40 sites, Yamout said. This expanding fleet has delivered in excess of 2 gigawatt-hours of battery power in response to SCE dispatches, including a stretch this fall when it was called on every business day for 64 consecutive days, she noted — a duty cycle that may be unmatched by any other VPP out there, “because most don’t get dispatched at all.” 

This comment underscores the fact that most VPPs are very much in the pilot project or early development stages, particularly those focused on the residential market. Europe is home to the largest of these residential VPPs, including those run by recent Shell acquisition sonnen, while Australia’s AGL and Vermont’s Green Mountain Power are seeking to expand their pool of household solar-storage systems. 

Behind-the-meter batteries are more cost-effective for commercial and industrial customers in many U.S. markets, including California, because they can be used to mitigate the demand charges that make up a significant portion of those customers’ utility bills. That’s the business model behind startup Stem, which also won a 2014 contract with SCE to provide 85 megawatts of local capacity by 2021. 

AMS also provides demand-charge and energy arbitrage benefits to its customers, with an estimated $1 million in cost savings so far from its SCE systems, Yamout said. But because it’s focused primarily on utility and grid services, it has “overbuilt” its projects to ensure that they can reliably provide the maximum amount of grid power called for under their SCE contracts, as well as provide additional services like demand-charge management, she said.

“Our systems are all overbuilt,” she said. While AMS is only contracted to provide 50 megawatts and 200 megawatt-hours of capacity to SCE, it expects the battery fleet to fulfill that contract will grow to 62 megawatts and 352 megawatt-hours at more than 90 sites by the end of this year. That additional capacity “allows us the flexibility to respond to opportunities” that are expected to emerge as California energy policy develops to take advantage of the capabilities of energy storage systems, she said.

Beyond Irvine Co., the startup has also installed systems at California State University campuses, and in April 2017 announced plans with Walmart to install 40 megawatt-hours' worth of projects at 27 Southern California locations as part of its SCE local capacity requirements contract. AMS is also working with the Irvine Ranch Water District to bring 34 megawatt-hours of batteries to 11 sites across its Orange County service territory, which shares boundaries with the Irvine Ranch property that is the core of Irvine Co.’s real estate empire. 

AMS also had to reconfigure its business model, pivoting from the capital-intensive role of developing projects toward a more pure-play software provider role, a move that allowed the company to secure a $34 million Series B venture capital round in 2017. Since then, the company has set its sights on enabling energy storage projects in markets outside California, including an early focus on Australia

In the United States, California remains the clear market leader for behind-the-meter battery opportunities. The key driver has been its Self-Generation Incentive Program, which has handed out hundreds of millions of dollars to bolster the demand-charge mitigation business case of systems from companies including Stem, Green Charge Networks, Tesla and other participants. 

But large-scale utility contracts remain an important opportunity for distributed energy storage to compete against utility-scale batteries, mass-market demand response and other alternatives to natural-gas-fired power to meet the state’s marginal energy needs.