City’s $30M VPP Can Become National Model

NEW ORLEANS — As city officials finalize plans for a $30 million virtual power plant (VPP) program, New Orleans has an opportunity to become a national leader in using distributed battery storage to strengthen the electric grid, improve storm resilience and lower energy costs.

The initiative would aggregate battery systems installed at homes, businesses and community facilities into a single grid resource, allowing the utility to draw on stored electricity during periods of peak demand or emergencies rather than relying solely on centralized power generation. Coordinating hundreds or thousands of distributed battery systems in this way can improve grid reliability while reducing strain during periods of highest demand.

The City Council is now reviewing the final details of Entergy New Orleans’ implementation plan, including how participants will be compensated for making stored electricity available to support the grid.

Energy experts said the program’s long-term success will depend less on the technology itself than on how city officials design upfront incentives and long-term performance payments that encourage widespread participation by homes and businesses.

During a webinar hosted by the Gulf States Renewable Energy Industries Association (GSREIA), panelists representing the solar, battery storage and grid management industries shared lessons from successful virtual power plant programs around the country.

“GSREIA wanted to hear from partners with expertise across successful programs in other parts of the country to collect and synthesize feedback, learn more about any best practices or hallmarks of a truly successful program that we may have missed,” said Monika Gerhart, executive director of the Gulf States Renewable Energy Industries Association.

Jeff Cantin, CEO of New Orleans-based Solar Alternatives, said the program’s value lies in enabling hundreds or thousands of distributed energy resources to function as a single power plant.

“Being able to tie those energy resources together into a VPP provides an enormous benefit for the broader region because that energy will be dispatchable together as a single power plant,” Cantin said.

VPP Program – Designs for Success

Zach Franklin of Grid Alternatives said the country’s most successful VPPs combine upfront incentives that reduce installation costs with ongoing payments that compensate participants for supplying electricity to the grid.

“The most successful programs nationwide take two parallel approaches: incentives to overcome capital barriers and payments that are compensation for the energy that participants are providing to all ratepayers,” Franklin said.

Corey Geiger, chief operating officer of Enstall, said New Orleans has an opportunity to establish a model other communities could follow.

“The opportunity in front of New Orleans is remarkable and sets an example for the rest of the country on how to improve quality of service and resilience to all of the members of a community, while simultaneously taking pressure off the grid in the near term,” Geiger said.

J.D. Sorrentino of NeoVolta said a well-designed VPP benefits customers, utilities and the broader electric grid by reducing reliance on volatile fuel prices while allowing locally generated electricity to meet periods of peak demand.

“This VPP program is a win-win-win for New Orleans: customers save money, it reduces overall reliance on volatile fuel prices, and the utility can access peak power directly from energy generated right here in New Orleans. Best-in-class batteries like NeoVolta can deliver power to the grid when it needs it most,” Sorrentino said.

Cantin said New Orleans’ growing network of resilience hubs—community facilities equipped with backup power and other emergency resources—demonstrates how distributed energy systems can benefit individual neighborhoods while also supporting the broader electric grid.

“Together New Orleans and others have proven that the resilience hub model really does provide a lot of value in the neighborhoods that they’re in,” Cantin said.

Final Decisions Ahead

Gerhart said only a handful of procedural milestones remain before the City Council is expected to make final decisions on the program in early fall. GSREIA has urged city officials to maintain the proposed $28 million in upfront customer incentives while establishing long-term performance payments that would compensate participating homes and businesses for electricity supplied to the grid during periods of peak demand. The association argues those payments should be treated as the cost of purchasing electricity from distributed battery systems, much like utilities purchase electricity from traditional generating resources, rather than as an additional customer incentive.

In comments filed with the City Council, the association said pairing upfront incentives with ongoing performance payments is essential to attracting enough participants to make the virtual power plant reliable while lowering costs for all ratepayers.

Gerhart said the level of interest in the webinar reflected the importance of the City’s upcoming decisions.

“The amount of interest and excitement the webinar generated is testament to the importance of this program,” she said. “Experts from around the country tuned in, as did local organizations and businesses.”