                                 CODE OF VIRGINIA

VIRTUAL POWER PLANT PILOT PROGRAM (§ 56-585.1:16)

A. As used in this act:
			&#8220;Aggregator&#8221; means an individual or entity, other than the
electric utility, that enrolls customers in the pilot program and coordinates
the operation of enrolled energy resources. An aggregator shall not be
considered an electric utility by virtue of participating in the pilot program
but shall be given nondiscriminatory access to necessary customer and grid data
from the utility to participate in the pilot program.
			&#8220;Distributed energy resource&#8221; means a resource of up to five
megawatts that is located on the customer&#8217;s premises or is interconnected
with the distribution system and produces or stores electricity or modifies the
timing or amount of a customer&#8217;s electricity consumption.
			&#8220;Electric utility&#8221; means a Phase II Utility as defined in
subdivision A 1 of &#xA7; 56-585.1 of the Code of Virginia.
			&#8220;Eligible technology&#8221; means a distributed energy resource that
meets the requirements for participation in the pilot program and does not emit
carbon dioxide as a byproduct of combusting fuel or manufacturing fuel for
combustion to generate electricity.
			&#8220;Grid event&#8221; means a grid condition for which the electric
utility schedules or remotely dispatches enrolled devices to respond.
			&#8220;Grid service&#8221; means a capacity, energy, or ancillary service
that supports grid operations.
			&#8220;Historically economically disadvantaged community&#8221; has the same
meaning as provided in &#xA7; 56-576 of the Code of Virginia.
			&#8220;Virtual power plant&#8221; means an aggregation of distributed energy
resources, enrolled either directly with an electric utility or indirectly
through an aggregator, that are operated in coordination to provide one or more
grid services.

B. No later than December 1, 2025, each Phase II Utility shall petition the
State Corporation Commission (the Commission) for approval to conduct a pilot
program to evaluate methods to optimize demand through various technology
applications including the establishment of virtual power plants. Such pilot
program shall evaluate electric grid capacity needs and the ability of such
virtual power plants to provide grid services, including peak-shaving, during
times of peak electric demand. Such pilot program shall consist of aggregations
of distributed energy resources totaling up to 450 megawatts for a Phase II
Utility and shall include distributed energy resources located in multiple
geographic regions of the Commonwealth. An electric utility may utilize any
existing or proposed distributed energy programs as part of the pilot program
and to further the development of virtual power plants in the Commonwealth. An
electric utility that petitions the Commission for such pilot program shall
demonstrate that the utility has evaluated funding opportunities from the U.S.
Department of Energy. In furthering the goals of such pilot program, the
electric utility shall (i) propose programs of at least 15 megawatts
incentivizing residential customers to purchase battery storage devices and (ii)
notwithstanding the provisions of &#xA7; 56-585.1:13 of the Code of Virginia,
propose a broader electric school bus program as part of a grid transformation
filing no later than December 31, 2027, and the Commission may require
competitive solicitation open to utility-owned and non-utility-owned resources.
The electric utility shall not own the electric school buses as a part of its
proposed program, but such electric utility may own the related storage
batteries. The electric utility shall only use the bus storage batteries to
access the stored electricity at times when the participating school system
determines that the electric school buses are not needed to transport students.

C. In conducting such pilot program, the electric utility shall evaluate methods
to holistically optimize demand, including: a stakeholder process to receive
feedback on program design; a review of reasonable enrollment and performance
incentives for participating customers; potential incentives for the purchase of
a battery storage device, including increased incentives for customers in
historically economically disadvantaged communities; operational parameters for
grid services, including the annual maximum number of grid events, the maximum
duration of such grid events, and conditions under which a participating
customer may opt out of a grid event; reasonable mechanisms to disenroll
customers for nonperformance; and preliminary development of a program tariff
that is designed to (a) allow customers with technologies, including battery
storage, non-battery storage, smart thermostat, or managed electric vehicle
charging technologies, to enroll their eligible technologies in the pilot
program; (b) provide a mechanism to incorporate existing programs, including
smart thermostat demand response, electric vehicle charging programs, and
battery storage programs, into such tariff; (c) specify compensable grid
services for each eligible technology, including peak demand reduction, voltage
support, and emergency services; and (d) specify pay-for-performance
compensation mechanisms for such grid services.

D. No later than November 15, 2026, the electric utility shall petition the
Commission for a program tariff or variations of a tariff structure through
which residential and commercial and industrial customers may enroll, either
directly or through an aggregator.

E. Each pilot program shall conclude its initial phase by July 1, 2028, at which
time the Commission shall undertake a review of the data and results of the
pilot programs and shall evaluate the effectiveness of the pilot programs in
providing grid services during times of peak demand. In addition, the Commission
shall consider lessons learned from the programs in relation to implementation
of Federal Energy Regulatory Commission Order No. 2222 by PJM Interconnection
and the complementary role of virtual power plants in the retail electricity
market in the Commonwealth. As part of its evaluation, the Commission shall
initiate a proceeding to establish a permanent program for the electric utility,
which shall include procurement targets applicable to the electric utility for
each such permanent program with corresponding performance metrics associated
with either achievement of such targets or failure to achieve such targets.

HISTORY: 2025, cc. 709, 712.