On the surface, Sonnen might look like just another company that sells big batteries for home energy storage.
But Blake Richetta, the company’s CEO, says that’s a big misunderstanding of Sonnen’s mission — and the potential for home battery technology in general. "We are not this backup power business," Richetta said. "We are a [virtual power plant]-focused business."
In fact, Sonnen generates about 80 percent of its revenue from the virtual power plant model. The company, owned by Shell, launched in Germany more than a decade ago, and since establishing itself in Europe has started to expand in the U.S. in recent years.
It’s riding a wave of interest and funding in virtual power plants, which have become more attractive in efforts to make the electrical grid more resilient and less reliant on fossil fuels.
So, what exactly is a virtual power plant? The term refers to a dispersed network of energy sources — say, solar arrays and home batteries — that are privately owned, but can be orchestrated by a central actor, such as a utility company, to balance out supply and demand.
A common example for the use of VPPs is in replacing fossil fuel "peaker plants." During the times of highest electricity demand, utilities can decide not to fire up the natural gas plants, for instance, and instead tap into its VPP network of clean energy storage to fill the gap.
This is the crux of the promise — and challenge — that Richetta sees in Sonnen’s business model. He’s not interested in simply selling home batteries to anyone who wants them: Sonnen is working with utilities and developers to create housing where batteries are connected to the grid to form a virtual power plant.
"If you’re Sonnen, you have to develop VPP business models in every market you go," Richetta said.
The flagship example of that model is Sonnen’s recent project in Utah, the Soleil Lofts. The luxury apartment complex is fully electric and carbon neutral, each unit outfitted with a Sonnen battery pack and solar array.
But the real achievement is in Sonnen’s contract with Rocky Mountain Power, which manages most of the Utah grid. The utility has adopted Sonnen’s VPP software, meaning they can steer this battery network directly and use it as a virtual power plant.
The success of that project has grown into a larger program called Wattsmart, which allowed Rocky Mountain Power to expand the model beyond Soleil Lofts. It controls more than 2,000 consumer batteries in Utah, and Wattsmart is expanding into Idaho as well.
"This is an enormous amount of batteries," Richetta said, which is a boon not just to the utilities, but to customers as well. In exchange for connecting their batteries to the grid, residents are compensated for the services their product gives to the utility.
Sonnen has its sights set on California, by far its biggest market yet. In the fall, the company launched SonnenConnect, a similar program to Wattsmart that would again allow customers to buy grid-connected batteries with the ultimate goal of growing a virtual power plant in the state.
Notably, Sonnen’s plans in California involve a partnership with Baker Electric Home Energy, a longtime installer of solar in the state that also sells home batteries. Richetta sees the VPP battery model as a method to make solar more valuable, in a state where net-metering is no longer such a lucrative business. By pairing solar with battery storage, customers can lower their own bills and still receive a check in the mail for the grid services provided by the battery.
"This allows solar to continue to live in California," Richetta said.
The virtual power plant model also has the potential, according to Richetta, to make home electrification more accessible. Rather than framing the energy transition as the domain of homeowners with tens of thousands of dollars to burn on a solar array, home batteries can allow a broader range of people, including apartment dwellers, to participate in a cleaner grid.
"Let’s do something for all of society, for all people, regardless of their FICO score," Richetta said. "And that requires batteries that work in a network with solar arrays."
