Powering VPPs with Regulatory Innovation
Neil Veilleux is Vice President of Market Development, and Gisela Glandt is Vice President for Virtual Power Plants at Uplight. Brian Kooiman is a Principal at The Ad Hoc Group. Brien Sheahan is a former Chair of the Illinois Commerce Commission and Chair of the NARUC Task Force on Innovation.
Virtual power plants (VPPs) are poised to revolutionize the power sector by orchestrating distributed energy resources (DERs) — like smart thermostats, household appliances, solar panels, batteries, and electric vehicles — into real-time networks of dispatchable capacity. The opportunity is especially significant for advanced VPPs, which aggregate multiple device types, are fully automated and optimized by price signals, provide multiple reliable grid services, are compensated on a pay-for-performance basis, and serve as a true supply-side resource.
Advanced VPPs can offer grid operators significant value by reducing stress on generation, transmission and distribution infrastructure at lower cost than conventional solutions like large-scale batteries, peaker plants, or additional poles and wires.
VPPs are already here. They are built on established technologies, and they hold great potential for significant market growth in the future. According to the U.S. Department of Energy, VPPs (including traditional demand response) serve approximately thirty to sixty gigawatts of peak demand.
However, that is only a fraction of their economic potential. Best estimates suggest that the VPP market could triple by 2030, serving eighty to one hundred sixty gigawatts of peak demand (or ten to twenty percent of the peak), and potentially even more beyond 2030.