The forward-looking concept of virtual power plants embraces technological neutrality
The virtual power plant (VPP) market is currently undergoing a significant transformation, with interoperability and technology-agnostic solutions at the forefront of this change.
Interoperability issues in VPPs, even with technology-agnostic platforms, can lead to latency and connectivity problems. However, new regulatory policies could accelerate the evolution of tech-agnostic VPPs by mandating utility-sponsored, tech-agnostic VPP programs for customers, or by requiring the adoption of open protocols for systems communication and integration.
Diverse players in the industry, including DER aggregators, utilities, OEMs, industry think-tanks, and non-profits, are forming working groups, partnerships, and consortiums to advance interoperability in the VPP market. Examples of these efforts include the Electric Power Research Institute and Kraken's Mercury Consortium, IEEE 2030.5 DER interconnection standard, Rocky Mountain Institute's VP3 consortium, Duke Energy's Open Field Message Bus (OpenFMB), and Linux Foundation's open source microgrid initiative.
As the transition to unified, tech-agnostic VPPs takes place incrementally over many years, utilities must begin implementing the systems that will enable them to derive full value from these platforms, such as Distributed Energy Resource Management Systems (DERMS), Advanced Distribution Management Systems (ADMS), and other supporting systems.
Despite the potential, fewer than 1 in 5 MW of installed DER capacity is enrolled in VPPs today, indicating a largely unrealized potential for DERs. To foster cross-technology participation by a variety of DERs and brands, VPPs must adopt open protocols facilitating cross-technology enrollment and interoperability for a tech-agnostic market to emerge.
Regional differences in energy markets, utility governance, clean energy regulation, taxation, and economic incentives will largely determine where VPPs take hold and how well they scale. The extension or expiration of tax incentives favoring VPP development could sustain or slow the growth and scaling of VPPs by state or region.
Molly Podolefsky, a managing director at Clarum Advisors, believes that the future of VPPs is tech-agnostic, with interoperability as a key driver. However, she notes that utilities should not shy away from proprietary, single-technology VPPs in the near-term, while waiting for interoperable DER technologies and VPP platforms to mature.
For VPPs to compete with traditional power plants, they must bridge the gap between today's fleet of non-interoperable assets and the tech-agnostic future market. VPP companies leveraging legacy APIs to integrate a variety of DER technologies will play an important role in this bridge. Even once most new DER technologies adopt open protocols, the bulk of legacy DERs on the system will not be fully interoperable.
The energy system is under strain due to industrial on-shoring, AI-fueled data center expansion, transportation electrification, and resulting unprecedented load growth and capacity constraints. The adoption of tech-agnostic, interoperable VPPs could help alleviate these strains by enabling a more flexible, responsive, and efficient grid.
In conclusion, the future of the VPP market lies in its ability to become tech-agnostic and interoperable. This transition will take time, but with the right regulatory policies, industry collaborations, and technological advancements, a more efficient, resilient, and sustainable energy system could be within reach.
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