Authors: Adam Light, Senior Director, VPP and DERMs Practice Lead at TRC | January 29, 2025

A series of converging trends are spurring U.S. power utilities to begin mapping out their strategies for making Virtual Power Plants (VPP) an important new element of their infrastructure. The trends include:

  • Rapidly accelerating demand for power;
  • Increased volatility of demand;
  • More frequent and prolonged peak demand periods;
  • A skyrocketing number of Distributed Energy Resources (DERs) that are connected to the grid;
  • And intensifying regulatory/investor pressures to meet future demand with sustainable power sources.

VPPs offer utilities a flexible, sustainable solution to all of those challenges, but utilities need to have the right strategy to ensure their VPP initiatives are successful.

VPPs combine small resources that are geographically distributed close to the edge of the grid where electricity is consumed. These DERs are owned and operated by residential and commercial customers, who sell usage rights to the utility. The utility then uses those aggregated DERs to provide capacity, energy and other grid services. VPPs deliver a number of benefits to utilities:

  • VPPs enable utilities to fully harness the power of aggregated DERs to increase effective capacity.
  • They provide flexibility for responding to peak demand without the need to build or expand traditional power plants.
  • Utilities can use VPPs to expand the available supply of clean energy, augmenting traditional investments in wind, solar and other renewables.
  • VPPs spurs private investment in DERs that delivers distinct CapEx and OpEx advantages.
  • Power from VPPs is free of transmission costs, which means it does not drive long-term rate increases.
  • And VPPs give utilities option value they can then employ in a variety of ways to increase the portfolio performance of their other investments, while simultaneously enhancing reliability and maintaining affordability for their customers.

Those advantages make VPPs an excellent tool for responding to rapidly shifting needs. But for a VPP to deliver the greatest benefit, it needs to be designed, implemented and operated to maximize its own flexibility to help solve challenges not only now but in the future as needs evolve.

Maximizing the Flexibility of your VPP Implementation

There are two key guiding principles that should steer your strategy: identifying opportunities to break down silos for greater adaptability of your VPP and determining where maintaining separation between systems will ensure long-term preparedness for future roles.

Let’s discuss both of these guiding principles:

Increase Adaptability by Breaking Down Siloes

For VPPs to operate effectively and adapt to evolving needs, utilities need to break down the silos that traditionally exist between departments. That is because successful VPPs require a high level of collaboration between traditionally separate functions within the utility.

One example of the value created through collaboration comes from bridging the gap between Customer Programs and System Operations groups. By increasing communication and cooperation between these teams, the Customer Programs team might identify ways to update program rules to permit (and encourage) customers to participate in the VPP more often, rather than only under the limited circumstances codified by existing peak load reduction programs. Such adjustments can unlock greater participation in the VPP and provide the System Operations team with more options to access the VPP. With increased options, the Operations team may use the resource in new ways, potentially leading to new sources of value in the face of emerging challenges.

Greater collaboration between the Systems Operations and Customer Programs teams can also lead to innovative strategies for managing batteries and EVs connected to the VPP. This collaboration allows the Operations team to gain greater control over when those devices charge and when they deliver power to the grid — all without inconveniencing customers. By working together, Customer Programs and System Operations can define and manage VPPs in ways that are more valuable than either could achieve independently. This maximizes the VPP’s flexibility for the future and enhances the utility’s ability to use DERs for multiple purposes.

Futureproofing by Maintaining the Right Separations

Given the complexity and rapid evolution of the VPP technology ecosystem, making sound decisions is critical to preserving the longevity of your investment. The wrong technology decision can create rigidity, inflexibility, vendor lock-in or regulatory complications that limit VPP value. One of the keys to futureproofing your VPP is therefore knowing which systems and data should remain separated.

After the foregoing discussion of breaking down department silos, this guidance for separating systems may seem counterintuitive. But system architectures that decouple internet-connected “behind the meter” devices and technologies from utility-connected “front of meter” devices and technologies can enable utilities to maintain and build upon their investments in secure, reliable OT (Operational Technology) systems, while also taking advantage of rapid investor-led innovation in consumer and business markets. Isolating DERs connected to utility networks from those on the public internet helps maximize flexibility This separation supports the orderly and adaptable scaling of VPPs, enabling them to respond effectively in changing circumstances.

This separation of systems is illustrated by the evolution of Distributed Energy Resources Management Systems (DERMS). Over the past several years, the market for DERMS has evolved into two distinct product categories: Grid DERMS and Edge DERMS. Grid DERMS are those connected directly to utility networks and other OT systems. In contrast, Edge DERMs are frequently deployed in the cloud, enabling them to connect and interoperate with an increasing number of device categories and manufacturers. By separating Grid DERMS from Edge DERMS, utilities can speed procurement and implementation and potentially lower costs while increasing VPP value over time.

TRC Companies’ Intelligent Grid Solutions

Following these two principles will maximize the flexibility of your VPP, enabling it to be a powerful tool in your utility’s toolkit for responding to the challenges I discussed above. But it is important to remember that no two VPP implementations are the same. Each utility’s needs are unique, meaning there is never a one-size-fits-all solution for VPPs.

TRC has unmatched experience and expertise in helping utilities customize their VPP strategies to match their specific circumstances, infrastructure and IT systems. Our seasoned team provides the guidance needed to successfully create and implement a VPP strategy that not only helps you solve the challenges you face today but also the unexpected ones you will face in the future. For more information about our Intelligent Grid Solutions, visit Smart Grid Solutions | Intelligent Grids | TRC Companies.

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Adam Light

Adam Light is DERMS Practice Lead at TRC where he helps electric utilities integrate distributed energy resources to enhance reliability, improve affordability, and decrease emissions. Adam joined TRC from Portland General Electric where he led development and delivery of technology solutions for behind-the-meter and front-of-meter DERs including commercial, industrial, and residential flexible load programs, managed EV charging, storage, and solar. Adam’s career has included leadership roles across software engineering and IT consulting. He graduated from Dartmouth College with a focus on climate science and holds a Ph.D. in geography from the University of Oregon.