New England is poised to pilot its first local grid flexibility market

Utilities in the U.S. are largely still coming to terms with the potential of distributed energy resources for local grids. So far, virtual power plant pilots have generally involved a single type of device, be it a smart thermostat or a residential battery.

But Piclo, a U.K.-based software company, is hoping to mainstream the use of multi-asset DER programs. And that includes expanding beyond the traditional peak shaving use cases. In July, the company launched a marketplace designed to procure around 35 megawatts of flexible energy across Connecticut for the coming winter season.

Through the Piclo platform, flexibility service providers (a group that includes DER owners, operators, and aggregators) will be able to bid on contracts with two Connecticut utilities, Eversouce and United Illuminating.

Mike Strahlman, Piclo’s chief growth officer, told Latitude Media that the idea for the marketplace emerged two years ago, in conversation with United Illuminating parent company Avangrid, which had already partnered with Piclo in the U.K., Strahlman added.

“There’s historically been less interest from utilities in the U.S.,” he said, pointing to similar European programs that date back to 2018. By streamlining some of the choke points of traditional VPPs, Piclo is trying to change that, he added.

“We’re working with utilities to create new markets, which incentivize and reward DERs for being more flexible. And we also give DERs and aggregators a simpler and quicker way to see multiple different programs that they could get revenue from,” Strahlman said.

That simplicity is key, he added: “Aggregators want an easy route to market and monetize their assets for all different types of services.”

Marketplace nuts and bolts

Piclo applied to be part of the Connecticut Innovative Energy Solutions program last year, and was approved in December. That program, a statewide initiative to pilot and scale grid decarbonization programs, pairs third-party tech developers with the state’s investor-owned utilities, and awarded Piclo $1.8 million for the winter season marketplace.

Within that marketplace, DER aggregators have until the end of September to register and upload their assets into the Piclo system. An interactive map of the state shows specific auctions, based on local grid constraints, and aggregators will ultimately be able to bid an asset to participate. 

Because Connecticut is testing several different use cases for DERs — including substation infrastructure deferrals, capacity support, and emergency reliability — auctions on the map have varying flexibility, pricing, and capacity requirements.

That offer of availability and cost for dispatch, and the utility’s decision as to what to purchase, is all facilitated through the Piclo platform, as is the award of contracts and the dispatch settlements.  Those contracts amount to around $750,000 in revenue opportunities for participants, Strahlman said.

The pilot starts on December 31, which means Piclo has had a total of around 12 months to get the marketplace up and running, enroll flexibility service providers, and coordinate integrations with operations and dispatch systems between partners and utilities, explained Alex Ghanem, who manages the company’s U.S. commercial operations.

For the first six months Piclo was working on what Ghanem refers to as phase one of that process: market launch and activation. That phase, culminating with the public launch of the market in July, involved identifying particular grid constraints throughout the state with the utilities, and setting the individual requirements for each location to get the marketplace itself online.

Part of Piclo’s value proposition to utilities is “liquefying the market” — in other words, getting as many DER aggregators registered for the marketplace and available to bid in an auction as possible in a relatively short amount of time. To date, Piclo has 50 registered sellers on the Connecticut market, Strahlman said.

The second phase, operations and dispatching, is now in full swing, and involves  asset monitoring and dispatch instructions, among other processes needed in the lead-up to dispatching a flexibility service.

The final phase is likely to be the most technically tricky, Ghanem said, and involves post-dispatch measurement and verification. 

“DER aggregators all have their own business models, and you need to meet them where they’re at,” he said. 

The bigger picture

The Connecticut program is New England’s first local grid flexibility marketplace, but it isn’t Piclo’s first deployment in the U.S. National Grid, a Piclo partner in the U.K., selected Piclo to manage procurement for two load relief programs in New York state, the pair announced last year.

But National Grid’s primary use case in New York was around non-wires alternatives, Ghanem said, whereas Connecticut was interested in a variety of use cases. In New York, he added, Piclo isn’t providing the same end-to-end service that includes dispatching assets and getting aggregators paid after dispatch.

Piclo’s software is relatively “out-of-the-box,” Strahlman said, but there are nonetheless configuration challenges with each deployment, because every utility has different constraints, approaches to network management, and software.

And, Ghanem added, each deployment has slightly different objectives. In Connecticut, for example, the utilities will be gauging Piclo’s success by the volume and number of DERs, the number of flexibility service provider participants, and the number and megawatts of bids.

Markets do tend to take a while to evolve, he added, but initial participation metrics are important for establishing something that is repeatable and can grow year to year. It’s ultimately those metrics that Piclo hopes will differentiate its approach from more traditional VPPs.

“What I think is missing from some of these VPPs is the heterogenous mixture of resources that they can call upon,” Ghanem said, pointing to Piclo’s “technology-agnostic” approach. 

“It helps to have all these different DER aggregators that have their own expertise, be able to provide their resources and support the grid,” he added. “If you want a dynamic, orchestrated grid that is also cost effective and provides a multitude of opportunities for aggregators to participate, you need a market-based mechanism.”