The next evolution of VPPs is built on better data

In its latest report, Wood Mackenzie predicts that U.S. distributed energy resource capacity will increase by 217 gigawatts by 2028, with half of this capacity coming from curtailment-based technologies like EV chargers, smart thermostats, and building automation systems. Capitalizing on these increasingly diverse DERs, however, will require a shift in how we measure and deploy flexibility programs — with data playing a critical role. 

“With emerging DER classes like batteries, EVs, and building automation systems coming online, we’re deploying VPPs in new ways,” said Paul Hines, vice president of power systems at EnergyHub. “But to reliably deliver the next evolution of cross-DER VPPs, these VPPs need to provide grid operators with data that is on par with what they get from conventional power plants.”

The data-driven evolution from demand response to VPPs

To understand the road ahead, it helps to look back at where we came from.

“In the past, ‘demand response’ meant utilities would send a signal to a one-way radio switch on customers’ air conditioners and hope the device turned off,” Hines explained. “It was really difficult to measure the impact of those programs on the grid.”

The advent of the Internet of Things and advances in customer DER technology over the past decade have radically transformed the flexibility landscape, enabling wireless DER dispatch and bi-directional communication on device participation and performance. Armed with more predictable results and more robust control, utilities started using aggregated DERs to deliver new value with strategies like load shaping and wholesale energy arbitrage, facilitating the transition from basic demand response to VPPs.

“Now, VPPs are evolving to include several DER classes that can deliver multiple grid benefits simultaneously,” Hines said. “These advanced applications require a new standard for how we collect, analyze, and apply the data we get from VPP programs.”

Building a strong foundation with integrations

Integrations are the backbone of VPPs, allowing utilities to work with their DERMS providers to reliably enroll customer devices, send dispatch signals, and receive performance data.

“With new OEMs and additional device classes entering the market, we’ve raised the bar for our integration processes and prioritized data quality, latency, and completeness,” said Hines. 

Load flexibility is often a small part of customer device manufacturers’ businesses, and even when their products meet interoperability standards, they aren’t guaranteed to integrate as expected. Working with a DERMS provider can prove advantageous for utilities in this situation, as DERMS often bring well-established industry partnerships and existing integration infrastructure that can help scale flexibility programs quickly.

Improving VPPs’ integrations with control room systems, such as advanced distribution management systems, or ADMS, can extend the value of VPPs even further by providing much-needed insights and control.

Currently, 16% of utilities report having no visibility into the location of behind-the-meter DERs on the distribution grid, and the majority only know the location of DERs that have submitted an interconnection request. Even worse, nearly a quarter report having no visibility into the actual load and generation behavior of behind-the-meter DERs. 

“Stronger ADMS-DERMS integrations can unlock tremendous value for utilities by improving grid planning and enabling localized dispatch to protect distribution assets,” said Hines.

What’s next: AI-driven predictive analytics

One of the most promising advancements in VPP technology — and a key driver behind the push for better data — is the use of predictive analytics and advanced optimization methods. Drawing on a growing pool of DER data, utilities can leverage machine learning algorithms to forecast the flexible capacity from DERs and optimize VPP dispatch strategies accordingly.

"Predictive analytics allow us to anticipate demand peaks, renewable generation capacity, DER behavior, and more." Hines explained.

So, for example, a utility with high solar generation can use a DERMS to forecast flexible capacity from a VPP made up of batteries, EVs, and thermostats, and then choose the best times to charge and discharge those resources to balance the grid. Likewise, a utility facing a heat wave could compare the predicted load shed of different demand response event durations to ensure their dispatch strategy balances customer comfort with grid needs.

“It all comes down to ensuring the reliability of VPPs as part of the utility resource stack,” said Hines. “With better data, we can unlock cross-DER optimization to deliver broad grid benefits at scale and enable VPPs to be a key element in navigating grid challenges like electrification, load growth, and renewables.”

This is partner content, brought to you by EnergyHub.