The advancement of virtual power plants prioritizes technological neutrality
In the rapidly evolving energy landscape, the future of Virtual Power Plants (VPPs) is increasingly being shaped by a push towards technology agnosticism and interoperability.
The energy system is under strain due to factors such as industrial on-shoring, AI-fueled data center expansion, and transportation electrification. To address these challenges, Distributed Energy Resource (DER) manufacturers are being encouraged to adopt protocols for communication and integration with a wider set of VPP and DER Management System (DERMS) technologies.
This move towards technology agnosticism is not limited to individual players. Organisations like the Electric Power Research Institute, the Kraken's Mercury Consortium, the IEEE 2030.5 DER interconnection standard, Rocky Mountain Institute's VP3 consortium, Duke Energy's Open Field Message Bus (OpenFMB), and the Linux Foundation's open source microgrid initiative are all spearheading efforts to build tools and platforms around interoperability.
However, the VPP market is currently fragmented and inefficient. For VPPs to compete with traditional power plants, they must foster cross-technology participation by a variety of DERs and brands. DER aggregators with cross-technology enrollment through non-exclusive partnerships and Original Equipment Manufacturer (OEM) integrations are expected to champion open protocols and adoption of interoperability standards.
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. New regulatory policy by states or regulators could accelerate the evolution of tech-agnostic VPPs in certain states or regions by requiring the adoption of open protocols for systems communication and integration, or by mandating utility-sponsored, tech-agnostic VPP programs for customers.
Despite these efforts, fewer than 1 in 5 MW of installed DER capacity is enrolled in VPPs today. Even once most new DER technologies adopt open protocols, the bulk of legacy DERs on the system will not be fully interoperable. The incremental cost of developing and adopting standardized interoperability protocols must not exceed its value for VPP platforms and OEMs to advance tech agnostic platforms.
As we transition towards a tech agnostic VPP market, utilities should undertake incremental investments and projects, building the systems and customer engagement platforms they will need to realize the full benefits of tech-agnostic VPPs in a dynamic, optimized grid-to-grid-edge future. Molly Podolefsky, a managing director at Clarum Advisors, believes that interoperability will be a key driver in this transition.
However, it is unlikely that the VPP market will be uniformly tech agnostic in the future. VPP companies leveraging legacy APIs to integrate a variety of DER technologies will play an important role bridging the gap between today's fleet of non-interoperable assets and the tech-agnostic future market.
In conclusion, the future of VPPs is promising, but the path towards a truly tech agnostic market will be a long one, requiring collaboration, standardization, and incremental investment from all stakeholders.
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