Business Model Innovations Can Drive Virtual Power Plant Growth

With renewable energy capacity increasing and the adoption of distributed energy resources (DER) continuing to grow throughout all customer segments around the world, there is a rising need for flexibility in power grid operations. Virtual power plants (VPPs) represent an opportunity to connect the expanding network of DER while providing flexibility and other essential grid services without the same harmful emissions as fossil fuel power plants. As technology advances and new market frameworks are implemented to allow nonutility and demand side resources to fully participate in energy markets, VPP deployments have started progressing beyond demonstrations and pilot projects to large-scale programs.

As the decentralized, two-way power flow model becomes more established on grids, utilities and grid operators will need to utilize new grid management technologies, like VPP platforms, to maintain reliable service. The adoption of new platforms and technologies will further complicate utility software use cases and daily grid operations, meaning those stakeholders will require additional guidance from VPP providers. And as energy markets liberalize to allow consumer participation, consumers will need assistance from DER providers when acquiring, installing, and enrolling assets in VPPs. This presents VPP and DER providers with opportunities to adapt their business models to facilitate wider market growth.

This Guidehouse Insights report discusses how VPP and DER business models are evolving and what role new, innovative business models can play in furthering the advancement of those technologies. The report provides recommendations to key stakeholders to increase the presence and impact of aggregated DER on grids around the world.