2Q 2023

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.

Pages 16
Tables | Charts | Figures 7
  • How are VPP deployments changing?
  • What role are VPPs playing in grid operations?
  • How are VPP business models evolving?
  • How can new VPP business models help utilities?
  • How are DER business models changing?
  • How can new DER business models assist consumers?
  • What can system operators and regulators do to facilitate new VPP business models?
  • VPP platform providers
  • DER providers
  • DER aggregators and VPP operators
  • Utilities and grid operators
  • Regulators
  • Large energy consumers




VPPs Are Becoming More Involved in Grid Operations

VPP Deployments Are Evolving

New Market Regulations Enable New Resource Participation

Case Study: Sunrun Residential VPP in ISO-NE

Utilities and End Consumers Will Need Assistance from VPP and DER Providers

Consumer Participation in Electricity Market and Grid Activities Is Increasing

Utility Software Use Cases Are Becoming More Complex

Case Study: AutoGrid and Clean Power Alliance

Incumbent VPP and DER Companies Have Opportunities to Adapt Their Offerings

Case Study: Generac Grid Services and Albuquerque Public Schools

VPP and DER Providers Must Continue to Modify Their Solution Offerings

VPP Platform Providers Should Develop Additional Services with Platform Sales

VPP and DER Providers Should Streamline Solution Offerings for Energy Consumers

System Operators and Regulators Should Develop Supportive Market Frameworks and Incentives for VPPs7

Utilities Should Adjust Their Retail Structures to Accommodate VPPs

  • Conceptual VPP Diagram
  • Cash Flows in a DER Aggregation-Enabled Market
  • VPP Platform Solution Offerings and Pricing
  • Paths toward a Full-Service VPP
  • VPP Value Chain and Business Models
  • VPP Platform Solution Offerings and Pricing
  • Components of the VPP Value Chain
Choose a License Type
$1,850 USD
$2,775 USD