Cleantech Market Intelligence
Microgrids or VPPs or Both?
I like to say that there’s a 75% overlap between microgrids and VPPs. What they have in common is the aggregation and optimization of distributed energy resources (DER). Where they differ is that a microgrid has a confined network boundary and can disconnect from the larger grid to create a power island. In contrast, VPPs can stretch over much wider geography and can grow or shrink depending upon real-time market conditions.
The DER portfolio in a VPP is as equally diverse as a microgrid. Yet, the primary value proposition for a VPP is that the services from these DER assets flow upstream to a utility or transmission grid operator; services are not sealed off into an island from the larger grid.
Once I go through this standard definitional description, the most common follow-up question is: Which of these two distribution networks represents the best opportunity for vendors over the next decade? While pundits like to pick winners and losers, I see future growth globally for both microgrids and VPPs.
Four Examples of Energy Cloud Innovators
Four companies active in what Navigant Research has dubbed the Energy Cloud—which encompasses both microgrids and VPPs—will share the stage at an upcoming panel at the fourth annual Microgrid Innovation Forum taking place in Washington, DC on May 16.
Navigant Research uses the term Energy Cloud to describe transcendent changes sweeping over the electric utility industry. Rather than bigger is better, which drove utility planning for over a century, the shift is toward smaller and smarter DER portfolios. While increasing complexity in energy management, the evolution of a collective Energy Cloud also promises a more dynamic energy market in which buyers and sellers engage in transactive energy.
Each of these four companies has a slightly different take on the Energy Cloud:
- Sunverge: This San Francisco-based solar PV and energy storage innovator is focused on VPPs that aggregate the DER installed at residences to provide value to utilities. Its recent initiative to sell its software independent from its hardware components speaks to the value of its software.
- Enchanted Rock: This Texas company offers a fresh take on microgrids. Focused on ultraclean natural gas generation, the costs of its microgrids are so low that cost-conscious commercial and industrial customers are jumping on board. The key part of its value proposition, however, is wholesale market participation revenue.
- Enbala Power Networks: Ranked No. 1 by Navigant Research in last year’s Navigant Research Leaderboard Report: Virtual Power Plant Software Vendors, this Canadian company is hardly standing still. It has integrated machine learning principles into its new product architecture while also partnering with to develop a DER management system solution for utilities.
- Blue Pillar: With its focus on Internet of Things (IoT) data management, this Washington, DC-based company’s claim to fame is the ability to bring networks of DER online quickly. Its approach is cost-effective due to the ability to squeeze more value out of existing asset base.
I think the VPP epitomizes the value of Energy Cloud trends since it addresses the so-called utility death spiral head on. If a residential home with solar PV and a battery are part of a VPP aggregation, the home can have it both ways. It can reduce its own energy costs while also contributing to the reliability of the larger utility grid.
The Energy Cloud is all about creating new relationships between and the grid. Which of these four companies do you think will have the greatest future impact?