The concepts of virtual power plants (VPPs) and transactive energy (TE) are similar in that they place prosumers—formerly passive consumers that now also produce energy—at the forefront of an emerging market for grid services delivered by distributed energy resources (DER). Yet, industry stakeholders must consider significant differences as policymakers accommodate new technologies, business models, and software platforms associated with power generation, control, and transmission and distribution.
Both VPPs and TE are still somewhat vague in meaning, further clouding distinctions. Both portend a future where DER become the dominant resource based upon which future growth in energy service innovation is realized. Both hinge on the recognition of value embedded in DER that can only be unlocked with the right software and market redesigns. The key question facing market makers is: Do VPPs create opportunities for TE revenue streams or vice versa? Most likely, these two DER platforms will evolve in parallel. The resulting new business models will require new IT infrastructure that relies heavily on the analysis of huge volumes of data.
This Navigant Research report examines the core of the VPP and TE platforms and identifies potential revenue streams that could be created through the integration of both. Six potential revenue stream opportunities are identified: localized clean energy; virtual capacity; real-time demand response (DR); fast frequency regulation; smart voltage control; and big data from small sources. The report focuses on an envisioned integration of TE within VPPs and what types of services could result from such a marriage.
Key Questions Addressed:
- What is a virtual power plant (VPP)?
- What is transactive energy (TE)?
- Where do VPPs and TE overlap?
- Where do they conflict?
- What might be possible in terms of revenue streams if these two distributed energy resources (DER) platforms are merged?
- What are six possible grid services that VPPs/TE could deliver if combined?
- What is the relative maturity of these six grid service revenue streams?
Who needs this report?
- Smart grid software providers
- Utilities and grid operators
- Energy storage vendors
- Solar PV industry
- Smart inverter manufacturers
- Distributed energy resources (DER) component suppliers
- Policymakers and regulators
- Investor community
Table of Contents
1. Executive Summary
2. Virtual Power Plant and Transactive Energy Market Definitions
2.1 VPPs and TE Exist within the Energy Cloud
2.1.1 Virtual Power Plants
2.1.2 Transactive Energy
2.1.3 Embedding TE within VPPs to Create an Energy Cloud Ecosystem
2.2 An Inventory of Potential VPP/TE Revenue Streams
2.2.1 Localized Clean Energy
2.2.2 Virtual Capacity
2.2.3 Real-Time DR
2.2.4 Fast Frequency Regulation
2.2.5 Smart Voltage Control
2.2.6 Big Data from Small Sources
3. Conclusions and Recommendations
List of Charts and Figures
- VPP Software Revenue Streams, World Markets: 2017-2026
- The Broad Umbrella of the Energy Cloud Can Foster New DER Revenue
- Key Stakeholders in the Energy Cloud Value Chain of the Future
- Annual Solar PV Plus Energy Storage Power Capacity and Vendor Revenue by Segment, World Markets: 2017-2026
- Leveraging Solar PV Plus Batteries to Provide Utility DR
- Depiction of Frequency Regulation
- The Transactive Energy Platform Technology Stack: Data Is Key
- Six Revenue Streams from Bundled VPP/TE Platforms
List of Tables
- VPP/TE Revenue Streams for Prosumers/Consumers: Current Viability Matrix