by Brianna Crandall — September 15, 2017 — A new report from Navigant Research examines the core of virtual power plant (VPP) and transactive energy (TE) platforms, identifying potential revenue streams that could be created through the integration of both and how they are expected to transform the energy market.
The concepts of virtual power plants and transactive energy 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). Both portend a future where DERs become the dominant resource for energy service innovation, and both hinge on the recognition of value embedded in DER that can only be unlocked with the right software and market redesigns.
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.
According to the report, these two distributed energy resources (DER) platforms are expected to evolve in parallel, creating new business models that will require new information technology (IT) infrastructure that relies heavily on the analysis of huge volumes of data.
Peter Asmus, principal research analyst at Navigant Research, explained:
The energy industry is shifting inexorably toward a more dynamic and volatile distribution network, where self-consumption and micro-trading will be the norm, whether between prosumers and the power grid or between prosumers themselves. The disruption created by this scenario will be deep and pervade the entire energy value chain.
Virtual power plants (VPPs) could be viewed as a leading pathway to transactive energy (TE) to meet the objectives of the Energy Cloud: providing power at high quality, on demand, and at a reasonable price, points out the report. These platforms deliver greater value to the customer while also creating benefits for the host distribution utility and the transmission grid operator.
According to the report, TE also enables prosumers looking to localize energy solutions in novel ways without traditional grid players, such as utilities or transmission grid operators, necessarily defining the rules of engagement.
The report, VPP Transactive Energy Revenue Streams, identifies six potential revenue stream opportunities: 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 transactive energy within virtual power plants, and what types of services could result from such a marriage. An Executive Summary of the report is available for free download on the Navigant Research Web site.