Reaching COP28 energy goals requires real VPP progress in 2024

Power grids globally must be upgraded by 2040 to keep the lights on. And while these upgrades will likely cost trillions, virtual power plants (VPPs), writes Autogrid’s Gisela Glandt, can curb these costs to the tune of $10B annually.

To fully utilise all the potential that VPPs can offer in the next few years, we’ll need a major strategy overhaul. While COP28 agreements to transition away from harmful fossil fuels and triple our collective renewable energy production by 2030 are noble, it will take intentional and strategic goalposts to help us get there.

To reach the targets set forth at COP28, we must accelerate global energy capacity and make progress as soon as this year in order to more than double our renewable capacity by the end of this decade. But here’s the good news: VPPs are one of the most effective—and as yet, largely untapped—tools that we can use on this journey.

In 2024, progress for VPPs will mean stakeholders taking initial steps towards promoting VPP adoption by both Programme teams and Energy Procurement teams, fostering customer engagement, developing supportive policies and regulations, and leaning into open standards.

Down the line, I see an increased adoption of devices and smarter homes, leading to a smarter grid, smarter cities, and ultimately smarter communities.

Making 2024 count – First steps

Climate conversations are now mainstream. With this increased attention to the energy transition, regulators and lawmakers will continue to push utilities to take faster action.

Announcements like Michigan’s targeting of 100% clean energy by 2040, while critical, are just part of what is needed for true progress.

We need each utility and load-serving entity to participate more fully in the energy transformation. This will require engaged, progressive utilities to see the potential behind flexible energy technologies like VPPs that bring reliability, cost savings, and increased integration of renewable distributed energy sources.

This shift can promote a solid foundation for meaningful participation in the evolution of the energy landscape more broadly. 

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Incentivising community engagement 

Propelling utilities to increase VPP adoption also requires bringing customers along on the journey. Promoting this engagement requires education, so we need to focus on helping individuals understand the direct impact of their actions.

Regulatory bodies like rate makers are working to communicate these differences effectively. Major players such as original equipment manufacturers (OEMs) are also engaging with users in a meaningful and contextualised way, contributing to the development of an ongoing educational journey. Especially noteworthy is the shift towards more personalised incentives that resonate with customers. These incentives are designed to speak the customer’s language and address concerns that are genuinely meaningful to them.

Importantly, customers receive immediate value through their participation in VPP programmes. Benefits are both fiscal and societal, as participating customers can gain financial incentives through VPP solutions by sharing assets with the grid or reducing their usage. This not only provides communities with financial benefits but also aids utilities in effectively handling our growing electrical demands. 

As VPPs are more widely adopted, the frequency and duration of their dispatch will increase with only minor added costs for operators and utilities.

The grid is constantly balancing many things, be it frequency capacity, energy demands, or emergency events. Those value streams create a direct benefit to utilities by better balancing their cash flow and providing ratepayers with greater returns. This is also the best cost option for utilities since the cost of incentives is lower than non-VPP alternatives to meet energy strain.

The equation is simple: To meet demand, utilities can either build and turn on more peaker plants, or they can pour those same dollars through VPPs into the hands of communities and customers.

Open standards are not optional

Beyond customer engagement, the industry also needs standardisation of protocols. This involves creating streamlined communication threads, allowing devices to seamlessly interact with each other and connect with grids through a software middle layer.

Simplifying these interactions reduces friction in our infrastructure, leading to accelerated device adoption, improved affordability and streamlined execution of programmes like virtual power plants.

This approach will also lead to the enhancement of products and services in the energy sector. Although work is already underway on these protocols, their widespread implementation is vital for enhancing the overall efficiency of the industry’s energy transition.

Interoperability and open standards are essential for multi-asset, multi-vendor VPPs—and are critical for scaling VPP adoption. While lack of standardisation presents challenges, companies are navigating these obstacles.

Despite hurdles, companies like AutoGrid work to promote VPP adoption, accelerate the energy transition, and improve widespread access to sustainable energy. I see even more consolidation happening in this space, leading more technologies and players to simplify steps for users.

For example, Uplight’s recent acquisition of AutoGrid will help expand the existing ecosystem of participating devices, along with other benefits.

Net zero within reach

As I think about how we’ll reach 2030 net zero goals, embracing VPPs is essential. From my experience spanning the energy sector, I know it may be hard, but we can do hard things.

It will just take the right partners, incentive structures, engaged customers and cutting-edge technologies. With these goalposts as our blueprint, we can work to unlock the full potential of VPPs for 2024 and beyond. It’s only then that we can take those lofty goals set forth during COP28 and make them achievable.

About the Author

As Autogrid’s VP of VPPs, Gisela Glandt leads AutoGrid’s Virtual Power Plants business and oversees the growth and health of Autogrid’s Distributed Energy Partner ecosystem. Prior to AutoGrid, Gisela led Nest’s Smart Home and Energy Partnerships at Google, with a focus on formulating and executing growth strategies for cutting-edge products and cultivating strategic partnerships.