Webinar: Virtual Power Plants and demand response: Lessons learned, latest insights and innovations in load flexibility

On July 25th, 2024, Codibly hosted a webinar focused on the latest insights and innovations in Virtual Power Plants (VPP) and demand response. The event featured Jay Snyder, Manager of Field Integration & Technology Alliances at CPower, and Spencer Borison, Head of US at Codibly, as key speakers. They shared their expertise on major trends, technical implementation strategies, and real-world case studies in the demand flexibility space. The discussion highlighted the evolving landscape of VPPs, the challenges, and the importance of innovative solutions to enhance grid reliability and efficiency. The event offered valuable insights and forward-looking perspectives for industry professionals.

Spencer Borison: Good morning, everyone. My name is Spencer Borison from the Codibly team. Excited to have you all on this webinar today. I’m happy to be joined by Jay Snyder from the CPower team, and I’ll let him introduce himself in more detail in just a minute. This is the Virtual Power Plants and Demand Response webinar. We’re sharing key lessons and insights from real projects and recent market developments that our organizations have been actively working on. A quick agenda: I’ll introduce myself and then ask Jay to introduce himself. Jay will present CPower’s perspective on the market, including facts, figures, and insights. I’ll present from Codibly’s perspective, focusing more on the technical side. We’ll save time at the end for Q&A. Please make your comments directly on the LinkedIn event page. The webinar is being recorded, and the slides and recording will be available on our website. If you have additional questions, you can email me directly. With that, Jay, would you like to introduce yourself?

Jay Snyder: Thank you, Spencer. As the slide indicates, I’m the manager of field integration and technology alliances at CPower. I’ve been a leader in the clean energy space for over 15 years and with CPower for the last three and a half years, seeking out partners such as Codibly to help expand the reach and impact of the Demand Response programs that we support through enabling end-to-end automation for the customer’s ease of use. Thank you.

Spencer Borison: Great. Nice to have you here, Jay. I am the head of our US business at Codibly. We are a team of about 15,000 developers and domain experts specializing in technical integration work and supporting clients across the Virtual Power Plants (VPP) and Demand Response grid services space, helping them integrate better with players like CPower and others in the market.

Jay Snyder: Thank you, Spencer, and the Codibly team for having us here today. Thank you to everyone for showing interest in what we have to say. For those who may not know us, CPower is the leading US distributed energy resource (DER) and Virtual Power Plant (VPP) provider. We are creating a customer-powered grid. A DER is any asset that consumes, generates, or stores energy and can respond to a signal. A VPP is an aggregation of DERs that provides grid services via a coordinated dispatch. Our portfolio, the largest within the U.S., represents seven gigawatts of customer-sided load at 27,000 sites.

The DERs that make up our portfolio can be anything from behind-the-meter storage to HVAC curtailment at a box store to flexible computing load. CPower identifies the flexibilities, connects, pools, and controls those assets, and finally sells that flexibility into energy markets across the U.S. Our marketing team has devised a helpful analogy for understanding Demand Response and why someone would be paid for using less power. This analogy involves airlines. In the U.S., airlines sometimes overbook flights based on the premise that not everyone will show up. Sometimes, more passengers do show up than there are seats on the aircraft, and instead of adding a flight, which would be cost-prohibitive, the airline opts to pay customers who are willing to shift their flight to a later time. Similarly, the electric grid has a large buffer of generation that satisfies user needs far beyond average usage but becomes constrained during a handful of peak hours each year. Just like the airline, it’s much more cost-effective to pay participants to shift their loads outside that congested period, bringing down the demand to meet the available supply, rather than building a whole new power plant.

Demand Response had its roots in a relatively simple scheme of capacity programs, which provide relief during those few hours of peak usage. However, grid operators are increasingly offering more complex, yet higher-revenue programs around ancillary services, handling more unpredictable and short-lived variances in the energy delivery system, and economic programs that allow customers and grids to hedge against high real-time power prices. This overview hopefully provides a good understanding of CPower’s approach. I’m happy to answer any questions during the Q&A period.

Transitioning to the major trends CPower sees in the industry: the first trend gaining attention in American mainstream media is the growing electricity demand. This is a departure from the plateaued demand of the last few decades, due to factors such as electric vehicles, electrification of heating and other end uses, and AI data centers’ thirst for energy. At the same time, we’ve seen increasing instability in the grid due to extreme weather and events like the COVID-19 pandemic. There are numerous examples where Demand Response was called on to save the day, but the customer experience was not optimal. Enrollment has increased since 2021, as has the resource demand. Regulators have taken notice. For example, ERCOT increased program options and revenue levels associated with them to attract more participants to help solve these problems following the major disruptive storm in the winter of 2021. CPower continues to answer this call through our vigorous efforts to add to our portfolio by identifying additional opportunities for existing customers and signing new ones.

The growth of AI also poses challenges but can benefit the energy system. CPower has launched a machine-learning-powered optimization tool called EnerWise, allowing customers to reap all the benefits of the emerging variety of programs available to them. This optimization does not stop with the variety of programs; it also accounts for the variety of demand response programs available to customers with aggressive demand charges, allowing them to reduce their own peak usage and system-coincident peaks. Our optimization tool constantly improves, automatically considering new data and tweaking algorithms for new savings and earnings opportunities.

Here are a couple of quick case studies: Metal Technologies has been an excellent industrial sector customer, supporting us with its industry-based programs. Through our EnerWise AI tool, they have added a full slate of programs offering financial returns and supporting their sustainability goals. Another example is the Houston Independent School District in Texas. Capital budgets are lean, and the school district has directly used revenues generated from Demand Response to fund much-needed equipment upgrades, benefiting teachers, students, and communities. It would take many more hours to cover all the excitement CPower sees in the markets we serve over the coming years, but this hopefully gives a high-level view of how increasing loads, weather variability, and AI as a mission accelerator are all top of mind for our company today and for the future. Thank you again for having me, and Spencer, I’ll turn things back over to you now.**

Spencer Borison: Thank you, Jay. I will transition into our presentation. For those who joined us late, if you have questions, we will open it up for Q&A after my presentation. You should be able to ask your questions directly within the LinkedIn event comments section.

A quick overview of Codibly: Codibly has been around for about 13 years and has recently joined forces with Spirosoft, expanding our geographical footprint to South America, North America, Europe, and Asia. We now have a team of over 15,000 people. We work with companies in the e-mobility, utility, and OEM renewable spaces, specializing in energy market integrations, energy storage, and residential and commercial energy management systems. Our expertise includes monitoring, commissioning processes, data aggregation, and effective display. In e-mobility, we focus on fleet charging, smart charging, demand response capability, charge point management systems, and EV driver apps. We also explore V2X and its impact on aggregating power within EV batteries to handle peak events, similar to what Jay described. We work closely with aggregators like CPower to understand trends and developments in Demand Response and Virtual Power Plants (VPP) spaces.

Transitioning to how we view the space: Typically, you have utilities at the top, in the nomenclature of major protocols for Demand Response, this is the virtual top node (VTN). There are two ways to architect a solution between utilities and homes and businesses. One is a direct integration between the manufacturer of a residential or commercial system and the utility through a protocol like OpenADR or IEEE 2030.5 CSIP. The other relies on aggregators like CPower to manage loads and participate in demand response incentives effectively. Aggregators act as a virtual top node from the utility, connecting with homes and businesses directly. Codibly sits within these pieces, helping with integrations between parties, especially from the home and business to the manufacturer of devices for commercial, residential, and industrial sites, integrating with aggregators or utilities and implementing necessary protocols.

The key benefits of Virtual Power Plants (VPPs) as Codibly sees it:

• Decentralization: Unlike traditional power plants relying on centralized large-scale generation, VPPs integrate multiple small-scale energy resources, reducing the single point of failure and enhancing grid resilience.
• Cost-Effectiveness: VPPs help utilities avoid expensive capital investments by leveraging existing capacity distributed across the grid, crucial with increasing demand and load due to electrification and data centers.
• Environmental Impact: VPPs primarily use renewable energy sources, reducing greenhouse emissions and the need for polluting, inefficient natural gas peaker plants.
• Grid Support: VPPs provide ancillary services like frequency regulation, voltage control, and load balancing, enhancing overall grid stability.
• Scalability: VPPs can be scaled by integrating more DERs and orchestrating demand response, quickly meeting community needs.

Obstacles to VPPs:

• Wholesale Market Rules: FERC Order 2022 requires RTOs and ISOs to allow DERs to participate alongside traditional resources by 2026. However, the order is vague, allowing RTOs to make their own rules, impacting how well VPPs can thrive.
• Retail Utility Offerings: Many areas lack retail programs, and existing ones may not be financially attractive. Utilities may not trust VPPs to deliver critical services or lack necessary infrastructure like smart meters and software systems.
• Consumer and Policymaker Awareness: Low awareness of VPPs and Demand Response among consumers and policymakers leads to significant time and resource investment in education, adding cost to customer acquisition.

From Codibly’s perspective, here are some recent technical lessons learned:

• Security: Establishing a secure connection between the virtual top node and the virtual end node involves configuring manual TLS with OpenADR-specific certificates. Allocating time and resources to infrastructure configuration is crucial.
• Integration: Choosing between push and pull integration models requires careful consideration. Push models enable real-time data and immediate response but are complex and costly. Pull models are simpler and more reliable but may have data transmission delays.
• Modularity: Splitting architecture into modules like telemetry gathering, reporting, device enrollment, and demand response event handling makes implementation easier and more efficient.
• Communication: Establishing effective communication channels and conducting regular meetings is crucial for project alignment and issue resolution.

A case study on aggregator integration: We recently wrapped up a project with a leading OEM for inverters and batteries, enabling their customers to engage in Demand Response programs facilitated by Energy Hub. The integration time was significant, requiring four to eight months for full integration. Major areas of work included defining and discussing integration APIs, understanding client requirements for pre-charging behavior of batteries, and leveraging Codibly’s accelerator for integrating with Energy Hub.

Key lessons learned from this project:

• Efficient communication is crucial. We held daily updates with the teams to ensure alignment and flexibility.
• Adjust priorities and methodologies in response to unforeseen issues.
• Leveraging modularity in APIs enhances efficiency and delivery.

We hope this overview and case study provide valuable insights.

Spencer Borison: We have a few questions coming in, so definitely encourage people to ask more. Jay, maybe this question is for you. What are some of the key programs across the country that you guys are keeping an eye on in terms of emerging Demand Response programs at different utilities specifically that are starting to be talked about or that are new to the market? Where do you see some of the new opportunities in terms of states across the country that may not have robust programs already?

Jay Snyder: That’s a terrific question. I didn’t focus on specific programs in my presentation. A real area of excitement, which ties back to FERC 22-22, is the New York ISO’s DER participation model. CPower was first to market in National Grid territory, enrolling customers into that program. We’re excited to see it roll out into other utility territories within NYISO. Another area of interest is the mid-continent ISO (MISO), covering Michigan, parts of Indiana, Missouri, and the Gulf Coast. Previously, this region was skeptical about VPPs and had limited opportunities. CPower is now active in Michigan and Missouri and is developing opportunities elsewhere within MISO. This region is at the frontier of new opportunities in Demand Response.

Spencer Borison: That makes a lot of sense. I’ll add that we’re also seeing interest in smart devices like HVACs, water heaters, and heat pumps. Washington State and Oregon have mandated compliance with the Ecoport CTA 20.45 standard, associated with OpenADR, for selling these devices. There’s speculation that California may require this by 2025, making it critical for companies selling in the US to consider this standard.

Second question – There’s a question about the 3.0 standard for OpenADR. I did a webinar with Rolf Bennett from the OpenADR Alliance on this topic. While 2.0b is still active and widely implemented, 3.0 is starting to be adopted by progressive utilities in California and the Northeast. If you have implemented 2.0b, you should be fine, as most programs will grandfather this standard.

One more question for you, Jay: How does CPower’s business model compare to companies like Leap, Energy Hub, or Autogrid? Are you peers, or do you serve different markets?

Jay Snyder: It’s a common question. Leap is similar to CPower, focusing on batteries. Autogrid operates more as a software provider to utilities, enabling them to administer their Demand Response programs. CPower is a service company, offering wholesale market access and utility program enrollment to commercial and industrial clients across the country. We embrace batteries but also focus on traditional curtailment methods to achieve Demand Response.

Spencer Borison: Thank you, Jay. Another question: What are the differences in VPPs between the European and US markets?

Jay Snyder: CPower is focused solely on the US, so I’m not an expert on European markets. However, Europe is similar to the US in that each country does things differently. For example, France is reportedly behind in Demand Response, while Scandinavian countries have advanced programs with stringent requirements. The UK, with companies like Octopus Energy, has a unique retail construct, allowing for innovative programs.

Spencer Borison: Great insights, Jay. Conferences like RE Plus in September and Enlit in Milan in October are excellent opportunities to hear about market developments and differences between regions. Thank you, everyone, for your questions. Jay, thank you for your time and valuable insights. The recording and slides will be available on Codibly’s website. Please reach out if you have further questions or would like to discuss your projects. Have a great rest of the week. Thank you.