VPP Policy Principles

As more homes and businesses adopt rooftop solar, batteries, electric vehicles, smart thermostats, smart water heaters, and other devices, there is a growing opportunity to shape their demand on the energy system while maintaining grid affordability and reliability. Customer-sited distributed energy resources (DERs), in conjunction with strong policy and regulation, can play a role in supporting these objectives.

Virtual power plants (VPPs) can ensure DERs are a grid asset. VPPs are aggregations of DERs that can flexibly balance electrical loads and provide utility-scale and utility-grade services. They can offer utilities and grid operators cost-effective, reliable, and resilient grid service solutions, while offering customers savings on their energy bills.

However, in order to scale VPPs and the benefits they offer, a foundation of strong policies and regulation is critical. This brief contains principles for policy and regulation that can support the fair and efficient growth, integration, valuation, compensation, and advancement of VPPs.

These principles can guide policy development and decisions affecting VPP growth in the next one to four years — including informing the initiation and adoption of regulatory proceedings or legislation directly related to VPPs and DER programs, integrated distribution system planning, non-wires solutions, utility business model reforms, wholesale market participation, tariff design, and energy system digitalization. These principles are intended to represent ideal visions for the roles of VPPs in a clean energy future, with practical steps on how to get there in the interim.

Check out our webinar to learn more.