BYOD
Customer Engagement
Demand Response
EV Charging
Incentive Processing
Program Design
Program Management Automation
Flexible Dispatch
Virtual Power Plants
Platform
Grid-Edge DERMS
Customer Engagement
Demand Forecasting
Last week we met with Ryan Hledik, Principal at The Brattle Group, to discuss findings from their latest research report with Lawrence Berkeley National Laboratory (LBNL), titled: Distributed Energy, Utility Scale: 30 Proven Strategies to Increase VPP Enrollment. Our live webinar explored how utilities can leverage grid-edge technologies to scale virtual power plants (VPPs) and demand flexibility programs like EV charging, BYOD, and demand response (DR) programs. If you missed it, no problem! You can watch the on-demand recording, and check out the highlights from the session below.
The Challenge: Meeting Peak Demand with Demand Response Solutions
Utilities are facing significant growth in peak demand, driven by electrification across transportation, buildings, and industrial sectors; increased demand from data centers and AI; and greater temperature extremes and weather variability caused by climate change. As such, traditional energy management solutions fall short.
According to the Department of Energy (DOE), between 80-160 GWh of virtual power plant capacity is needed by 2030 to meet consumer demand; currently, the U.S. grid generates between 30-60 GWh of aggregate VPP capacity, primarily courtesy of demand response programs. Constraints like equipment shortages, transmission delays, and affordability concerns make it clear that traditional grid investments alone will not solve the gaps in generation capacity.
Virtual power plants (VPPs), powered by demand flexibility programs like demand response (DR) provide a path forward by harnessing both utility-held and behind-the-meter distributed energy resources (DERs). These include batteries, smart thermostats, and electric vehicles, which together can form a flexible, dispatchable resource to meet capacity needs, reduce costs, and support decarbonization goals, which are managed by either Grid or Grid-Edge distributed energy resource management systems (DERMS) depending on the use case (utility-held or behind-the-meter).
Scaling VPPs: Insights from LBNL and the Brattle Group’s Report
Our webinar highlighted findings from a new report that distilled best practices from interviews with 15 leading utilities and service providers. These findings offer actionable strategies to overcome barriers in scaling VPPs and enhancing demand response enrollments. Breaking down the strategies that were most effective as well as easiest to implement, a few key tactics emerged.
1. Streamline Demand Response Enrollment Processes
Research indicates that 94% of online users report that easy site navigation is crucial in any website. This statistic demonstrates that customers want simplicity and ease of use in their services, whether that’s through e-commerce or with their energy provider. In terms of encouraging more enrollment and participation, simplicity is key.
- Simplify Enrollment: Customers are more likely to participate if the enrollment process is seamless. Digital, one-click options reduce friction compared to lengthy forms or multi-step procedures. Use simplistic, direct language to lower barriers to communication, as 54% of adults have a literacy below 6th grade level.
- Leverage Point-of-Sale Opportunities: Fostering a contractor network creates an opportunity for an easy win for renewable energy adoption. By partnering with a contractor network, you can train contractors to educate customers on their energy-saving opportunities when they purchase DER-enabled devices, such as smart thermostats, water heaters, or batteries. Retailer partnerships and e-commerce integrations can make participation effortless.
2. Optimize Demand Response Incentive Design
With the cost of electricity on the rise, approximately 34% of all surveyed Americans stated that they had to cut spending to afford their electric bill. While incentives are not necessarily the only opportunity to encourage enrollment and participation in demand response programs, research indicates that lower incentives decrease customers’ willingness to participate. Fortunately, program managers can plan for their incentive structures when developing their programs by:
- Combining Upfront and Performance-Based Payments: Offering initial financial incentives to offset device costs and ongoing payments for participation ensures both customer acquisition and sustained engagement.
- Make Rewards Visible: Payments through channels like Venmo or direct deposits are more noticeable and valued than traditional bill credits. Whatever the case, identify the most common payment methods in your area and work to ensure them, simplifying the enrollment process.
3. Refine Messaging for Demand Response Growth
Finding the right messaging is crucial to building rapport with customers who may not even be aware of utility demand response or other demand flexibility programs. Developing a messaging strategy includes identifying your audience, specifically their pain points, and educating them about the opportunities available to them. Focus on the audience—your customers—and how their enrollment and participation in your program benefits everyone involved, from the customer to the community to the utility.
- Focus on Simplicity and Transparency: Highlight financial benefits, environmental impact, and program flexibility. Utility customers want to know their options, including how a program works, how it may benefit them, and how it serves the community. Address common customer concerns, such as the ability to opt out of events or limitations on device control.
- Communicate Clear Boundaries: Make sure that customers understand their participatory options, including when grid events will occur, how long they will last, and what their opt-in/out opportunities might be during the event. Remember that customers do not like losing their autonomy, which can lead to less enrollment and participation in the future. For example, informing customers that thermostats will only be adjusted a certain number of times per season or that battery storage will retain emergency reserves builds trust.
4. Leverage Ecosystem Partnerships for VPP Scalability
The distributed energy resources (DERs) necessary to implement a demand response program vary dramatically by device and device type and range from photovoltaic solar or battery installations to EVs or smart home devices like thermostats or water heaters. All of these DER assets are controllable through the use of a Grid-Edge DERMS, which can aggregate one or many devices and device types. Doing so leverages the full potential of existing behind-the-meter DER assets to create a broad ecosystem of possible load-shifting opportunities.
- Collaborate with OEMs and Installers: Partnerships with device manufacturers and service providers can expand customer reach and simplify integration into VPP programs. Doing so can minimize programmatic deployment while minimizing development costs.
- Incorporate Multiple Device Types: Including a mix of technologies, like thermostats, batteries, and water heaters, enhances program flexibility and scalability. The more devices and device types available, the more vectors that customers have to participate.
5. Focus on Long-Term Customer Engagement
It bears repeating that customer engagement never stops. Building rapport with customers is the best step in owning the customer journey and engendering a relationship of trust and mutual support necessary to secure customer buy-in. Through tools like program automation, program managers can automate regular communications with customers, saving time and money for back-of-office operations, while continuing to educate customers on the potential of demand response. Here are a few tips to get you started:
- Deliver Value Beyond Financial Incentives: Customers want to be engaged! Use app-based notifications, energy-saving tips, and gamification to keep participants motivated and interested in what comes next!
- Encourage Customer Investment: Programs that require customers to contribute a portion of device costs often see higher installation rates and sustained participation, as customers feel more invested.
Demand Response Strategies: Building Momentum for VPP Deployment
The transition from pilot programs to full-scale virtual power plant (VPP) deployment requires a strategic focus on both operational and customer-centric factors. Here are a few ideas for stakeholders to consider when playing their part:
- For Regulators: Support policies that enable streamlined enrollment, encourage pilot-to-scale transitions, and remove barriers to seamless participation. Keep it simple and easy for customers, and work to remove barriers to participation
- For Utilities: Prioritize customer-focused designs, invest in scalable technologies, and leverage real-time and historical forecasting data to showcase virtual power plant (VPP) reliability and cost-effectiveness. Fortunately, increasing VPP capacity to meet recent Department of Energy (DoE) recommendations not only enhances grid resiliency but can lead to more than $10 billion in savings by 2030.
- For Service Providers: Advocate for regulatory changes, provide empirical support for effective strategies and deliver on scalability commitments.
Why Virtual Power Plant (VPP) & Demand Response Enrollment Are Critical to the Future Grid
The energy landscape is evolving, and utilities must adapt to meet the dual challenges of increasing peak demand and decarbonization goals. By scaling virtual power plants and refining demand response enrollment strategies, utilities can unlock significant value for customers, enhance grid reliability, and accelerate the energy transition. With the actionable insights from this webinar and the LBNL-Brattle Group report, utility professionals have the tools they need to drive meaningful change.
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