The Smarter Grid: The Evolution of Virtual Power Plant Software

Two weeks ago we looked at The Evolution of Smart Grid Venturing, tracing its development from smart meters and data management apps to the Internet of Things to today’s diaspora of customer-sited generators and energy management products in an increasingly connected world. This week, we will drill further into this theme, taking a look at the role Virtual Power Plants (VPPs) will play in the next-generation energy grid.

The principle is not new. Joined up generators are more useful to grid operators in servicing load than archipelagic systems. Joined demand response (DR) assets can offer load reduction to relieve stress on the grid. However, a third category has emerged which serves as a hybrid of the two systems outlined above. Through IoT-enabled connectivity, and the increasing penetration of small- and mid-scale energy storage and customer-sited solar arrays, the electricity market is transforming into a trading of services, rather than a typical consumer-producer model.

A new frontier for the Energy Internet

This two-way street is becoming increasingly complex. There are some long established VPP providers who have been solving the demand response piece of this equation for some years, such as Comverge and Enbala. Furthermore, there are those who started in DR and have branched into broader distributed energy resource (DER) management, including EnerNOC and Blue Pillar. There are also those DER aggregators who either own or facilitate the installation of physical assets like batteries. This latter group includes most of the distributed storage companies like Stem, Advanced Microgrid Solutions, Sonnen, Greensmith, Green Charge Networks, and Sunverge. There is a fourth group emerging, however, who are seeking to solve both the producer- and consumer-side of the equation without directly owning or facilitating the installation of any physical assets. These companies are forming a new nexus in the Energy Internet through a software-only approach, recognizing that all of the physical assets and control systems are already in place (or on a path to being so).

Table 1: Companies working in software-only solutions


Meeting in the middle

Sonnen, which began life developing a residential energy storage system, appears to be emerging as a pathfinder in this new network. The development of SonnenCommunity seems to take them out of just the demand-side of the network, and place them in the hybrid category between supply and demand. Sonnen’s innovation is to retain control of the battery systems, combining its assets into a single network. The company recently announced a partnership with Autogrid Systems, with the intent possibly aimed at developing this side of the business into an offering that can compete at the utility level with the granting of Sonnen’s utility license in Germany at the beginning of the year.


From this small selection of companies it seems there are two categories emerging from this fourth wave of VPP technology. The first group contains companies that offer their software and VPP products to existing utility companies. These companies are mostly technology agnostic and are looking to optimize existing assets on the supply and demand side of the grid, while allowing utilities to optimize infrastructure planning. The second group includes those that trade on the electricity produced or saved within the network they themselves have created. In the case of Sonnen, this is done through its own network of hardware, but an example such as Next Kraftwerke shows that this isn’t the only working model, as the company bundles together medium- and small-scale power producing and power consuming units. Whether these VPP companies integrate with a utility’s existing infrastructure, or better serve the grid by running their own networks and communities more as microgrids, remains to be seen.

P.S. While we will never pick winners here, it should be mentioned that Upside Energy and Greencom Networks appear on our 2016 Ones to Watch list!