Changing Energy Market Landscape Drives NAESB’s Industry‐Initiated Standards Development in 2024

Abstract

Ten billion dollars—the amount of money the U.S. Department of Energy (DOE) estimates could be saved through the deployment of virtual power plants (VPPs), simultaneously helping to meet the estimated 200 gigawatt (GW) of peak demand growth expected by 2030.1 While there are variations within the industry on the construct of VPPs, one common definition of a VPP is “aggregations of [distributed energy resources] DERs that can balance electric loads and provide utility‐scale and utility‐grade services like a traditional power plant.”2 DOE is actively supporting VPPs, as evidenced by the issuance of the September 2023 report Pathways to Commercial Liftoff: Virtual Power Plants, as well as the announcement that same month of a $300 billion commitment to Project Hestia, an effort to make DERs, and the accompanying consumer‐facing software to enable a nationwide VPP infrastructure, more widely available to American homeowners.3 This backing, combined with recent legislative and regulatory actions, such as the Inflation Reduction Act (IRA) of 2022 and the Federal Energy Regulatory Commission (FERC) Order No. 2222, which established a framework for DER aggregations that meet minimum size requirements of 100 kilowatts (kW) to participate in organized wholesale markets, is likely to promote greater deployment and participation of DERs in the market and could result in a large influx of such resources in a relatively short time span.