The utility world has changed drastically in the last 10 years. New technologies like Smart Meters and fully functional Smart Grid concepts have made large inroads into the utility space and no one should want to be left behind. Utilities also face additional pressures from regulatory bodies who are continuing to encourage carbon reduction and greater customer flexibility. Utilities need to balance these new requirements with the financial obligations of providing reliable power (at a reasonable price) while attempting to meet shareholder expectations. Each of these goals are not necessarily complimentary, thus utilities need to determine how to address each one.
VPPs are an aggregation of customers (i.e. residential, commercial or industrial) under one type of Pricing, Demand Response or Distributed Energy Resource program. While that concept sounds very similar to today, the key differentiators is that a VPP is defined at a more granular level than just the overall program. No longer do utilities need to group all customers with a particular program under one umbrella. The VPP concept allows Power Equity to aggregate these programs by type and location in the distribution topology or some other agreed upon aggregation and bid it into the Energy Market.
Read more here…https://www.energy.gov/sites/prod/files/oeprod/DocumentsandMedia/ABB_Attachment.pdf