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Understanding the future of VPP market design and technology with Shikhar Pandey · Factor This

• 0:03
  SPEAKER_01: A few years ago, when Comed deployed one of the country's first utility-scale DER management system, it proved that software-driven flexibility could integrate gigawatts of distributed resources without waiting on multi-year hardware upgrades.
• 0:16
  SPEAKER_01: But turning individual DERS and DERMS networks into true virtual power plants that are capable of delivering real-time voltage and frequency support is no small feat.
• 0:26
  SPEAKER_01: Doing so requires a dedicated effort to work through legacy distribution hardware, regulatory challenges, and leveraging an 80% capacity gap in untapped behind-the-meter assets.
• 0:36
  SPEAKER_01: Shikar Pandy, founder and managing partner of Gridco Group, both understands and has worked through these challenges in a real way, as he helped spearhead that pioneering Durham's work at Commed, but is also doing some really innovative work at GridCo Group.
• 0:50
  SPEAKER_01: He brought some of those operational insights and lessons learned to the stage at the recent DTEC Reliability and Resiliency Conference, and he's talked about what it means to transform the perception and reality of DERS and VPPs from emergency assets to ones that can be counted on in a very different way.
• 1:05
  SPEAKER_01: And we wanted to further showcase those insights, since he's one of the few people in the industry who can do so from a uniquely grounded perspective that spans utility operations, federal research, and commercial technology.
• 1:16
  SPEAKER_01: So, Shikar, thanks so much for joining us today.
• 1:19
  SPEAKER_00: Thank you, Jeremiah, for having me.
• 1:21
  SPEAKER_01: So I briefly touched on it in that in that intro, but you're the founder and managing partner of Gridco Group, but your background really spans a deep operational work at Comed, but as well as research leadership at what is now the National Laboratory of the Rockies.
• 1:36
  SPEAKER_01: So can you talk a little bit about how those different environments shaped your approach to solving the grid challenges that we're dealing with in the in the present?
• 1:44
  SPEAKER_00: Yeah, well, great question.
• 1:46
  SPEAKER_00: And I mean, I do get asked this question as well because the background is a little bit diverse.
• 1:51
  SPEAKER_00: But you know, I'll start with when I was at National Laboratories of Rockies, is what it's called now.
• 1:57
  SPEAKER_00: Um, still not easy for me to pronounce all that because it's so used to NRE.
• 2:02
  SPEAKER_00: Um, but when we were working there and and I was working on a project in on making Alaskan grid resilient by design, it was a DOE project.
• 2:11
  SPEAKER_00: So it won't involve aspects of reliability, resiliency, battery energy, storage system, smart meters, and whatnot.
• 2:16
  SPEAKER_00: It was a very small microgrid in a city of Cordova.
• 2:19
  SPEAKER_00: It was pretty, pretty good.
• 2:21
  SPEAKER_00: Um that was my, I would say, first exposure in the United States on a research project, going into a ground and making a difference kind of a thing, right?
• 2:31
  SPEAKER_00: Um, and that's basically where I got really excited with the utility space.
• 2:34
  SPEAKER_00: I'm like, uh because I have masters and PhD, I was a researcher, and then I got really excited into actually working for utilities.
• 2:41
  SPEAKER_00: And then in 2020, I joined Commonwealth Edison.
• 2:44
  SPEAKER_00: I worked in their smart grids department.
• 2:46
  SPEAKER_00: So I dealt with a lot of uh battery energy storage system, um, you know, analysis, modeling, and figured out a lot of things about the battery industry.
• 2:54
  SPEAKER_00: If you know it's too cold, it doesn't work, and it depletes faster, you know, all those new nuances and whatnot, right?
• 3:01
  SPEAKER_00: Uh so worked there.
• 3:02
  SPEAKER_00: Then I was uh most recently senior manager of the air planning and engineering there, where we rolled out the Durham's platform there.
• 3:09
  SPEAKER_00: And now it's I think supposed to connect 650 megawatt on the system, which is huge, right?
• 3:15
  SPEAKER_00: So the team there is working as GridCo, you know, then fast forward, we started Gridco, about 20, 30 people in the company, all working on the techno-regulatory space, pretty much, like the policy side of things.
• 3:28
  SPEAKER_00: And that was my life's conclusion or journey's conclusion, is this yes, research is needed, operation is needed, but there's a lot of work that's needed on the policy side as well, on the regulatory side, to make sure there are right incentives for these programs, right?
• 3:42
  SPEAKER_00: Because there are a lot of issues, and Power Grid has probably never been this complicated as it's right now, uh, which is a great opportunity.
• 3:49
  SPEAKER_00: So we work across all the way from Massachusetts to California to Puerto Rico, all across the US on several different uh projects, and you know, Durham's flexible interconnection, virtual power plant um being at the at the very forefront of what we do.
• 4:04
  SPEAKER_00: So that has been the experience so far, and we just continue to do uh good work in this space.
• 4:09
  SPEAKER_01: Yeah, no, I wanted to touch on that work at GridCo Group.
• 4:13
  SPEAKER_01: Um, so is it really about that that policy piece in terms of a better understanding of how these different, these different models, these different technologies can create value?
• 4:24
  SPEAKER_01: Um, because that value might look different for a given utility depending on where they're at or where things are with their uh with their ratepayers or or or just their setup.
• 4:35
  SPEAKER_00: That is a great question.
• 4:36
  SPEAKER_00: And you know, this is something I try to tell people that look, sometimes people ask me, well, UK has done flexibility market, why not US?
• 4:44
  SPEAKER_00: Right?
• 4:45
  SPEAKER_00: Well, UK had a war in 2022, US didn't, right?
• 4:48
  SPEAKER_00: That's their energy pricing.
• 4:50
  SPEAKER_00: So flexibility might have made sense there in 2022.
• 4:54
  SPEAKER_00: It might not have made sense for us in the US in 2022, right?
• 4:58
  SPEAKER_00: However, now with prices going up, the capacity pricing because of all the large load and whatnot, it might make sense, right?
• 5:05
  SPEAKER_00: So a California problem is not an Illinois problem.
• 5:08
  SPEAKER_00: Those two grids are very different, right?
• 5:10
  SPEAKER_00: And that's the reason why regulations in the energy space, part of it is made at the state level, right?
• 5:16
  SPEAKER_00: So it's not people try to like draw, you know, BPP a technology, it should work everywhere.
• 5:22
  SPEAKER_00: It probably will not work everywhere, right?
• 5:24
  SPEAKER_00: It probably will not even work in the same utility on every circuit, right?
• 5:28
  SPEAKER_00: And it's very important to know and understand that.
• 5:31
  SPEAKER_00: And when the pressure is on affordability, we really can't afford to do a program that at that scale that doesn't work, right?
• 5:39
  SPEAKER_00: It's very, very important to make it work as well.
• 5:41
  SPEAKER_00: So what we do is we understand, because we are all mostly comprised of ex-utility engineers.
• 5:47
  SPEAKER_00: We understand utility business, we understand the process, what a capacity planner, DER planner goes through, what operation people go through.
• 5:54
  SPEAKER_00: So we know the technol technology piece of it and how it actually works.
• 5:58
  SPEAKER_00: And then we try to take that and explain it to stakeholders and regulators and policymakers of what a good policy may sound like, what a good tariff filing may sound like, right?
• 6:08
  SPEAKER_00: So that once you go ahead and make some ruling, um, it's actually scalable, right?
• 6:14
  SPEAKER_00: It's good for the ratepayers, right?
• 6:15
  SPEAKER_00: So that's the lens that we try to take, right?
• 6:17
  SPEAKER_00: We're not just policy people.
• 6:19
  SPEAKER_00: We're engineers first, and then we try to bring that to policy.
• 6:23
  SPEAKER_01: Well, and it's such an important point in terms of VPPs not making sense everywhere.
• 6:27
  SPEAKER_01: There's there's no, they're not a silver bullet solution.
• 6:30
  SPEAKER_01: And I mean, there is no real silver bullet solution in the in the utility space, but maybe we could dig into that a little bit.
• 6:35
  SPEAKER_01: In simplest terms, how do you explain VPPs as both a concept and a solution?
• 6:40
  SPEAKER_01: And maybe you could talk a little bit about how that perception and even the attitude towards VPPs have evolved over the past couple of years.
• 6:47
  SPEAKER_01: Because it's not a it's not a new, new innovation or technology, but it feels like the way that they're being talked about and positioned is a is pretty new.
• 6:55
  SPEAKER_00: Yeah, yeah, yeah.
• 6:56
  SPEAKER_00: I mean, that's that's again, you know, you're hitting all the right questions.
• 6:59
  SPEAKER_00: Because look, if you think VPP in the way people have talked about, it's all in.
• 7:05
  SPEAKER_00: Like if you pick up any piece of legislation, PVPP is called as demand response technology, smart thermostat, bat energy storage system, and everything else, right?
• 7:13
  SPEAKER_00: Why did we do that?
• 7:14
  SPEAKER_00: While demand response already existed, smart thermostat and all those things already existed.
• 7:19
  SPEAKER_00: The only reason there was an urge to call something virtual power plant, because it was, you know, the technology was there where a household can inject electrons onto the grid.
• 7:30
  SPEAKER_00: Right?
• 7:30
  SPEAKER_00: You can backfeed into the grid through solar or through battery, and these things became a little bit more dispatchable, right?
• 7:36
  SPEAKER_00: Versus demand response, some were mandatory, but most of them were voluntary, right?
• 7:41
  SPEAKER_00: It may or may not show up, kind of a thing, right?
• 7:44
  SPEAKER_00: So if you actually design a power plant, and what we did as part of our IEEE task force that that I was leading on grid flexibility, is we went all the way to the 1990s and we thought we traced the origin of the definition.
• 7:57
  SPEAKER_00: So if you read the report, it'll trace the defin uh origin of the definition.
• 8:02
  SPEAKER_00: And what we concluded, all the technical minds, right, from Australia to New Zealand to US, is that a power plant should be able to inject power onto the grid, right?
• 8:12
  SPEAKER_00: So a demand response is demand response, right?
• 8:15
  SPEAKER_00: Why are you clubbing that in?
• 8:17
  SPEAKER_00: Um, an aggregator can aggregate demand response technology and virtual power plant, which in this case is only current injecting devices.
• 8:24
  SPEAKER_00: That's totally fine, right?
• 8:26
  SPEAKER_00: But let me ask you, Jeremiah, like I need one kilowatt, okay?
• 8:30
  SPEAKER_00: I need one kilowatt of support.
• 8:32
  SPEAKER_00: You are going to reduce your HVAC to give me one kilowatt, and your neighbor is going to dispatch their battery to give me one kilowatt.
• 8:41
  SPEAKER_00: Which one is more valuable?
• 8:42
  SPEAKER_00: I am getting my one kilowatt, but because you are reducing your demand, you are doing less work in the side.
• 8:50
  SPEAKER_00: Whereas the other person is dispatching, they're doing more work in that point in time, right?
• 8:54
  SPEAKER_00: So of course they'll charge later and you will, you know, use HVAC later.
• 8:57
  SPEAKER_00: But the whole point is that more work done has to be valued more.
• 9:02
  SPEAKER_00: So the compensation mechanism of demand response, something not controllable, is gonna be different than something that's more reliable, more controllable, because utilities can then rely on them to do their planning.
• 9:13
  SPEAKER_00: That's why this difference was really needed.
• 9:16
  SPEAKER_00: So it was a revelation for us when we started.
• 9:18
  SPEAKER_00: We didn't have all this in mind.
• 9:19
  SPEAKER_00: We just started talking and we said, well, if it says power plant, what is the virtuality of it?
• 9:24
  SPEAKER_00: Well, the virtuality of it is that it's not in the same space, right, same geographical location.
• 9:30
  SPEAKER_00: It can be dispersed.
• 9:31
  SPEAKER_00: So that's the virtuality of it.
• 9:32
  SPEAKER_00: But at the end of the day, it's a power plant.
• 9:34
  SPEAKER_00: So it should act like one for the most part, right?
• 9:37
  SPEAKER_00: That's where we came in the paper that hey, there's a distinction.
• 9:40
  SPEAKER_00: And I think it's pretty good because when you think about people making standards around this and technology provider, right?
• 9:49
  SPEAKER_00: Virtual power plant uh current injecting device needs to be treated differently because of safety security reasons as well, right?
• 9:56
  SPEAKER_00: Because if it injects things in the back in the grid, you need to have some sensing technology.
• 10:00
  SPEAKER_00: So people out there, you know, working on the circuit are safe and whatnot.
• 10:04
  SPEAKER_00: Whereas demand response, one-way power flow, no problem, right?
• 10:08
  SPEAKER_00: And you can club them to aggregate for 2222 allows for that aggregation, no problem.
• 10:14
  SPEAKER_00: But just the name virtual power plant should inject current onto the grid.
• 10:18
  SPEAKER_00: That has been our position.
• 10:20
  SPEAKER_01: And how do you see that?
• 10:22
  SPEAKER_01: How has that has that changed?
• 10:24
  SPEAKER_01: And you know, what are some of the biggest friction points?
• 10:26
  SPEAKER_01: Like, and I think the example you you just mentioned might be a good one.
• 10:29
  SPEAKER_01: Is it not an understanding of where that value is or an expectation of how it's going to impact that demand in a way that doesn't line up?
• 10:38
  SPEAKER_01: But again, that could go something you mentioned earlier of that just not making sense for that given utility or that given usage.
• 10:45
  SPEAKER_01: Like, is the is the biggest challenge about the concept, about the technology, or the market or or a combo?
• 10:52
  SPEAKER_00: Yeah, I think I think I would, if I had to prioritize that, I would prioritize market, right?
• 10:57
  SPEAKER_00: I would say market is the biggest challenge.
• 10:59
  SPEAKER_00: And the reason being that somebody buying a power wall, hooking it up, is what is the rate of return on that, right?
• 11:06
  SPEAKER_00: What compensation should they get around it?
• 11:08
  SPEAKER_00: Now, the compensation that you give to your customer to make a virtual power plant work, if that's more costly than you procuring the same energy or capacity in the market, then it's not affordable, right?
• 11:22
  SPEAKER_00: So, and the other, this a chicken and egg problem.
• 11:24
  SPEAKER_00: And if you don't create a market, the prices don't go down, nobody can manufacture it in bulk, so somebody can buy it cheaper.
• 11:32
  SPEAKER_00: So it's just this whole tension between what's the right amount to kickstart a program, right?
• 11:38
  SPEAKER_00: So, I mean, even California did quite a lot of um VP keys, and I I I'm hearing now that they're slowing it down.
• 11:45
  SPEAKER_00: Right now, Illinois is ramping it up, right?
• 11:47
  SPEAKER_00: Um, they have like a whole battery mandate and a lot of VPP stuff going on there, right?
• 11:52
  SPEAKER_00: And in Minnesota, Excel has some um you know connected capacity connect program as well, right?
• 11:57
  SPEAKER_00: So all that is going on.
• 11:58
  SPEAKER_00: So just people are trying it out.
• 12:00
  SPEAKER_00: I think market is is what I would put on the top.
• 12:04
  SPEAKER_00: I think technology is there.
• 12:07
  SPEAKER_01: And it's such a I mean, that's that's it's just so key because it I don't want to say it's easy to talk about the technology, but it in some cases it's more comfortable to talk about the technology, or it's easier to get your arms around what that what it means to solve that as a technology problem, but as a market problem, like that's just not always uh not always as as simple to to sort out.
• 12:34
  SPEAKER_01: Um so you know, last I and I mentioned it uh we touched on it a little bit, but the last time we we connected, uh we discussed how well Comed's uh Durham's implementation was performing.
• 12:43
  SPEAKER_01: And you know, I'll link to and and reference that that full piece, but you know, can you talk a little bit about the the any of the lessons learned from that project or anything that you've that you've brought forward to today?
• 12:55
  SPEAKER_01: Because that was a few years ago at this point.
• 12:57
  SPEAKER_00: Yeah, I think when we last spoke, it I was still there, it was probably end of 2024 or something.
• 13:03
  SPEAKER_00: Um but yeah, since then, when by the time I was there, we did a bunch of workshops.
• 13:08
  SPEAKER_00: We launched it as a program.
• 13:10
  SPEAKER_00: I think it's a very good resource.
• 13:12
  SPEAKER_00: Um I think if you just typed in comet.com flexible interconnection or something or Google it, you should go to their page.
• 13:18
  SPEAKER_00: Um they have done a lot of workshops to create a process around it, which is probably first in the country to do at that scale.
• 13:26
  SPEAKER_00: Um, you will get a lot of information on how to apply, how to connect, who gets capacity, things of that nature.
• 13:32
  SPEAKER_00: And I think um in the latest um filing that they have done in their multi-year integrated grid plan, I think they're saying that they'll connect 650 megawatt by 2031, right?
• 13:43
  SPEAKER_00: Uh huge amount, right?
• 13:46
  SPEAKER_00: Just imagine how much infrastructure would it have needed to connect that much, right?
• 13:50
  SPEAKER_00: So that's that's quite a lot of um a megawatt.
• 13:53
  SPEAKER_00: So you know, more power to to you know, come at love them, my my alma mater and great people, good work they're doing.
• 14:00
  SPEAKER_00: But yeah, it's not easy to run an innovative program like that at that scale, right?
• 14:05
  SPEAKER_00: So, in terms of like lessons learned, right?
• 14:09
  SPEAKER_00: It's one thing to run 10 megawatt pilot, it's a whole lot different beast to run 100 megawatt because now you need to have a dedicated team, people debugging the system, customers will call you about complaints, and 100 people will come up with 100 problems, 10 people might come up with two problems, right?
• 14:27
  SPEAKER_00: So that's the other thing that you will see.
• 14:29
  SPEAKER_00: So how they scale the team up and just you know, the employee base and whatnot, that would be like a huge thing.
• 14:35
  SPEAKER_00: I think technology works, we have proven that already, but technology working and working at scale are two different beasts all the way.
• 14:44
  SPEAKER_01: Well, and and it's just so pervasive because that what does it mean to scale?
• 14:49
  SPEAKER_01: How do we take these lessons learned from this pilot and apply them across the organization?
• 14:53
  SPEAKER_01: Like that's uh there's so much to that.
• 14:56
  SPEAKER_01: And like what that actually looks like, again, is gonna depend on the project, depend on the utility.
• 15:02
  SPEAKER_01: But is there anything that that has stuck with you in terms of the mindset or the approaches or the questions to be asking of either before a pilot or as part of it, like to better get your arms around that that scale question?
• 15:15
  SPEAKER_01: Because I mean, you're never gonna really know until you're you're doing it, but what it looks like to better prepare yourself with with questions and insights as part of that, which can then be part of this scale process.
• 15:27
  SPEAKER_00: I'm gonna tie this back to my NLR days, National Renewable of Rocky days.
• 15:32
  SPEAKER_00: And when when I was there, we were working on this whole ADMS 2.0 advanced application ADMS, right?
• 15:38
  SPEAKER_00: Um and a lot of discussion was that ADMS will solve this DER problems, right?
• 15:43
  SPEAKER_00: So DERMS as a as a technology was always thought to be a module of ADMS, right?
• 15:50
  SPEAKER_00: And ADMS deployment got delayed for the most part everywhere, right?
• 15:54
  SPEAKER_00: And the demand for DERMS was there quite a lot, right?
• 15:58
  SPEAKER_00: So now you have this whole standalone entity, which is DERMS, which almost requires a lot of modeling, at least at that circuit level, as much as ADMS would require.
• 16:07
  SPEAKER_00: So we're almost creating like two different technologies that should actually be one, right?
• 16:12
  SPEAKER_00: So you're like linking through that a communication thread and transferring things.
• 16:16
  SPEAKER_00: I feel when ADMS just has the Durms module built in and it's fully operational, I think that's when the scale problem is gonna be like really, really solved and it's gonna go just like business as usual.
• 16:30
  SPEAKER_00: Because think about it, right now, utility is great at adding transformers, switches, devices, interrupters, right?
• 16:36
  SPEAKER_00: Things of that nature.
• 16:37
  SPEAKER_00: Why?
• 16:38
  SPEAKER_00: Because it's just a very standard ADMS related process, right?
• 16:41
  SPEAKER_00: Then they can easily do that.
• 16:43
  SPEAKER_00: In this case, well, the two things are here.
• 16:45
  SPEAKER_00: In this case, it's a different technology, derms, that you are standalone, you're working through that, right?
• 16:51
  SPEAKER_00: And the second piece is customer.
• 16:53
  SPEAKER_00: You are controlling somebody else's asset, right?
• 16:56
  SPEAKER_00: And well, the a lot of things can happen.
• 16:59
  SPEAKER_00: It's not under your control.
• 17:00
  SPEAKER_00: Physically, you can't just barge in somebody's solar farm, right?
• 17:04
  SPEAKER_00: You can go up to your equipment, right?
• 17:06
  SPEAKER_00: So if something is going on there, you don't have permission to go in, right?
• 17:09
  SPEAKER_00: These processes, procedure needs to be set up.
• 17:11
  SPEAKER_00: And that's where it's gonna take a little bit of time.
• 17:15
  SPEAKER_00: But I think Comed and other utilities, Excel, even like in Minnesota and other places, they've done a great job at setting up some repeatable process.
• 17:24
  SPEAKER_00: But there has to be more maturity that that needs to come about.
• 17:31
  SPEAKER_01: Yeah, I wanted to get in with a few of those examples you mentioned.
• 17:34
  SPEAKER_01: But you know, we we touched on the the importance of of markets and even your work at Gridco Group with the policy piece, and that really leads into something I wanted to ask you about the the tension that exists between the the federal wholesale markets and and mandates like FERCORDE 222 and uh uh and but then the state or local distribution utility policies.
• 17:55
  SPEAKER_01: You know, what's the is there a best way to bridge the gap between wholesale market rules and and retail distribution utility policies?
• 18:03
  SPEAKER_00: Yeah, that one is a complicated one, man.
• 18:04
  SPEAKER_00: Like the FERC 2222, right?
• 18:07
  SPEAKER_00: Somebody calls it 2222.
• 18:09
  SPEAKER_00: Um, that's been around, I don't know, since 22, 23 or whenever.
• 18:13
  SPEAKER_00: And at one point we thought, well, it's gonna be a thing, and then it got delayed by two years, and I think now the next deadline is 2028 February or something.
• 18:21
  SPEAKER_00: Um, that one is a hard one.
• 18:23
  SPEAKER_00: Some states are taking it very seriously.
• 18:25
  SPEAKER_00: They're like, um, we just want to make sure that utilities are preparing for this policy, right?
• 18:31
  SPEAKER_00: And getting ready.
• 18:32
  SPEAKER_00: Some states are making something very parallel policy around that is that look, you know, there is a way where we could reduce the overall demand, the supply-side demand, and that will lead to rate suppression already.
• 18:45
  SPEAKER_00: So why don't we make a state policy around local grid constraint, you know, uh compensate people locally and whatnot, and get about our business, right?
• 18:53
  SPEAKER_00: So I've seen both flavors, right?
• 18:55
  SPEAKER_00: Uh, I think if you look in Maryland, they're pushing very hard, follow this, right?
• 19:01
  SPEAKER_00: Follow for 2222, make sure you are compliant.
• 19:03
  SPEAKER_00: If you look at in Illinois's recent proceeding, I didn't see as much chat around that, right?
• 19:09
  SPEAKER_00: Not a lot of people seem very concerned about where the utilities are at with this, right?
• 19:13
  SPEAKER_00: They were going forward with their state policy, right?
• 19:16
  SPEAKER_00: And it also has depends on the market structure, like if you're in FJM and MISO and wherever else, all that also depends, right?
• 19:23
  SPEAKER_00: Because of capacity pricing uh is different, different places.
• 19:27
  SPEAKER_00: But I think to answer your question, I feel like somebody needs to sit and say, look, at this given location, point your finger on your map that's behind you, at this given location, what is the value of one kilowatt of uh capacity, 10 kilowatt hour of energy?
• 19:47
  SPEAKER_00: You answer that question the right way, then you figure out what w what of that value, what of that dollar amount comes from, the supply side, the transmission side, the distribution side, right?
• 19:57
  SPEAKER_00: And that's that's the cue, right?
• 19:59
  SPEAKER_00: So if you say that, well, supply is dirt cheap, you have a bunch of nuclear and you know it's dirt cheap, no problem.
• 20:05
  SPEAKER_00: You're not gonna compensate them for supply.
• 20:07
  SPEAKER_00: Then you're gonna focus on very locally on distribution grid constraints or something of that nature, right?
• 20:12
  SPEAKER_00: But if you have ample distribution grid capacity, then all you have to play for in valuation is supply side, right?
• 20:19
  SPEAKER_00: And some way place you don't have any, and there it doesn't make sense.
• 20:22
  SPEAKER_00: You're just handing out free dollar for this technology where it's not needed, right?
• 20:26
  SPEAKER_00: So it just depends, and somebody needs to do that, and it's not gonna be one clean answer for everybody's territory.
• 20:32
  SPEAKER_01: Well, and that's what it comes back to is like, I mean, even that that sort of question of like of sorting out that that tension between those those levels, what it what it looks like to get where you need to go, it depends on depends on where utility is starting, or depending on what that cost is, which again goes back to that that market question and policy question, which I know at Gridco Group you guys are are digging into in those very specific ways.
• 20:58
  SPEAKER_00: Yep.
• 20:58
  SPEAKER_00: Yep.
• 21:00
  SPEAKER_01: Um, you know, as these, you know, we we touched on what some of the other uh some of the work that's being done in these in these different states.
• 21:07
  SPEAKER_01: And as utility-owned VPP models are are coming online, such as Excel's uh Energy Capacity Connect, you know, how can utilities prioritize some targeted grid edge hardware upgrades so that their legacy infrastructure doesn't throttle that performance?
• 21:21
  SPEAKER_00: Yeah.
• 21:21
  SPEAKER_00: I am I am a little bit a fan of utility-owned grid edge devices such as Capacity Connect.
• 21:28
  SPEAKER_00: And the reason being is just that, you know, as a utility, and I this is me putting my utility hat on, is that if I have that particular device in my control, I have it for a reason, but then I can use it for multiple different reasons in the next three, four year time, right?
• 21:45
  SPEAKER_00: But when it's customer owned, like for example, you are giving me something and I'm writing an interconnection agreement with you, I'm saying this is your compensation for the next 20 years, right?
• 21:54
  SPEAKER_00: And if I don't say that it's your compensation for the next 20 years, you can get financing, right?
• 21:58
  SPEAKER_00: It's hard for you to finance.
• 22:00
  SPEAKER_00: A project, right?
• 22:00
  SPEAKER_00: So, and if I did say that in the agreement and now I suddenly realize there is more value or less value, I don't have as much leeway.
• 22:08
  SPEAKER_00: So at the end of the day, if if your thought processes that I need to have my grid work for my customers and suppress the rate, work for the ratepayers, then having it more in the utility controlled environment might actually be good.
• 22:24
  SPEAKER_00: Now, the flip side is that, well, utility is sitting on a lot of information, they will not let third party be a player, and all these things are also there, right?
• 22:33
  SPEAKER_00: So let's assume that you solve for that.
• 22:35
  SPEAKER_00: Let's assume that doesn't occur and it's not there.
• 22:38
  SPEAKER_00: If it's not there, then I think utility-owned VPPs might actually work really, really well.
• 22:44
  SPEAKER_00: And to answer your question, uh hardwares and whatnot, well, you can retrofit some of these batteries on your substation, right?
• 22:51
  SPEAKER_00: You can have, instead of like upgrading a transformer, you can put a five megawatt battery.
• 22:56
  SPEAKER_00: The land is saturated, it's not going to grow more than 5 megawatt, a 5 megawatt battery might defer your 20 megawatt of standard transformer that you would have put otherwise, right?
• 23:05
  SPEAKER_00: So there is value to doing that as well.
• 23:08
  SPEAKER_01: Well, it goes back to that concept of how these um how VPPs are evolving both as a comp as a concept, but then how utilities are thinking about them.
• 23:18
  SPEAKER_01: And you know, as these utility business models evolve away from viewing VPPs just as an emergency asset that's deployed during price spikes or extreme weather, and instead towards integrating them as something that's predictable and provides long-term distribution, enables long-term distribution system planning.
• 23:36
  SPEAKER_01: You know, those how how essential is that that evolution of the expectations that a utility can have out of uh a VPP?
• 23:44
  SPEAKER_00: Yeah.
• 23:45
  SPEAKER_00: I mean, I was just having a conversation this morning with a with a client of ours.
• 23:49
  SPEAKER_00: And you know, the the thing that came up was that how do you account for these VPPs during planning process?
• 23:58
  SPEAKER_00: Because if I can't count on these devices while I'm planning the grid, that they will show up when I need when it's 102 degrees outside, all these people will show up and reduce their you know, HVAC and whatnot and span thermostat and all those things.
• 24:12
  SPEAKER_00: I can't account for that during planning.
• 24:14
  SPEAKER_00: And if I don't account for that during planning, there's no savings for the customers, right?
• 24:20
  SPEAKER_00: It's only costly.
• 24:21
  SPEAKER_00: So that's where it's very, very important that you know these things are controllable, dispatchable, and very optimized, right?
• 24:30
  SPEAKER_00: If you can't account for them, you can't rely on these technologies, then it's hard.
• 24:34
  SPEAKER_00: And I don't think there's a technological issue, right?
• 24:38
  SPEAKER_00: Going back to the technologies there, it's how you do the market piece, who controls, where the asset is, who owns, right?
• 24:46
  SPEAKER_00: All this is basically what we need to solve for, right?
• 24:49
  SPEAKER_00: I know a lot of jurisdiction where it's it's unsaid, but it's almost prohibitive for utility to propose uh utility on battery on the distribution grid, right?
• 24:58
  SPEAKER_00: They're like, oh, they don't it's not very well taken, right?
• 25:02
  SPEAKER_00: They're like um this is not unknown.
• 25:04
  SPEAKER_00: Well, why?
• 25:05
  SPEAKER_00: It might actually be good for the ratepayers, right?
• 25:08
  SPEAKER_00: So that's the other aspect of things that we should consider.
• 25:11
  SPEAKER_00: So I think the minute the planners, the capacity planners and distribution grid folks start relying on this technology and they show up, there is enough evidence, I think it will be good.
• 25:22
  SPEAKER_00: And the the paper talks about some case study of these technology sometimes consistently underperforming than what was expected.
• 25:30
  SPEAKER_00: Right?
• 25:31
  SPEAKER_00: Well, if you know it's gonna underperform by 20%, right, at max, well, that's all you need to account for.
• 25:37
  SPEAKER_00: Like plan for 80% to be available, and there you go, right?
• 25:42
  SPEAKER_00: But when you are very locational, well, it can underperform 80% somewhere, whereas performing somewhere fully.
• 25:49
  SPEAKER_00: So you have to solve for all that.
• 25:51
  SPEAKER_01: Well, and what what planners can rely on is that essential question.
• 25:55
  SPEAKER_01: And that that leads into something I wanted to ask you about in terms of the the consumer behavior, because I referenced the stat up top about roughly 80% of distributed energy capacity remaining um remains unenrolled in some of these active programs.
• 26:09
  SPEAKER_01: You know, are there are there consumer incentives or simplified onboarding frameworks that that we could enable or showcase to convert passive behind-the-meter assets into these active grid participants that those planners then can rely on?
• 26:23
  SPEAKER_00: Yeah, I think I think that is a very big aspect of it, like customer onboarding and and whatnot.
• 26:29
  SPEAKER_00: I think this whole grid edge derms and aggregators, right, all that discussion comes into play where there have been like some success stories of aggregators, like let's say uh a power wall aggregator is there out and you know they can enroll 3,000 devices and it just shows up, right?
• 26:47
  SPEAKER_00: So you can have some sort of dashboard and tracker that, hey, here's the state of charge of all these batteries, it will show up in the next two hours if you want to, right?
• 26:55
  SPEAKER_00: So I think that's very, very important.
• 26:57
  SPEAKER_00: And um like we are working on a lot of these problems as well for utilities that hey, how do we have our system, turn it into an edge terms, onboard aggregators?
• 27:09
  SPEAKER_00: They give us either a scheduled dispatch virtual power plant or controllable one, right?
• 27:14
  SPEAKER_00: And the minute it starts to come, map that onto your grid that, okay, under this substation, under this feeder, this is how much capacity is available, right?
• 27:23
  SPEAKER_00: And if there's a running dashboard, you can see how much megawatt or you know is and state of charge is available, you can plan for that, right?
• 27:31
  SPEAKER_00: If not in planning realm, you can at least plan for them in like day-ahead operational realm, right?
• 27:39
  SPEAKER_01: So is that is that consumer piece?
• 27:41
  SPEAKER_01: Is that is that one of the the quote unquote easy wins that that utilities can look to to kind of unlock some of the value that that they can have with VPPs right now, like short term?
• 27:51
  SPEAKER_00: Yeah, I think so.
• 27:52
  SPEAKER_00: And I think the only way to do that is through third parties because utilities have to run their grid, they have their piece, they probably are not that great at going door-to-door telling people about, hey, you should install this and that.
• 28:06
  SPEAKER_00: The other people are good at that.
• 28:08
  SPEAKER_00: They've done that.
• 28:09
  SPEAKER_00: There are aggregators who have aggregated smart thermostats in the past, right?
• 28:13
  SPEAKER_00: There have been success stories.
• 28:14
  SPEAKER_00: So I think that's where the third-party partnership with utility is is important.
• 28:18
  SPEAKER_00: But I think that's easy when and people are realizing that and they're working towards that too.
• 28:23
  SPEAKER_01: Well, and I imagine there's there's there can be multiple benefits to working with those third parties.
• 28:28
  SPEAKER_01: I think in some instances the utility not having that directly part, like there's benefits to outsourcing that that go beyond just the the logistics of something like that.
• 28:39
  SPEAKER_00: Yeah, definitely.
• 28:40
  SPEAKER_00: There is a lot of benefits to doing that because it's a very cumbersome program.
• 28:44
  SPEAKER_00: And it's it also goes back to expertise, right?
• 28:47
  SPEAKER_00: I'm working at a utility, I've worked, you know, five years there, six years, and I'm like, I want to do that.
• 28:53
  SPEAKER_00: I'm good at running my grid, I'm good at understanding what the grid needs.
• 28:57
  SPEAKER_00: But if I have to now manage individual customers' assets and roll them, that's a little bit hard, right?
• 29:04
  SPEAKER_00: Um, so I think third party comes into picture there, and which is really good.
• 29:09
  SPEAKER_00: I'm grateful for like there are a bunch of vendors out there who are working on this technology.
• 29:14
  SPEAKER_00: So I think I think that's where the you know uh utility and private partnership makes a lot of sense.
• 29:20
  SPEAKER_01: Well, and as you said, like it's it's always gonna depend.
• 29:23
  SPEAKER_01: A different utility might might have a different approach or a different model, but we just called out about like there is that support out there.
• 29:30
  SPEAKER_01: There are those organizations that can maybe not plug into that system, but can support it or enable it, whether it's it's through third party or or better supporting directly how a utility can enable that.
• 29:43
  SPEAKER_01: Like those options are out there.
• 29:45
  SPEAKER_01: 100%.
• 29:46
  SPEAKER_00: I think like if it's a like, for example, the the program that we talked about, like Excel, right?
• 29:50
  SPEAKER_00: I think it's one to three megawatt.
• 29:51
  SPEAKER_00: So if it's a bigger size battery, it makes sense for utility to connect, easier to manage.
• 29:56
  SPEAKER_00: But if it's a lot of five kilowatt, ten kilowatt, twenty kilowatt assets, I think it should go through aggregation, right?
• 30:02
  SPEAKER_00: Because that's just gonna be too cumbersome and a lot of administrative cost on the utility side as well, right?
• 30:08
  SPEAKER_00: So that's where that model could work.
• 30:11
  SPEAKER_01: Yeah, it goes back to being able to have that baseline that you're working off of.
• 30:15
  SPEAKER_01: Where's the where's the value?
• 30:17
  SPEAKER_01: What's the value?
• 30:17
  SPEAKER_01: How is it realized?
• 30:18
  SPEAKER_01: And like again, it's it's easy to talk about that in the abstract, but setting that down, making all of those answers part of a planning process, like that's how you get where you need to be with all those pieces.
• 30:30
  SPEAKER_01: So if you look out over the next three to five years, how do you expect the the market understanding and operational adoption of VPPs to continue to change and mature?
• 30:40
  SPEAKER_01: Is it gonna be that better understanding of those market realities?
• 30:44
  SPEAKER_01: Will that enable that more widespread adoption of them?
• 30:47
  SPEAKER_01: Or is, you know, what's the technology piece in that?
• 30:49
  SPEAKER_01: How do you uh how do you see a lot of those pieces playing out?
• 30:53
  SPEAKER_00: Yeah, I think I think it's only gonna grow, the adoption.
• 30:57
  SPEAKER_00: And the reason being that there is a lot of like now technologies out there, like you can easily get a battery as compared to what you could get 10 years ago, right?
• 31:07
  SPEAKER_00: Just thermostats, everybody is smart.
• 31:09
  SPEAKER_00: Now you have electric vehicles that could do V2G and whatnot.
• 31:12
  SPEAKER_00: So consumers, customers have those technology already, right?
• 31:16
  SPEAKER_00: And uh the technology of aggregation, right, and aggregator aggregating that is also available, right?
• 31:22
  SPEAKER_00: Um, so those two things are already solved for.
• 31:25
  SPEAKER_00: Now the only question remains is that uh in the regulation space, right, market and regulation space, market is gonna drive it because capacity prices are on the rise everywhere.
• 31:35
  SPEAKER_00: So it's getting to a Europe level energy crisis, if not, if not that level, but somewhere close where the prices are not affordable.
• 31:43
  SPEAKER_00: So I think the market will also be there.
• 31:46
  SPEAKER_00: Uh and now goes back to just the policy aspect of it.
• 31:49
  SPEAKER_00: So I'm seeing a lot of states requiring utilities to file a BPP tariff, meaning how you enroll people, how do you run a program?
• 31:57
  SPEAKER_00: And even um, you know, at national level, people are talking about all this, like data center flexibility and and things of that nature, right?
• 32:04
  SPEAKER_00: So all those pieces are all across.
• 32:06
  SPEAKER_00: The whole flexibility term is all across, right?
• 32:09
  SPEAKER_00: So it's not going away.
• 32:11
  SPEAKER_01: Well, and it it's uh it speaks to something.
• 32:14
  SPEAKER_01: I mean, we we touched on it is just how that that consumer piece and like these pieces are there, that technology they have in their in their houses, but like what are they what are they literally or figuratively plugging into?
• 32:25
  SPEAKER_01: Like how can that be incentivized and how can the utility rely on that?
• 32:29
  SPEAKER_01: Just a better, uh, better awareness of what it means to connect those dots, like that can that can really change things.
• 32:36
  SPEAKER_00: Yeah, that definitely can change things.
• 32:38
  SPEAKER_00: And one one way of doing this is that look, as a utility, you don't need to know exactly where all assets are, so long it's safe and and and whatnot.
• 32:45
  SPEAKER_00: But if it's reducing your baseline, then your supply demand is going down at certain hours.
• 32:52
  SPEAKER_00: Great.
• 32:52
  SPEAKER_00: But that has lower value.
• 32:54
  SPEAKER_00: Higher value is that if you know exactly which street, which feeder, how much is available, right?
• 33:00
  SPEAKER_00: That's better for planning purposes.
• 33:01
  SPEAKER_00: And that will be higher value to the society, to the grid.
• 33:05
  SPEAKER_01: Well, it reminds me of that old expression of the perfect being the enemy of the good, like wanting that perfect understanding, that perfect awareness, which yes would be great.
• 33:14
  SPEAKER_01: But without that, is there something we can still build on, can still make part of the planning effort?
• 33:19
  SPEAKER_01: And if the answer is yes, like let's figure it out.
• 33:23
  SPEAKER_01: Uh excellent.
• 33:24
  SPEAKER_01: Well, last question for you.
• 33:26
  SPEAKER_01: We've been talking power.
• 33:27
  SPEAKER_01: So give me, can you give us a piece of advice that's powerful?
• 33:31
  SPEAKER_01: Something that's that's anchored your work or a critical perspective that the broader sector is missing, or maybe something from entirely outside of this industry that is that is powerful to you, or something that's driving driven your thinking?
• 33:45
  SPEAKER_00: Well well, I think um one thing I'd say is that this electric infrastructure, our grid, is comprised of multiple stakeholders, right?
• 33:55
  SPEAKER_00: There are like people with EV coalition, right?
• 34:00
  SPEAKER_00: Uh, battery, solar, whatnot, grid, utility regulators.
• 34:04
  SPEAKER_00: I think the the advice I'd give is that don't shy away from conversation, right?
• 34:09
  SPEAKER_00: Try to understand why somebody's saying something.
• 34:13
  SPEAKER_00: And that's why like what we do in our business is a lot of like stakeholder management through either testimonies or litigation or whatnot.
• 34:20
  SPEAKER_00: And what I try to get to is that what does Jeremiah want?
• 34:24
  SPEAKER_00: Like what is why is he saying what he's saying, and how does that affect, right?
• 34:28
  SPEAKER_00: So just like listening to it and dismissing it without digging deeper into it is one of the problems of our industry because it's so heavily regulated, people at times shy away from some conversations, right?
• 34:38
  SPEAKER_00: I don't think we should, right?
• 34:40
  SPEAKER_00: We should probably dig into it and be pretty open about it.
• 34:43
  SPEAKER_00: And if a problem could be solved, just solve it, or if it could be solved five years from now, say it, right?
• 34:49
  SPEAKER_00: And and move on.
• 34:50
  SPEAKER_00: So that I would say is don't shy away from conversation.
• 34:53
  SPEAKER_01: It's it's so essential and it's it's another one that's easy to to say but tough to do.
• 34:58
  SPEAKER_01: But like just the the way that that folks will make assumptions about what somebody on the other side of that conversation, the the assumption that a utility would make of a regulator or a regulator makes of a community, and vice versa, and like being able to to think about it from that perspective, like that's that's gonna change the change, literally change the conversation.
• 35:16
  SPEAKER_01: You're seeing that with with the data center pushback, like communities, communities not not seeing or or hearing that perspective.
• 35:24
  SPEAKER_01: And I think I think utilities and even regulators need to do a better job of getting their perspective out there, but just being there to have that that conversation, to lay that out, to see the way in which everybody is coming into these conversations, like, and I'm sure you've seen it, you've worked on all different sides of it.
• 35:38
  SPEAKER_01: If you get everybody around, like those conversations will just happen.
• 35:42
  SPEAKER_01: Those dots will will almost naturally be connected just as part of that conversation.
• 35:47
  SPEAKER_00: Yeah, I 100% agree.
• 35:48
  SPEAKER_00: And like, look, some some things are essential, right?
• 35:51
  SPEAKER_00: Like data centers, we need them moving forward into the next era, right?
• 35:55
  SPEAKER_00: Now it's just a question of how do we build that, right?
• 35:58
  SPEAKER_00: And we need to solve for that.
• 35:59
  SPEAKER_00: And some community who have concerns around that, like it's been around for a long time, it's not new, right?
• 36:04
  SPEAKER_00: It's just that it's more prolific now.
• 36:07
  SPEAKER_00: So we just need to talk to those communities.
• 36:09
  SPEAKER_00: And I it would have been great if we got ahead of the story and explained the side of it before it became into a crisis, which you know, now you have to manage that and whatnot.
• 36:19
  SPEAKER_00: Um, but that's a classic example of what I'm talking about, is is that, right?
• 36:24
  SPEAKER_00: So excellent.
• 36:26
  SPEAKER_01: Well, yeah, no, there are conversations that I know you're having at at Critco Group, and I know pretty active on LinkedIn.
• 36:32
  SPEAKER_01: So encourage everybody to have those conversations with you and the and the folks you're you're working with.
• 36:37
  SPEAKER_01: So, Shikar Pandy, uh really appreciate you taking the time and uh let's stay in touch.
• 36:43
  SPEAKER_00: Thank you so much, Jeremiah.
• 36:44
  SPEAKER_00: I appreciate the opportunity.
• 36:47
  SPEAKER_01: As always, thank you for listening to the Factor This podcast.
• 36:52
  SPEAKER_01: Please do like and subscribe wherever you find your favorite podcast.
• 36:56
  SPEAKER_01: Let us know how we're doing.
• 36:57
  SPEAKER_01: You can find me on LinkedIn.
• 36:59
  SPEAKER_01: I'm Jeremiah Kerpelwit, and always looking forward to hearing your feedback.
• 37:03
  SPEAKER_01: Tell us what we can do better with the show, or if you have an idea for an episode, please get in touch.
• 37:08
  SPEAKER_01: Stay in touch.