It’s been said that analogy is a powerful force when it comes to innovation. It creates an environment where it’s easier for people to apply knowledge from one domain that they already understand to another that they don’t understand quite as well – and thus make it, too, easier to grasp.
Uber is a prime example of analogy taken, perhaps, to the extreme. It would be tough to estimate the number of companies that have come into being recently aiming or claiming – to be the “Uber for ....” – you fill in the blank. There’s an “Uber for errand running,” an “Uber for pet care,” an “Uber for tool rental,” an “Uber for grocery (and alcohol) delivery,” an “Uber for finding parking spaces…” You get the picture.
Basically, everyone is trying to figure out how to capitalize on the success of the Uber model by connecting those who need a resource with those who have that resource. But the success of the Uber model is about more than bringing A and B together. It’s about connecting resources whose capacities aren’t being fully used with those who need that under-used capacity – and connecting the two in a way that’s economically beneficial to both sides of the equation. Also, the model’s success is predicated around the assumption of volume – the higher the involvement and volume of participants, the better the system works.
There’s been a lot of talk in the energy industry for the last two or three years now about what might become the Uber of this space. Are there resources that already exist but are not being fully utilized and – if so – how we can use this leftover capacity to create new synergies in a sharing economy.
There’s no question that distributed energy resources (DERs) are changing the physical and economic landscape of the utility industry. Distributed generation, rooftop solar, demand response, flexible load, battery storage…. these and a long and growing list of other distributed energy assets are poised to enable a sharing economy for the utility industry that has many operational and financial benefits for the entire energy ecosystem. And as factors like lower costs, greater incentives and new corporate initiatives continue to drive growth of DERs, the opportunities continue to expand with each passing day – opportunities like the one open to utilities to leverage DERs to become an Uber of the energy industry.
All the elements for success are there. You’ve got valuable resources that aren’t being fully utilized, so there is excess capacity. And on the other end, you have buyers for this capacity, along with a two-way transaction opportunity that’s mutually beneficial to buyer and seller. Plus, as we’ve already discussed, you have volume in the hundreds of thousands or even millions of DERs that can play into the energy system.
The Missing Link
One of the things that's been missing in the past is a trusted, open platform for DERs to participate in a shared economy – such a platform also underpins the success of Uber and other shared economy businesses.
To our way of thinking, a Virtual Power Plant (VPP) could well be the missing link that will enable utilities to harness the burgeoning DERs that are permeating the power grid – and to do so in a way that positions them to become the Uber of the energy space. Instead of being disintermediated by a third party wishing to hold this position, utilities have a unique opportunity today to leverage VPPs to take hold of this opportunity and become the orchestrators of the distributed energy symphony.
As a powerful software platform for managing DERs, VPPs use real-time communications infrastructure to monitor, control, coordinate and manage distributed energy assets. The portfolio built with these aggregated DERs becomes a single dispatchable resource that can provide grid services, such as capacity, operating reserves or regulation service. Not only does this open opportunities to strengthen customer relationships (another critical success criteria in a sharing economy) by helping customers to achieve even more value from their DER investments, but it also provides the ability for sophisticated planning, scheduling and bidding of DER-based services.
VPPs can monetize trust and interconnection between utilities and their customers, and this too is critical in a sharing economy. Let’s take a closer look.
VPPs and the Uber Model
Upon opening the Uber app, a potential rider/customer is given visibility into resources (cars). These resources are dispatchable, meaning they can be located and called upon in minutes. You are also able to choose between multiple services, such as UberBlack, uberPOOL, UberX, UberXL, etc. When dispatched, the Uber platform efficiently delivers the car you need based on distance and service needed.
A VPP has many similarities that can help utilities behave more like Uber. The VPP is connected to a multitude of DERs: storage, PV, loads, etc. These DERs can be dispatched in real-time, in an economical, efficient and orchestrated manner to provide the services needed. Furthermore, the VPP can provide value to multiple stakeholders, including ISOs, utilities, aggregators and end customers.
As the expansion of DERs continues, both in the U.S. and abroad, the decision for utilities and aggregators alike will be a simple one: Do you want to be “Ubered” or do you want to be Uber? With a VPP, utilities have the chance to be the Uber of the energy space – to orchestrate the selling and buying of DERs. Food for thought.