July 31, 2024
As the summer heats up, so does the market for virtual power plants (VPPs). Higher temperatures trigger higher electricity usage - and recent heat waves have driven up energy demand across the country. This July, Leap and its partner network have responded to dozens of grid events, activating over 40,000 unique distributed energy resources (DERs) in California, New York, Texas, Massachusetts and Rhode Island to provide support to the grid. Through VPPs, aggregations of flexible loads can provide critical relief to grid strain while generating significant peak season revenue.
Today, we’ll explain one of Leap’s key areas of focus during these crucial months: monitoring and improving VPP performance.
What is VPP performance?
Performance measures how DERs participating in a VPP respond to a grid event, usually against a predetermined commitment to the market. In other words, did our devices reduce, shift or export load at the amount that we expected?
Why is VPP performance important?
As we wrote last year, achieving high performance during dispatches leads to more revenue opportunities for our partners. By demonstrating reliability to grid operators, Leap improves our ability to get future market awards and pass them along to partners. Moreover, demonstrating reliability to regulators and energy consumers is key to developing a trusted market for VPPs at scale. By focusing on strong performance, we show grid operators that VPPs are just as dependable - or even more dependable - than traditional power plants.
What are the important terms to know when talking about VPP performance?
⚡️Capacity
The potential ability to reduce peak demand on the grid each month, measured in power (kW). Payments are provided for committing to be available to produce power (via curtailment) if needed. VPP capacity is usually factored into grid planning along with capacity from traditional generation such as wind, solar, geothermal and gas peaker plants.
⚡️Energy
Actual energy curtailment during dispatch events. Payments are provided based on the energy (kWh) that customers don’t use during a dispatch period, typically compared to what they would have been expected to use under similar circumstances.
⚡️Net Load
The difference between a customer site's energy usage and any energy generated or discharged by onsite resources at a given point in time. It is calculated by subtracting the energy generated (e.g., from solar panels) and discharged (e.g., from batteries) from the total energy consumed on-site. A positive net load means the site is drawing power from the grid, while a negative net load indicates the site is producing more power than it uses and feeding power back to the grid.
⚡️Baseline
Represents what a customer’s load would have been during a grid event if curtailment action had not been taken.
⚡️Nomination
Predetermined load reduction or export commitment provided to the market or program. In some programs, this can just be the nameplate capacity of the battery or other asset.
⚡️Performance %
Generally calculated by subtracting the net load at the meter site or device during the grid event window from the meter or device’s energy usage baseline, and dividing by the commitment (nomination) made to the market.
Performance % = [Baseline - Load] / Nomination
⚡️Voluntary Program
A grid services program that uses a pay-per-performance model, with no penalties for not responding to grid events.
⚡️Obligation Program
A grid services program in which assets commit and sell a certain quantity of power over a certain number of hours to the market, and are expected to deliver that quantity when a grid event is called. Striving to achieve 100% of monthly nominations is especially important in obligation programs, in which there are financial penalties for underperforming.
How is performance measured and evaluated?
Most grid services programs leverage advanced metering infrastructure for measuring the net load at the home. Some programs, like Demand Side Grid Support (DSGS) in California, use interval data from the DER device itself as the source of measurement and verification. Depending on the source of the data, performance can either be measuring net load of a site or measuring a single DER.
Performance can be summarized in energy (kWh/MWh) or capacity (kW/MW) metrics. These different units are used based on the type of value the VPP is providing to the grid. In California’s Resource Adequacy (RA) program, the primary revenue stream comes from capacity payments, and performance is generally measured in kW as a result.
By comparison, Massachusetts’ Clean Peak Standard (CPS) program quantifies performance based on the amount of energy shifted outside of a peak period; therefore, performance is measured in kWh. Meanwhile, programs like New York’s Commercial System Relief Program (CSRP) compensates participants for both capacity and energy, and measures performance using both metrics.
Here are some examples of performance metrics that Leap measures across different levels of aggregation:
Best 2 Clock Hours (kW) - Across all events in a month, we look at the maximum average power delivered across two consecutive clock hours of a dispatch for each aggregation.
Average Best Clock Hour (kW) - The average of the maximum average power delivered within one clock hour for each event across a month, broken out by technology load type. Leap uses this metric to assess how different technologies are performing across markets and programs for each month and season.
Average Power (kW) - The average power delivered over each event. Leap uses this metric to understand how much power our partners’ assets can consistently deliver in each program.
Total Energy Delivered (kWh) - the total energy delivered for a given program. Leap looks at this total to understand overall performance relative to market obligations in a given month.
How do baseline calculations impact performance?
Baselines aim to capture what DER energy usage would have looked like if a DER had not responded to a grid event. They are commonly calculated using historical usage data from the DER device or site. Underlying calculations can differ by market, program and technology type. Many baseline frameworks provide a weather-adjustment variable to try to ensure that baseline accurately captures weather conditions on the day of the event that may be different from the conditions on the preceding days used to calculate the baseline. Some programs offer several baseline options and allow Leap to determine the most appropriate baseline for a given DER aggregation.
Selecting the appropriate baseline matters, because the more accurate a baseline is, the more it can accurately capture true performance. Baselines that do not do a good job of predicting expected usage absent an event create challenges for market participants and for program operators to accurately quantify the value that DERs provide.
How does Leap approach VPP performance?
Leap has focused heavily on building a platform that makes it easy for our partners to understand how to nominate, dispatch and improve performance over time in order to grow their VPP revenue. By automating the dispatch process for most of our VPP portfolios, Leap has been able to remove the need for manual intervention by our partners or their end customers in responding to grid events. This eliminates many sources of error or inefficiency that can impact performance.
We’ve also gained valuable insights on how to optimize VPP participation to provide the most value possible to the grid. During extreme grid events, there is often a one- to two-hour window that is most critical to avoid blackouts. VPPs are well-positioned to serve the grid on short notice during these windows by responding to market pricing signals. DERs can often deliver the highest performance during these less-than four-hour peak periods. However, many grid services programs require that resources dispatch for a four-hour period, and measure performance based on the ability to dispatch during the full period. As a result, the true value that DERs can provide to the grid can be understated.
Next time, we’ll dive deeper into strategies to improve VPP performance and some of the tools Leap has built to facilitate strong performance for our partners.
