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Insider's Guide to Energy
The Energy Industry is uniquely evolving as traders are under increasing pressure to manage costs, cash, limits, and risks. The Insider’s Guide to Energy Podcast addresses current and emerging challenges business executives face daily through stories shared from peers and industry experts while covering topics such as innovation, disruptive technologies, and emerging trends.
Insider's Guide to Energy
189 - Unlocking the Future: How Virtual Power Plants Are Transforming Energy Distribution and Resilience
In this episode of the Insider's Guide to Energy, host Chris Sass and co-host Jeff McAulay dive deep into the transformative potential of Virtual Power Plants (VPPs) with guest Michael Levy, US Networks Lead at Baringa. Virtual Power Plants, an aggregation of distributed energy resources like rooftop solar, electric vehicles, and smart appliances, are set to revolutionize the energy landscape, potentially growing into a $70 billion market by 2030. Michael Levy discusses the intricacies of how these decentralized energy assets can provide substantial value to utilities, aggregators, and consumers while enhancing grid reliability and resilience.
The conversation delves into the technological advancements and regulatory changes driving the adoption of VPPs, exploring how these innovations are making energy management more efficient and cost-effective. Levy explains the concepts of "shed," "shift," and "shimmy"—key functions that allow distributed energy resources to contribute to grid stability and reduce the need for costly infrastructure upgrades. The episode also addresses common concerns about the dispatchability and reliability of VPPs compared to traditional centralized power plants, offering insights into how these new energy solutions can be both dependable and economically viable.
Listeners will gain a comprehensive understanding of the current and future landscape of Virtual Power Plants, including the challenges and opportunities they present. Whether you're an energy professional, a utility provider, or simply interested in the future of energy, this episode provides valuable insights into how VPPs could play a critical role in the transition to a more sustainable and resilient energy system. Tune in to learn how these innovative solutions are set to reshape the way we generate, distribute, and consume electricity.
We were pleased to host: https://www.linkedin.com/in/michaelklevy/
Visit our website: https://insidersguidetoenergy.com/
Transcript
00:00:00 Michael Levy
Virtual power plants are an aggregation of distributed energy resources, things like rooftop solar storage, electric vehicles, smart water heaters, smart thermostats, and our view is that's going to be a $70 billion market by 20-30. So the big question is, how is that value going to be shared between utilities, Aggregators and customers.
00:00:25 Chris Sass
Your trusted source for information on the energy transition. This is the Insider's Guide to Energy podcast.
00:00:38 Chris Sass
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00:01:07 Chris Sass
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00:01:40 Chris Sass
Welcome to another edition of the Insider's Guide to Energy. I'm your host Chris Sass, with me and my co-host Jeff McAulay. Jeff, we're gonna talk virtual power plants today this.
00:01:47 Chris Sass
Is an exciting topic.
00:01:49 Chris Sass
What do you think we're going to do?
00:01:51 Jeff McAulay
Wow VPS, one of my favorite topics. Very excited to get into this and we're lucky to lucky to bring back on the show. Michael Levy, the US networks lead at Baringa who has a new report out on the wonders of virtual power plants all the reasons they're cool.
00:02:11 Jeff McAulay
And maybe why we should all care about them more. Michael, welcome to.
00:02:14 Jeff McAulay
The.
00:02:14 Michael Levy
Show. Hey, thanks for having me back guys really, really looking forward to the discussion.
00:02:19 Jeff McAulay
So Michael, refresh us just a little bit. What is baringa your role and why are you putting out such great content?
00:02:28 Michael Levy
Right. So Baringa is a Global Management advisory company that specializes in consulting and advisory services for energy companies. We're about 2000 people globally, many of many of which are in the UK, but we've got a very quickly growing business in the.
00:02:45 Michael Levy
US I run our US networks practice, which is just the UK term for transmission and distribution operations. So virtual power plants and everything related to the grid edge falls squarely within my remit and we're really excited and bullish on the the amount of of of value that VP's can provide our.
00:03:05 Michael Levy
Clients and and customers.
00:03:08 Jeff McAulay
Great. And I I think this is in the common lexicon, but please do if you could give us your version of a definition and you've got some new terminology, some more accessible terms that I really like. And in your report, walk us through what those are.
00:03:22 Michael Levy
Yeah, absolutely. And you, you did reference a report. We recently released a A white paper that was in collaboration with Kavala, who's, who's at one of our our key partners, a virtual power plant is really an aggregation of distributed distributed energy resource.
00:03:38 Michael Levy
Sources. So if you think about electric vehicles or rooftop solar or storage or things like smart water heaters, smart thermostats, anything that can the the amount of load that it consumes or can can discharge excess energy that.
00:03:58 Michael Levy
Is and it can. It can respond to some sort of signal.
00:04:03 Michael Levy
That is potential, you know, and it's behind the meter that is potential for aggregation for virtual PowerPoint. So the the idea and virtual is is kind of a misnomer because it's not actually virtual, it's a real, it's a real plan. It's just decentralized. I mean, among many, many, many, many assets.
00:04:22 Jeff McAulay
Great. And you talk about what I I love here is the the shift, the shimmy and.
00:04:28 Jeff McAulay
The shed walk us through those functions.
00:04:31 Michael Levy
Yeah, absolutely. I I wish I could take credit for, for for that names, but I I've got to give it to my friend Jen Downing from DOE LPO, the loan programs office. They also recently released a report, a liftoff report focused on virtual power plant. So I'd encourage your listeners to take a look.
00:04:47 Michael Levy
At.
00:04:47 Michael Levy
That, but the idea is that.
00:04:51 Michael Levy
Different types of behind the meter assets can provide different types of services to.
00:04:56 Michael Levy
The grid. So when we talk about shed, that's a reduction in load or demand shifting would be moving demand from one time to another. So that'd be like an electric vehicle or battery storage shedding would be you know more things like traditional demand response like a smart water heater or.
00:05:16 Michael Levy
Thermostat or or an industrial load that's flexible.
00:05:19 Michael Levy
And then shimmy refers to more ancillary services like frequency regulation and and helping balance initial imbalances from renewable integration. And then and then lastly of course you have generate which solar assets can produce power and then that net.
00:05:39 Michael Levy
Excess power that's not being consumed by the customer that can be pushed back onto the grid for consumption by others.
00:05:47 Jeff McAulay
And the dig here against the the virtual power plants and maybe you're right. You should just call them distributed energy resources or distributed plant or aggregated power plants is that they're not quote dispatchable or they're not firm. So is that a valid criticism?
00:06:06 Jeff McAulay
And how would you think of the the the virtual aggregated power plants as compared to the more traditional centralized model?
00:06:14 Michael Levy
Yeah, great. Great question. So if you think about the different types of assets that that I listed, whether it's electric vehicles, all the things that come under FDR, so solar and storage and other types of dispatchable backup power could be a diesel generator, could be like a generac and and then you, of course, you have like traditional demand response.
00:06:34 Michael Levy
Assets or direct load control, direct load control and anything that's incorporated with storage that is dispatchable. So really the only one of those that's not dispatchable would be solar, and that would be solar. You know, distributed solar if it was in Asia.
00:06:51 Michael Levy
Now it's important to note that unlike a power plant, these assets in many cases are serving multiple needs, often providing a utility to the customer, right. So just because it's just because your EV is dispatchable, if you need it to be charged because you're about to drive to work, then obviously.
00:07:10 Michael Levy
There's restrictions on that, so there's additional like a customer behavioral aspect to the, the the way that like the amount of of of value that's that's available to to utility, yeah.
00:07:27 Jeff McAulay
So if I'm an energy user and I'm listening to this and saying wait a minute, power plant, those are, that's my stuff, right. You're reaching into my thermostat and my water heater in my car. And like, I don't want you to do that. Why? Why should somebody an end user of business be OK with participating?
00:07:47 Michael Levy
Also good question because you can save.
00:07:50 Michael Levy
Money.
00:07:50 Michael Levy
So in many cases, these assets, the way that they're being dispatched, whether it's a shed you know depending on the type of service they're providing shed should be shifted or generate it's it goes unnoticed to the the, to the customer and actually the intent is that.
00:08:07 Michael Levy
When an asset is responding to an event or or, you know providing some sort of grid.
00:08:14 Michael Levy
Services. It is within the boundaries of the convenience and choice that you know the customer has. So you know from your perspective as a customer it's it's like well, do I want a 20 or $50.00 bill credit and I don't even notice that I'm doing anything different. It's kind of.
00:08:31 Michael Levy
A no brainer for them.
00:08:33 Jeff McAulay
Right. And there's also, I mean talk to about talk to us about the result.
00:08:38 Jeff McAulay
Improvements, I mean distributed assets versus centralized.
00:08:42 Michael Levy
Yeah. So maybe it's worth actually just talking about, you know, we we said these are the different ways that the assets can respond and and and add value to the grid, but it's worth explaining like what that value stack looks like. How is that, how are those services actually monetize?
00:08:59 Michael Levy
And in the paper we talk about 3 different really main categories. One that is right related to the bulk power system for generation and transmission. So you have reduction in demand, you have capacity, you have potentially energy arbitrage which is trading based on price.
00:09:18 Michael Levy
Differentials and then ancillary services. That's the Jimmy thing that we we had talk.
00:09:22 Michael Levy
About with the implementation of for quarter 2222, which requires all the different independent system operators to allow behind the meter assets access to those services Isos are being forced to define what those rules are in order to be in compliance with with that rule.
00:09:42 Michael Levy
So that part of the value stack is going to have to be available to customers and different Isas are in different levels of maturity in terms of their implementation timelines. But you know they they should be. They should be in compliant with within the next couple of years.
00:09:58 Michael Levy
The next part of the value stack, which I actually think is the largest of of of of the three is is network deferral. So if you think about the grid as you know flowing electrons, but then also you have the network that has the capacity to carry those electrons to the consumer.
00:10:19 Michael Levy
If the consumer is using less power or or shifting it so that it's off peak, then now the capacity of the network doesn't need to be.
00:10:29 Michael Levy
It's large and so if utilities are able to defer the upgrading of a substation transformer or the capacity of a line that has benefit, right, because they would have spent that money to make the upgrade. But since the the demand was shifted, shed shifted or shed they no longer have to make the.
00:10:50 Michael Levy
Assessment monetizing that actually is a is a bit more controversial and requires close coordination with the utility, and we're still in the very, very early stages of of that. And then the last, which are less often monetized, but I think still very important, the last category is related to resilience.
00:11:11 Michael Levy
So if you think in many cases, customers are buying these assets exclusively for the purposes of backup power.
00:11:18 Michael Levy
You look at what happened in Texas with Hurricane Beryl, there were two and a half million customers out around Houston and you better believe that folks are going to be looking pretty hard at potentially purchasing backup power because they don't look through that again.
00:11:33 Chris Sass
Let me go back to your investment conversation, because your White Paper covers it, talks about deferring as substation. I think for 10 years and and talk about future value of money to get a better deal on on the capacity. I mean, I understand today with demand growth that we maybe want to defer things not even for economic reasons just because we may have more demand and capacity.
00:11:54 Chris Sass
At times.
00:11:55 Chris Sass
Uh.
00:11:57 Chris Sass
Do you do? The consumers even really look into this? I mean that that's a utility statement, right when when the one the example you gave in your White paper was the utility deferring. Are the consumers aware of this kind of savings and are they getting future value savings as well?
00:12:11 Michael Levy
Yeah, also good question. So when we talk about network capacity deferral, usually that's sort of coined under this term non wires alternative which you guys may be familiar with.
00:12:23 Michael Levy
There are very few examples of where nwas have been shown to be economic, but I think that that's for a couple of reasons. It's not because they actually aren't economic, it's because the incentive structure actually is designed that utilities don't want to do IWA's they make money by spending money. So it makes sense that they would want to continue to upgrade.
00:12:45 Michael Levy
Upgrade the network. That said, the utility is still responsible for maintaining the reliability of the network and so often they'll they'll claim that.
00:12:57 Michael Levy
Behind the meter, assets are unreliable and therefore you know they can't count on the customers behaving in an in an expected way. Responding to a price of an order event and therefore they have to make the upgrade. But many, many pilots that have been deployed and even other VP aggregators that are operating at scale.
00:13:16 Michael Levy
Have proven that not to be the case, so I think we're still in the very early stages where utilities and aggregators are working much more closely together to actually find those opportunities where they can defer capacity investment and they feel confident that that you know there won't be reliability issues later on down the.
00:13:34 Chris Sass
Is that getting to the ratepayer then? Is that trickling down?
00:13:37 Michael Levy
Right. I didn't answer that your question. So in the case of the N.W.A, this this concept of of game sharing and the idea is that if you have a substation that you would have upgraded, but instead you're paying everybody to have a power wall in the garage, then there's some deferral value.
00:13:57 Michael Levy
There's some value from deferring that the capacity.
00:14:00 Michael Levy
Grid rather than the customer keeping all of those savings, the N.W.A construct as the utility would actually gain share in that deferral value and that actually gives them an incentive to to make the investment that you know maybe less traditional.
00:14:16 Jeff McAulay
So what's new here? Virtual power plants. If you're talking about demand, response is not new. We've had smart.
00:14:24 Jeff McAulay
Water heaters for.
00:14:25 Jeff McAulay
For decades, what are the new elements that are making VP's more attractive, more monetizable, more valuable to different stakeholders?
00:14:36 Michael Levy
Yeah, great question. So if I think about you, you're absolutely right. Everything that we've talked about is not new. In many cases, it's been around for, for.
00:14:43 Michael Levy
Decades.
00:14:44 Michael Levy
I think the big difference between a VPP and say like a traditional demand response program is.
00:14:50 Michael Levy
The the spatial resolution at which events are called and then the frequency. So this isn't your mom and pop PDR program where you're calling, you know one or two events a year just to address the peak. You can systematically be addressing the very localized peaks at the grid. And in fact, we're actually seeing.
00:15:11 Michael Levy
The divergences between feeder level peaks temporally and and the bolt power system peak, which kind of supports that. That argument I was making before around a lot of the value being around distribution upgrades so that that's one point. The second point is that a lot of these assets are being bought by customers.
00:15:30 Michael Levy
Irrespective of whether they're VPP, enabled, right. And so you've got all this latent untapped capacity. Our estimates are that it's around $15 billion today in, in the US and that's actually expected to grow to around $70 billion in terms of potential value.
00:15:51 Michael Levy
By 20.
00:15:52 Michael Levy
And then the Third Point that I'll make, which I think is is maybe the most important of the three, is that unlike traditional, unlike traditional generation that the cost grow basically linearly, that VPP's are software enabled, so every asset.
00:16:12 Michael Levy
That you add the the normalized dollar per MW hour actually declines exponentially because this it doesn't cost you know 10X to have 100,000 customers enrolled versus 10,000 because it's software that's enabling enabling these assets. And so if you think about.
00:16:30 Michael Levy
As demand is expected to grow from electrification and AI and EV adoption and other things, then capacity becomes increasingly expensive and so that spread between greater VPP enabled assets and then the cost of capacity is going to continue to get bigger and bigger over time.
00:16:51 Michael Levy
And that's why I think, you know, that's why.
00:16:53 Michael Levy
Our view is that this market is going to grow so rapidly.
00:16:57 Jeff McAulay
You talked about assets that are deployed but not enabled. Why is that? If VPS are so great and this is so valuable and beneficial to the system, is it an individual consumer or business level opt in that people just don't know they can? Or is there some other barrier to adoption?
00:17:17 Michael Levy
Yeah, I think that's a big part of it actually, is like people have a smart water heater and they may not even be aware that there's there's an aggregation program that would pay them to, you know, pre cool or pre heat the water or, you know, Preheat the water at at at at a different time during the day that's off peak and it can save them, you know.
00:17:37 Michael Levy
A handful of dollars. You know, that would add up throughout the year in, in many cases, just lack of awareness. But I think the aggregators that are coming out and and in in many cases.
00:17:47 Michael Levy
Policies that are that are looking to to enable these assets, they're taking advantage of it too. So I think that's a big part of it and another part which which the LPA does a good job of outlining as a barrier is there's a lot of these different assets, types of assets. And so there's there's inherent complexity and decentralization.
00:18:07 Michael Levy
And similar to, you know different all the different EV chargers and all that stuff, there's a lack of standardization. So there's a bit of technological complexity in terms of having a standard way to aggregate lots of different types of assets that can respond.
00:18:23 Michael Levy
In a predictable way.
00:18:26 Chris Sass
I also think that the deployment will vary right individual. If you're trusting the ratepayer or from a bottoms up, or you know from the user perspective.
00:18:35 Chris Sass
Some people are going to going home, put a power wall up and some people are going to have a lot of smart appliances and others may choose not to so.
00:18:43 Chris Sass
Imagine it's fairly inconsistent across the market.
00:18:48 Michael Levy
Yeah. I mean, it's uh, it it the the rate of adoption is is often based on the incentive structure that's available and and also just power prices, right, as prices get higher than the incentive to offset that also grows. And so if you look at places like.
00:19:07 Michael Levy
New York and California and Massachusetts.
00:19:09 Michael Levy
It's it's probably no surprise that they also have high rates of der adoption because customers want to offset their bills, right? I mean, there's also like, a a sustainability and clean angle that we haven't talked about a ton. You know these assets in many cases are actually reducing emissions or reducing renewable curtailment from from centralized generation.
00:19:30 Michael Levy
So there's an angle of that too, but I think predominantly is driven by high prices.
00:19:35 Jeff McAulay
We talked about some of the benefits. We talked about some of the challenges. What's on your wish list is that the gap you wish there was some magical smart home controller. There's a it's a product gap, it's an end user awareness that everybody just magically opted in. If they had a a battery and didn't know that they could enroll it or is it a regulatory?
00:19:55 Jeff McAulay
Construct that stitches together all these disparate markets, just offering a few. But what's on your wish list?
00:20:01 Michael Levy
That's a great list. That's yeah, that's a.
00:20:03 Michael Levy
List for me like top of the list actually is.
00:20:09 Michael Levy
That utilities were more diligent about appropriately valuing these assets and and considering them as investment alternatives. I'm not going to sit here and say that every feeder has a in N.W.A possible, but it is surprising to me that there's been so few.
00:20:29 Michael Levy
Instances where that's been deemed economic, and I think a large part of that is because the business cases are not being appropriately crafted based on the value that they can of the of those assets, so.
00:20:41 Michael Levy
You know, I would like to see utility share in that value also. You know if they're, if they are creating a market that saves money for customers, they should be rewarded for for creating that market. So that that would be the top of the list for me.
00:20:54 Chris Sass
You talk in your White paper about the regulation. You talk about the 42222 regulation.
00:21:01
How?
00:21:01 Chris Sass
Are we set up to make this successful? Because it seems a little bit I get.
00:21:04 Chris Sass
The feel that.
00:21:05 Chris Sass
You're you're positioning all the good things that can be virtual power plants have been around for a while, but you're saying they're, you know, they're they're underutilized or there's 15 billion going to 70 billion potential value that's untapped.
00:21:17 Chris Sass
How is the regulation keeping up with this and what needs to happen at both the state and the federal level to make this more interesting or more likely to come to fruition?
00:21:26 Michael Levy
Yeah, 2222 is a great is a great first step. I mean that I I sort of Orient because that the value stack that we've described, we haven't necessarily said how that's shared between the participants and the in the BP system, right. You've got the customer, you've got the utility, you've got the aggregator, you've got.
00:21:45 Michael Levy
The wholesale market.
00:21:46 Michael Levy
Participants, so there's enough value in there that everyone can share in that pie.
00:21:54 Michael Levy
And until the regulation allows them to do that, then that it's not in their best interest to enable the the value.
00:22:02 Michael Levy
Of those resources.
00:22:03 Michael Levy
So you know, 2222 unlocks the generation and built power system. Part of that value stack. I'd love to see regulation that's focused on unlocking the TD deferral.
00:22:14 Michael Levy
And you know, you talked about we talked a little bit about resilience.
00:22:18 Michael Levy
On on on the last podcast with you guys. And that increasingly is going to be maybe an unmonetized part of the value stack that that's drive driving adoption but allowing customers to capture other parts of the value stack beyond just the main driver, which might be.
00:22:38 Michael Levy
You know, avoiding having a week without power because the.
00:22:42 Michael Levy
Because of the bad weather, you know that's going to accelerate adoption. And the other thing too that I'll add is if you think about from a resilience perspective, these assets are decentralized. And so that and if itself is is more resilient, right, if supply is Co located with demand, there's fewer points of failure.
00:23:04 Michael Levy
In between and. So like a great example of this is if you look at Puerto Rico, right, they're basically rebuilding the grid from the ground up. After what happened several years.
00:23:15 Michael Levy
To go and they are covering that place with micro grids and with behind the mirror solar and storage. And because they they know that the grid is going to continue to get battered by really, really strong hurricanes and that's OK, you know that's that's what you get in the Caribbean but having a decentralized grid makes them.
00:23:37 Michael Levy
It gives them the backup, right?
00:23:39 Michael Levy
Yeah.
00:23:40 Jeff McAulay
Michael, can we explore that a bit more? Because I think it's a natural point that people get OK. There is a power outage, the power plant goes down of the transmission line, goes down. I'm going to have my personal home backup, whether that's solar, battery generator and my personal EV that can run my home, but I'm not sure that people can as easily.
00:24:01 Jeff McAulay
Make the leap to say that if 30% of the people in a community have solar, that makes everybody more resilient to outages, how would you better articulate?
00:24:14 Michael Levy
So is is your is your question on the debate of like resilience for community solar versus VP assets?
00:24:21 Jeff McAulay
Or or. Is that true? Just does do the deers of individual homes make more than just that home resilient? Is it 1 to one where if you just have 100 homes with 100 backup generators then each one of those individual homes is protected? Or is there some sort of herd immunity where if you get?
00:24:32 Michael Levy
Yeah, yeah, yeah.
00:24:40 Jeff McAulay
A sufficient level of distributed generation. It makes the entire group more resilient.
00:24:44 Michael Levy
Umm.
00:24:46 Michael Levy
In the case.
00:24:47 Michael Levy
Of like a really bad out. Generally you're not going to size solar to go on your roof to be supplying the rest of the neighborhood, because that probably wouldn't be economic or or even permissible probably by the utility. So I think I think in the case where there's a bad outage, then, yeah, likely it's just that you're going to be providing enough power.
00:25:08 Michael Levy
For yourself, however.
00:25:12 Michael Levy
If you've got net excess generation during those times that aren't during extreme events, then that can help offset both network capacity and also bulk power system upgrades that that those costs would be socialized with with with other customers.
00:25:29 Jeff McAulay
Michael, it strikes me that we might be talking about different forms of grid stress. We've talked about the different types of solutions or ways in which VPS can provide grid services, but what kind of grid stress events are we talking about? That could be a power outage at the power plant.
00:25:46 Jeff McAulay
Let's say winter storm Uri. That could be a.
00:25:51 Jeff McAulay
Ice Storm or Hurricane knocks out power lines. That's the T&D. And then we could just have a hot summer afternoon when everybody's running the AC at the same time and there's not enough juice to go around. It's a, it's a peak day. Can you talk about how VPP's might create community resilience in each of those 3 cases?
00:26:09 Michael Levy
Yeah, absolutely. And maybe maybe to even break it down more simply, you could you could describe them as events that require load shedding and events where you're you're not physically connected to the grid because of a line is down.
00:26:22 Michael Levy
Right. So in the case of load shedding, you're absolutely right. If you have excess generation, then that reduces the need for load shedding. So you know all many customers can benefit from that. In the case of a A line being down, then you know you're probably limited to providing your own.
00:26:42 Michael Levy
Backup power, or at least those that are like adjacent to you. Depending on how your system is sized and then the last point that I'll that I'll make which which which I think is noteworthy is in terms of utility restoration is.
00:26:56 Michael Levy
Is if you are able to produce your own power and utility is aware of that, that means they can focus restoration efforts on customers who are more vulnerable. So you know you're saying like, look, we're good, we got power our ourselves for now go take care of that senior living facility that is is running on a backup generator and is going to run out of power.
00:27:17 Michael Levy
Themselves.
00:27:20 Chris Sass
That's we've gone kind of the gamut. We've talked about the technology, the shedding of the load. We've built the economics. Where are we now in the evolution of virtual power plants? Jeff and I have both said, we've been talking about since the beginning of the podcast. We've had folks on early on where is the industry, where do you think it's headed in the near?
00:27:41 Michael Levy
Yeah. If you look at I I was actually staggered to hear this. We were talking to a company that is one of the largest VP aggregators in the US and they said that they're calling 10 events per day. So it's just a staggering amount of of of activation of these resources.
00:28:01 Michael Levy
And I think you're going to see more and more of that particularly.
00:28:03 Michael Levy
As 2222, four quarter 2222 comes to fruition and then the other parts of the value stack grow. So as the adoption of these these assets grow because they are declining on the cost curve because people want to have backup power from resilience, from growing severity and frequency of extreme weather, the capacity cost is also going.
00:28:25 Michael Levy
Going up because of increase in demand and then you've got regulation that's now supporting more parts of the value stack. All of these are really, really good tailwinds for VP.
00:28:36 Michael Levy
What I what I would be really encouraged to see is utilities and aggregators working very closely together because I think the the size of that pie is large enough that utility shareholders and customers can all benefit. And my my worry is that if.
00:28:56 Michael Levy
One side has a more adversarial relationship with the other, then customers will not receive as much value as.
00:29:03 Michael Levy
They otherwise could have.
00:29:06 Jeff McAulay
Can we talk about underserved populations you mentioned in restoration, maybe serving underserved communities, but a lot of the resources that we're talking about are often labeled as toys for rich people. There's the the smart thermostats, the batteries, the EV's. So yeah, you've got your wealthy.
00:29:27 Jeff McAulay
Homes with all the electrification and they're getting even more money and incentives through these VPS. How do we make sure that distributed generation is actually equitably distributed?
00:29:38 Michael Levy
I'm not sure this is the only answer, but I think a key element of that is is creative financing, right? So if you think about all that value stack that I had mentioned in many cases these assets can be self funding, they just need that they need capital upfront. So I can see a world where.
00:29:57 Michael Levy
We've got aggregators that are deploying assets in the field and then there's an agreement where they share in the benefits of the VPP. So the customers basically getting a new electric smart water heater for.
00:30:09 Michael Levy
Free right and and and then once that once the loan is paid off through the VIP savings, then they get to continue enjoy the savings thereafter.
00:30:21 Jeff McAulay
I I couldn't agree more, and actually that feels like a great place to wrap because we've really covered a a huge arc here, which is what RVP's, how are they constructed? Where have they been, where are they going? What are the constraints and some of the reasons to be optimistic. So Michael, that's a huge amount of ground to cover. We really appreciate you taking the time today.
00:30:42 Jeff McAulay
Great to have you on the show again.
00:30:44 Michael Levy
Yeah, my pleasure. Good to see you guys.
00:30:47 Chris Sass
So we hope you've enjoyed this episode. If you really are interested in it, read the White Paper. There's a link in the show notes. It will take you to the paper. It will give you a lot more background than we're able to cover in 30 minutes. I think you'll find it interesting, and we hope to see You again next Time on the Insider’s Guide to Energy. Bye for now.