VPP & DER glossary

A company that pools many small DERs and bids the combined resource into wholesale markets.

Under FERC Order 2222, aggregators can participate directly in ISO/RTO markets. They handle metering, telemetry, settlement, and customer enrollment.

Grid-stability products like frequency regulation, spinning reserve, and voltage support.

Batteries are particularly well-suited to fast services like frequency regulation (sub-second response) and operating reserves (10-minute dispatch).

The estimated load a customer would have used absent a DR event — used to measure curtailment.

Common baselines include 'high-X-of-Y' methods (e.g., highest 5 of 10 prior similar days) with day-of adjustments. Baseline methodology directly affects payment.

Equipment on the customer side of the utility meter.

BTM solar, batteries, and load can be dispatched without traditional generator interconnection. Most residential and many C&I VPP assets are BTM.

Programs that enroll customer-owned equipment instead of requiring utility-purchased hardware.

BYOD VPPs accept supported batteries, thermostats, and chargers a customer already owns. It speeds enrollment but requires broader device integrations.

A forward auction that pays resources to be available during peak hours.

Capacity payments cover the fixed cost of being ready to deliver power. VPPs and DR providers earn $/kW-year for committed capacity, settled separately from energy.

Voluntary reduction or shifting of electricity use in response to grid signals or prices.

DR programs pay customers to curtail load during peak hours or grid emergencies. Programs range from emergency call-outs a few times a year to economic dispatch that follows real-time prices.

The MW a resource can reliably deliver on command.

Dispatchable capacity is what utilities pay for. It is lower than nameplate capacity because of availability, state-of-charge, and customer opt-out rates.

Any small-scale generation, storage, or controllable load connected at the distribution level.

DERs include rooftop solar, home and commercial batteries, EV chargers, smart thermostats, heat pumps, fuel cells, and backup generators. They sit on the customer side of the meter or on local distribution feeders.

FERC ruling that opened wholesale markets to aggregated DERs.

Issued in 2020, Order 2222 requires each ISO/RTO to allow DER aggregations of 100 kW or larger to compete in capacity, energy, and ancillary services markets alongside traditional generation.

Sub-second adjustments to generation or load to keep grid frequency at 60 Hz.

Resources respond every 2-4 seconds to an Automatic Generation Control (AGC) signal. Storage and fast-responding loads dominate this market.

Utility-side resources that inject directly into the distribution or transmission grid.

FTM storage and solar are dispatched and settled like conventional generators. The line between BTM and FTM is blurring as aggregators bid BTM assets into wholesale markets.

Earnings a DER owner receives for providing capacity, energy, or ancillary services.

Often shared between the aggregator and the customer. Residential battery owners typically see $200-$1,500/year depending on market and program.

Electric heating and cooling system that can be controlled as a flexible grid load.

Networked heat pumps support pre-heating, pre-cooling, and short curtailment events. Combined with thermal storage in the building, they become a powerful DR asset.

The technical and contractual process for connecting a resource to the grid.

BTM solar and storage follow streamlined interconnection (e.g., Rule 21 in California). Larger FTM resources go through ISO queues.

Independent System Operators that run regional wholesale electricity markets and the bulk grid.

CAISO, ERCOT, PJM, NYISO, ISO-NE, MISO, and SPP operate competitive markets where VPPs and DR can sell capacity, energy, and reserves.

Software that shifts when EVs charge — without exporting power — to align with grid needs.

V1G is simpler than V2G: it modulates charging power and timing. Most utility EV programs today are managed charging, often called smart charging.

The rate schedule and rules under which a utility customer takes service or participates in a program.

VPP-relevant tariffs include time-of-use rates, critical peak pricing, and dedicated DR or BYOD tariffs filed with the state regulator.

Real-time data from DERs back to the aggregator's control platform.

ISO markets typically require 1-second to 4-second telemetry for fast services. Capacity-only programs may accept 5- or 15-minute interval data.

Bidirectional EV charging that exports stored energy back to the grid.

V2G requires bidirectional chargers and OEM-approved firmware. Early commercial deployments include school buses and depot fleets; passenger V2G is emerging with new EV platforms.

A networked portfolio of distributed energy resources dispatched as a single grid asset.

A Virtual Power Plant aggregates batteries, smart thermostats, EVs, solar, and flexible loads behind software that bids the combined capacity into wholesale or utility programs. From the grid's perspective the VPP looks like one dispatchable power plant.