Distributed Capacity Procurement (DCP) is a groundbreaking approach that transforms the energy sector by building upon the success of virtual power plants (VPPs) to deploy critical capacity faster and more efficiently. As utilities, energy brands, and commercial real estate owners seek innovative solutions to embrace change and transform buildings into active grid participants, DCP has emerged as a game-changing strategy that unlocks the full potential of distributed energy resources (DERs).
Virtual Power Plants have already proven their value in the energy market by aggregating and optimizing DERs such as battery storage, backup generation, solar generation, and building energy efficiency measures. VPPs offer a range of benefits, including:
Reducing grid operating costs and providing ancillary services
Adjusting consumption patterns to balance supply and demand
Selling excess energy and participating in energy markets for revenue
Collaborating with grid operators for seamless integration and enhanced grid stability
The U.S. Department of Energy estimates that VPPs could reduce peak demand in the United States by 60 GW by 2030, with the potential to reach 80 to 160 GW. However, VPPs still face challenges, such as the need for standardization, simplified enrollment, and integration into utility planning and wholesale markets.
DCP takes the VPP model to new heights by placing the utility as the wholesale purchaser of DERs to serve specific grid needs. By marrying utility planning processes with DER deployment, DCP creates new capacity at an unprecedented speed and scale. Utilities, with their deep understanding of grid needs, can strategically deploy customer-sited generation and storage as grid assets based on their value to the grid, alleviating grid congestion, accelerating the pace of new capacity, lowering transmission and distribution (T&D) costs, and unlocking grid value in ways that third parties have not.
The DCP model offers clear value for the grid while alleviating capacity challenges across load pockets. Utilities are uniquely positioned to spearhead the deployment of DERs at an unprecedented scale, strategically placing assets where the grid needs them most, unlocking the highest total value for society while accelerating the speed and scale of deployment.
DCP presents significant opportunities for vendors, developers, and original equipment manufacturers (OEMs) in the energy sector. By fostering a competitive ecosystem of local vendors and suppliers, DCP programs ensure that the deployment of DERs is not only cost-effective but also aligned with labor, safety, and cybersecurity standards. This collaborative approach recognizes the inherent value of diverse stakeholders while harnessing the collective power of the utility industry to drive transformative change.
Vendors and developers can benefit greatly from participating in DCP programs:
OEMs can capitalize on the growing market for distributed energy technologies, developing innovative solutions that meet the specific needs of DCP programs. By partnering with utilities and participating in DCP initiatives, vendors, developers, and OEMs can position themselves at the forefront of the energy transition, contributing to the creation of a more resilient, sustainable, and cost-effective grid.
Distributed Capacity Procurement represents a paradigm shift in the energy sector, empowering utilities to leverage the full potential of distributed energy resources to create a more resilient, sustainable, and cost-effective grid. By marrying utility planning processes with DER deployment, DCP accelerates the pace of new capacity, lowers costs, and unlocks grid value in unprecedented ways. As the energy landscape continues to evolve, DCP will play a crucial role in driving the transition to a cleaner, more distributed energy future, offering significant opportunities for utilities, vendors, developers, and OEMs alike.