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Voltus makes it easy to offer, monetize demand response, other DERs

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Peter Key's picture
Freelance Writer, Editor, Consultant, Self-employed

I've been a business journalist since 1985 when I received an MBA from Penn State. I covered energy, technology, and venture capital for The Philadelphia Business Journal from 1998 through 2013....

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  • Jul 2, 2021
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Demand response program participants used to be large electric customers, such as manufacturers and big building owners, who agreed to reduce their power usage when their local utility’s grid was straining due to a heat wave or other event.

Now, a restaurant or retail chain can have each of its locations effortlessly participate in the demand response programs offered by its electric utility or grid operator. That’s due to technology that enables chains to have the air conditioning remotely and automatically adjusted in any of their locations where the grid operator wants to reduce load, aggregate the reductions, and sell them as demand response services.

“We’ve helped automate the actual load reduction,” said Matthew Plante, president and co-founder of Voltus. “During the early days of demand response, we used to pick up the phone and call customers and ask customers to reduce their electricity consumption. Today, most of what we do is fully automated, which allows us to provide operating-reserve resources with 10 minutes notice.”

Demand response is just one kind of distributed energy resource that Voltus manages. Others include energy efficiency, distributed generation, energy storage and electric vehicle charging.

In all, the San Francisco-based company manages more than 2 gigawatts of DER capacity, an impressive amount, but not as much as its two largest competitors. Enel X, formerly ENERNOC, where Plante and Gregg Dixon, Voltus’ CEO and other co-founder, once worked, manages more than 6 GW of demand response capacity worldwide. CPower manages more than 4.2 GW of demand-side program capacity in North America.

But even though Enel X and CPower are bigger, Plante said Voltus has a more comprehensive reach in the United States.

“There are several markets in which we are the only third-party aggregator of DERs,” he said.

The origins of Enel X, CPower and Voltus can be traced back to the Northeast Blackout of 2003, Plante said. That blackout was the result of a chain of events set off when a power line drooping due to heat contacted vegetation and shut down without triggering an alarm in a FirstEnergy control room.

One of many results of the blackout, he said, was that regulators began allowing demand response services to compete with traditional generation services as way to address load.

“That was one of the very first steps towards building a modern electric grid. Voltus is a continuation of that process,” Plante said.

As Plante noted, the process has advanced to the point that companies that want to offer demand response services can now automate their load reduction rather than directing it by phone calls or emails.

Another advancement is the aggregation technology that enables Voltus to bundle load reduction from many small-to-midsize businesses to attain a total amount of load reduction that’s large enough to sell into a grid market.

“Aggregation has massively increased the market source for demand reduction services and allowed us to increase the scale of resources we bring to the grid,” Plante said.

Yet another factor that has allowed Voltus to increase the scale of resources it brings to the grid is the proliferation of DERs, all of which can be tapped by VoltApp, Voltus’ cloud-based DER platform. 

VoltApp enables Voltus’ customers and partners to monetize every type of behind-the-meter DER with what it calls an automated "meter to market to money" customer experience.

Customers can forecast, audit, and report on the value of their DERs across all energy markets in VoltApp, while giving Voltus the ability to connect and settle transactions with the markets, as well as provide full digital payment processing and line-item automation.

VoltApp also enables Voltus to show its existing and potential customers who may not be altruistically motivated to provide demand response services that doing so can pay off for them.

In addition to making VoltApp available to its customers, Voltus also makes it available to third parties that want access to the markets it serves.

"Rather than building out their own resources market by market, DER type by DER type, we've built for our partners a set of common services for any DER to interact with all markets," Voltus Chief Technology Officer Neil Lakin said in a recent press release from the company.

One ongoing challenge Voltus is encountering in enabling all the DERs it manages to interact with all markets is the regulatory landscape.

The Midcontinent Independent System Operator’s tariff allows states in MISO’s service territory to block third-party demand response providers from participating in the grid operator’s wholesale market.

Voltus filed a complaint with the Federal Energy Regulatory Commission about the policy last October and in March, FERC approved a notice of inquiry to look at whether allowing states to opt out of letting third-party demand response aggregators participate in markets such as the one MISO operates still makes sense. Plante said the policy limits what Voltus can offer its national customers by enabling it to market demand response services from their locations in some states but not in others.

The deadline for comments on FERC’s notice was supposed to have been June 17 but Plante said FERC extended it an additional 90 days.

Although it includes residential electricity customers in the demand response capacity it manages, Voltus does not market to them directly, instead acquiring their capacity through partnerships with companies that make smart thermostats and/or EV chargers, Plante said.

Also, although electric utilities can and do offer demand response services themselves, Voltus usually provides demand response services for them rather than competing against them, he said.

Voltus has caught the eye of venture capitalists, recently closing on a third-round funding of $31 million that nearly doubled the amount of equity funding it has raised to $65 million.

In Voltus' press release announcing the funding, Raj Atluru, a managing director at Activate Capital, which led the round, said, “The serviceable addressable market for DERs is extraordinary, amounting to hundreds of thousands of megawatts of potential opportunity [for Voltus].”

Although the proliferation of connected DERs makes companies such as Voltus possible, it also increases the number of entry points for people looking to hack the North American power grid. That’s why Voltus and its competitors are subject to the same cybersecurity requirements as power generators and others on the grid.

“They force us in a very good way to bring a resource to the grid that is just as secure as any other resource,” Plante said.

Grid operators, of course, have been facing problems other than cyberattacks. The prolonged outages in Texas last winter and blackouts in California last summer show they need every resource they can get, whether those resources provide load or load reduction.

By tapping into solar-plus-storage and EV batteries connected to VoltApp, Voltus can provide both and do it at speed.

Plante said Voltus has more than 1 percent of the market it serves enrolled in a program to provide operating reserves that can be activated on a 10-minute notice.

“We’re really excited about the possibility of bringing tens of thousands of MW of resources to grids that need them right now,” he said.

Discussions
Matt Chester's picture
Matt Chester on Jul 2, 2021

This is one of the areas I'm most excited to see where we get in 5 years-- the possibility to engage with customers in ways never previously imagined will really bring the customer into the fold and empower them. 

Rao Konidena's picture
Rao Konidena on Jul 3, 2021

Peter - Thanks for writing about Voltus.

I believe in a distributed energy future. And for more DERs to be enabled, an aggregator like Voltus would be ideal because they have the experience in working across multiple organized markets, and they have the experience aggregating multiple market products in those markets.

My home state Minnesota has chosen to take the "opt-out" demand response programs from wholesale market participation. I am not sure if you have teased out some of these nuances in your discussions with Voltus. MN PUC docket # 09-1449 banned Aggregators of Retail Customers (ARCs), but states in PJM RTO did not ban aggregators. That is the reason why PJM has more demand response programs in wholesale markets.

I am hoping that DER providers have discussions with an aggregator like Voltus and identify some of the current market opportunities in energy, capacity, and ancillary services for ramping capabilities if their facilities provide. Morning ramp and evening ramp are two areas I see needing assistance to balance the grid in future, with more renewables on the system. Morning ramp because solar is just increasing its production, and evening ramp because solar is decreasing its production value. 

And most RTOs, including MISO and PJM, has until early 2022 to file their FERC Order 2222 compliance plan with FERC to identify any barriers for their technology to participate in organized markets. Now is the time to work within the RTO stakeholder process.

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