VPP glossary

A

Aggregator

A company that enrolls many devices or sites and sells their combined flexibility to a utility or market, usually keeping a share of the revenue.

Ancillary services

Short-term grid services such as frequency regulation and reserves that keep supply and demand balanced second to second.

B

Baseline

The estimate of what you would have used without an event. Your performance — and pay — is measured against it.

Behind the meterBTM

Equipment on the customer’s side of the utility meter, such as a home battery or rooftop solar.

Bring your own deviceBYOD

A program that pays you to enroll equipment you already own, rather than providing it.

C

Capacity

The ability to deliver power when needed, measured in kilowatts (kW) or megawatts (MW). Most VPP pay is for capacity.

Capacity market

A market, such as PJM’s, where grid operators pay resources to be available at peak years in advance.

Curtailment service providerCSP

PJM’s term for a demand response aggregator.

D

Demand charge

A commercial bill charge based on a customer’s highest power draw in a month, often a large share of the bill.

Demand responseDR

Reducing or shifting electricity use when the grid is stressed, usually in exchange for payment.

Demand Side Grid SupportDSGS

A California state program that pays customers and aggregators to reduce load or discharge batteries during grid emergencies.

DER management systemDERMS

Utility software that monitors and controls distributed resources to keep the local grid within limits.

Dispatch

An instruction for a resource to change output or consumption at a specific time.

Distributed energy resourceDER

A small-scale device that produces, stores, or flexibly uses electricity — batteries, solar, EVs, thermostats, water heaters.

Distribution deferral

Value from avoiding or delaying upgrades to local wires and transformers by reducing peak load in that area.

E

Emergency Load Reduction ProgramELRP

A California utility program that pays $2 per kWh of load reduced or exported during grid emergencies.

Event

A period, usually 1–4 hours, when a program calls on enrolled devices.

F

Federal Energy Regulatory CommissionFERC

The federal agency that regulates interstate electricity transmission and wholesale markets.

FERC Order 2222

A 2020 federal rule requiring regional grid operators to let aggregations of distributed resources as small as 100 kW participate in wholesale markets.

I

Independent system operatorISO

An organization that operates the grid and wholesale market in a region, such as CAISO, ISO-NE, NYISO, MISO or ERCOT.

K

Kilowatt / kilowatt-hourkW / kWh

A kilowatt measures power at an instant; a kilowatt-hour measures energy over time. A 5 kW battery running for 2 hours delivers 10 kWh.

L

Load shifting

Moving electricity use from expensive hours to cheaper ones, such as heating water at midday instead of 6 p.m.

M

Managed charging

Adjusting when and how fast an EV charges to avoid peak hours, either by schedule (passive) or real-time control (active).

O

Opt out

Choosing not to participate in a specific event. Many programs allow it but may reduce pay.

P

Peaker plant

A power plant, usually gas-fired, that runs only during the highest-demand hours. VPPs compete with peakers.

Performance payment

Pay based on the measured kW or kWh your device actually delivered during events.

Pre-cooling / pre-heating

Running a heat pump or air conditioner harder before an event so the home stays comfortable while it is turned down.

Q

Qualified scheduling entityQSE

An ERCOT market participant that submits schedules and receives payment on behalf of resources.

R

Regional transmission organizationRTO

A grid operator covering multiple states, such as PJM or MISO. Often used interchangeably with ISO.

Reserve (backup)

The share of a battery’s charge kept for outages and not dispatched in events.

T

Time of useTOU

A rate that charges more for electricity at peak hours and less off-peak.

V

Vehicle-to-gridV2G

Bidirectional charging that lets an EV send power back to the grid.

Virtual power plantVPP

A group of distributed resources coordinated by software to act like a single power plant.