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This is partner content from Latitude Studios. Virtual power plants, long a valuable but niche part of the power grid, are having a moment. Suddenly, a lot of people are paying attention. As electricity demand increases, virtual power plants might be the answer. So these are called VPPs, or virtual power plants. But what are virtual power plants? And why are companies like Google and GM getting involved? By now we're all familiar with the intense pressures that are converging on the grid at once. Sudden load growth is running headfirst into aging infrastructure, extreme weather is stressing the system, equipment backlogs are delaying upgrades, inflation is making them more expensive, and pervasive nimbyism is making it hard to build new transmission to connect markets. Together they're turning connected, distributed resources into must-deploy assets. And a more popular policy tool as well. About a dozen other states already utilize VPPs. If the bill passes, it would deliver $34 billion in savings over the next 20 years. We really believe that this is the only bill that gives electricity customers a fighting chance to do something about sky-high rates, trying to keep those price increases in check. VPPs have become kind of a stand-in for electricity affordability. They're being championed as a critical tool for moderating rates, a solution for opening up new capacity, and a way to give customers more control at a moment when many people feel like they're losing control. Utility rate requests and approvals totaled $34 billion over the first three quarters of this year. That is a big chunk. In fact, that's double the $16 billion in rate requests and approvals over the same period last year. So it's clear something is different, but in a moment when utilities are planning more than a trillion dollars a year. It can sometimes feel like VPPs are a round peg in a square hole. Some utilities and regulators treat them like a novelty, and market rules are not designed to unlock their full potential. So what still needs to happen to bring them further into the mainstream? I'm Stephen Lacey, and that is a question that I recently asked on stage at CPower's Grid Future conference. We partnered with CPower to tape a live episode with three people at the front lines of a VPP strategy, policy, and growth. They are David Visneau, Head of Demand Response and VPPs at NRG Business, Ken Shisler, Senior Director of Growth and Policy at NRG, and Matthew Sachs, the Chief Strategy Officer of CPower. We dove into the unique tailwinds for the market, the regulatory constraints, the state-level policy activity, and some predictions about where we're headed. So here is our episode from the Grid Future conference. Thank you. So let's dig into where you guys see the market right now. David, you just moved over from Shell, where you were Chief Commercial Officer of Shell Energy Solutions. You're overseeing Demand Response and VPPs at NRG now. What excites you most about the market as you make this transition? Everything you said to start off, Stephen, first of all. Demand Response started off as a program. For those of us who don't know, Demand Response started off as a program for those of us who have been in the business for a couple of decades. It started off as a program, but now VPPs are becoming part of infrastructure. So that's what's really exciting. I think if you look at the challenges we're facing today with reliability and affordability sort of crashing with each other head on, we need to find solutions that we can scale fast and that are affordable. And building our way out of this problem, it's going to take too long and be too expensive. We definitely need to build, but at the same time, we need to have some flexibility. As the sound bites you played, they are somewhat new to the public, but they're not new to us in the industry. And our ability to help solve the problem with these is super exciting, and that's why I'm here. Yeah, you made a good point about this tension between building more and using what we have, and we're going to get into that. Ken, you've been a lawyer, a legislator, a utility regulator, and now you're on the industry side of the table. Who do you have the most sympathy for at the moment of all the work that you're doing? Who do you have the most sympathy for at the moment of all those roles? Most sympathy definitely for the utility regulator. Their statutes limit their ability to do things. They're not an uber board of directors over the utilities. Their statutes may not be, they can only do the things that their laws allow them to do. And right now, this problem is new, and they're being demanded by their governors to do things. And I think their tools are limited, and their processes are painfully slow, and we needed solutions yesterday. So, they've got a really tough job. So, Matthew, you've been in this industry for a long time. All these storylines are converging. Do people in your life finally understand what you do? Most people probably don't, outside of this room in the industry. The only moment, though, where people started taking notice and asking more questions was probably the election cycle last year, where you were seeing this bombarded, like, really, on ads and everything. I remember we ran an event together in New York, a bunch of people in C-Power, and they were showing football. And all of a sudden, I think it was a Mikey Sherrill ad came on, and here it is, like, affordability, and then starting talking about too much demand and exactly what we do. On the professional side, I think people got wise a little earlier, I'd say maybe the big realization moment for me was on your sister podcast that I did. And when you guys released that, I think I got, like, 24 texts in, like, 30 minutes from — That was Catalyst you were on? That was Catalyst, yeah. And from CEOs of battery companies and leaders in the industry, it was like, wow, people care now. So, thank you for that. Absolutely. Well, so, David, you commented on some of the, like, the clips that I played at the beginning there to set up the topic. I'm just curious. If we look at the tailwinds right now, these really urgent tailwinds, how are you actually seeing it show up in the market? Maybe in terms of policy pressure, in terms of, you know, more sophisticated conversations with customers? How's it showing up? Yeah. We're seeing — I mean, we're seeing it everywhere. I mean, if you think traditionally, you know, the industry has sort of forced distributor resources into, like, a centralized power plant framework, and we're starting to see that start to shift, at least. And that's a big part of what we need. In this industry, we need the momentum behind customers, policymakers to understand that this is real, that VPPs, that DERS, that that can help solve a big problem, that if you look at, you know, you and I talked about this earlier, if we look at some of the, you know, the RTPs, some of the planning, the projections of the load growth, that seems almost unbelievable. If even, you know, a percentage of that, you know, happens, most grids in the U.S. will double at some point in the very near future. Again, we can't build our way out of that problem. We need to build into it, but we also need as many solutions as possible. So getting that momentum, we've seen that happen with customers. We've seen it happen at the state level. I think we're starting to see it at the federal level as well. So there is a lot of sort of excitement around it, and I think those tailwinds will help push us forward. And I'll add to that, David, that the customers are experiencing rate shock right now. And that makes them pay attention in a way that they weren't just a couple of years ago when power prices were low. On the grid side, in addition to rate shock, there are very real reliability concerns that customers, you know, the average customer may not know how bad a shape the grid is now in terms from a resource adequacy perspective. And so that makes the policymakers want to say, what can we do to do more? So we're getting pull from both ends. More customer interest and then also the policy solutions and the policymakers and grid operators want what we have to bring. Yeah. And the technology is there. The technology, I think that's been proven. We just need to marry that with, you know, I often think about we have 21st century technology with 20th century sort of market structure. So marrying those two together, getting that momentum becomes a big leap forward for us. Absolutely. You know, a phrase we like to joke around internally is, this ain't your granddaddy's DR. And it's really changed. You know, if you take this year, we're up over 3,000 dispatches and, you know, Shelley said it earlier, over 16 a day. That's dramatically, that's over double from where we were last year. And if you took a long like decade view, we're more than 10x up. And I think that really emphasizes how the grid is using this as a, it's not emergency DR anymore. It's really using it as a resource along the stack with everyone else. On the customer side, we're now seeing that's a lot of calls. 85% of those are automated calls. So that's not what it looked like, you know, 15 years ago when I was first learning about it. Yeah. That's an interesting point. I'm just wondering, can you guys clear something up for me? Like, what is the difference between traditional demand response and a virtual power plant? Is it a name change? Is it materially different in the way they're dispatched and the aggregation of certain type of resources? Give me your best definition of the difference between traditional DR and a VPP. The way I would categorize it is a natural evolution, kind of like that Silicon Valley development cycle. DR, emergency DR was a good first proof point. Now we've moved on. We've been doing free. You know, we're in over 60 programs across ancillaries, energy, and capacity, and of course, some utility programs. And I think as we are on this kind of journey to be really a peaker replacement which would be the gold standard there if you could turn off a peaker and put on a virtual power plant and have it go there i think that would be the you know the turning test to borrow from a colleague or a peer in the industry for this so i think that's the journey we're on and that's where the more you look like a classical power plant the better it's gonna be more than just emergency demand response but i think people do call you know there is confusion out there and some people would call all of that demand response which is okay by me yeah i think i'd add to that i think dr traditionally was looked at for emergency situations a handful of hours a year if we hit a scarcity event in any market you know you one of one of the first lines of defense would be to start turning power off a negative watt had the same impact to the grid is is basically adding one on we've now gotten to the point where technology has become a part of the grid stack and it can become part of the plan going forward that we can have you know the what in my mind i often call the law of accumulation a bunch of small things equals something big if you have if you have a bunch of you know distributed resources that in total are not as large as a power plant but can all act together in our uniform they can displace or equal what a power plant can do and so by bringing that power off the grid it helps balance the grid it helps create you know additional load that you know i mean excuse me additional uh assets to the grid and then also you know in in most minds it is somewhat renewable um or at least it's clean because it's taking something off the grid let's talk about some headwinds now i mean you made a really important point that this is not a technology problem it's an institutional problem the rules haven't caught up to what's possible um and ken you know you have made the case that the market is declining it's not a problem it's an institutional problem it's an institutional problem and so what we need to do is to look at what's happening in the market and what we need to do is to look at what's happening in the market and what we need to see is defined by and narrowly tailored utility applications that don't really scratch scratch the surface of what vpps can deliver what david just described explain how that is shaping the market so the the conventional particularly mass market solutions and and what we really need is to see a radical expansion of mass market solutions for residential customers multi-family housing uh and and small businesses they're they're going to pinch right now the traditional approaches were dominated exclusively by utilities and you know they're structured to be risk averse because you want to have low cost of capital if you're running a utility by its nature being risk averse is sort of the opposite of being entrepreneurial and taking risk and innovating and so that's a real challenge for uh for utilities to really kind of embrace the the range of sol solutions that we're looking at and so that's a real challenge for us to look at and so that's a real challenge for us to look at and so that's a real challenge for us to and potentially have some of them fail um our model to needs to expand to allow innovators into the space the the the the rule set the regulations if you will need to kind of welcome that that sort of innovation so the the old you know your grandfather's demand response was a you know a load control device just shut it all off right um and now with digital technology and uh we we can do so much more with res with with these resources and so do we need to bifurcate markets you know have an emergency market and then something that's a little bit more dynamic in real time well i don't know that that um i mean there's a very important role for the utilities to play um but the traditional utility model may not be the best platform to get the solutions into the market mm-hmm but i do think that's critical you have to meet customers where they're at and the customers some could you know have a low marginal cost of that next dispatch say a battery um they could dispatch all the time some actually have to shut down production and do something different stop making their widget that makes a difference so i think either you could bifurcate it or trifocated if that's a word um or you could leave it to players like us and our peers out there to really put it together and put that puzzle together and perform as a power plant so matthew you mentioned um we saw on the screen earlier there's 16 dispatches a day now and climbing um when you look at like how vpps are being called upon has the resource mix and the frequency how it has the frequency and the resource mix changed it's changed dramatically i mean i think we we covered the frequency there with it with the the increase but it's also the programs right if you go to the emergency programs there's a lot of those classic programs that were emergency programs they're being called more often but there's also these new sets of things like the dr participation model in new york things like that are they're designed to be called all the time and that's the intent so we're starting to get into that conversation where we're being a resource alongside more traditional resources you know the state of new jersey was here this morning and mentioned vpps right next to nuclear and solar too we weren't there a few years ago david how have you seen the portfolios themselves change um the mix of assets you know from shell energy solutions into nrg yeah it's interesting um you know i think there's still a big emphasis on well we saw an emphasis actually go away for a decade plus on traditional generation and we saw a big shift into sort of renewable gen and that's when sort of vpps became you know more mainstream if you will we've seen a shift back because of the need because of what's going on with data centers large load growth that now we need to have a mix of both and so i think those the the great thing about these portfolios is the the entire pie is expanding so much that each slice of the pie is becoming significantly larger and so we're seeing companies in the past that traditionally probably would have only focused in one area now are looking to have a more balanced approach and to participate because i think to the point you know that that that uh you know ken and matt made earlier um you know you you have some of these some of these loads that can participate um in both sides of the program that you had mentioned um and they can be flexible themselves on how they participate it may often be driven by whatever market they're in and if the price of power is an underlying sort of feed into that then that could drive which way they want to participate so just having that flexibility and seeing that growth has been really exciting so if we're seeing this increase in frequency of dispatches how is that impacting the customer you know i'm really struck that there was a panel earlier where we heard from some customers and it reminds you that there's human beings with wildly different needs inside those facilities they all have different thresholds they all have different impacts in the facility when you you know modulate energy use and i'm sure that with that frequency you start to get some customer fatigue are you seeing customer fatigue given this uh you know increase in dispatches and what do you do about it yeah look at like every other product customers are in segments right and there's customers that could be dispatched often and just want to chase every bit of revenue they could get and there's customers that really are doing it for other reasons right and i think it's a mistake if you look to segment our customers it's purely industry sectors and you really need to go look at what are their wants and what are their capabilities like any other product so certainly folks on one end in some segments are very fatigued right they signed up for emergency capacity or they've been doing it for a long time and they remember it and they should feel like that and that's they're not wrong to feel like that what i guess i'm trying to say is go back to meet customers where they are they have value if you could dispatch an hour or you could dispatch 400 hours a year you have value to the grid that doesn't mean you should be paid the same but you have value and the trick is as we get these policies right is to create the right set of market design and rules so that we could really unlock every hour there and i think so is there fatigue for sure but there's also a new set of assets that are highly automated and and could dispatch very very often so there is customer fatigue but i think there are readily available solutions that we we need to develop to address it um for example we we how we call the industry load aggregators or demand response aggregators um but yet the the way the programs operate you don't you don't really have the ability to optimize performance like a tetris model moving customers to the beginning of the event or the later part of the event if we would do that then we could manage that kind of customer fatigue and at the end of the day there are customers that say you know what i just need to be able to use my energy and not worry about it but in the event of an emergency it's much better than a of having the power go out i will reduce that time so making aggregation flexible and enhancing enhancing the the role of the aggregator and also creating sort of true reliability products are i think two easy sensible solutions that would address the you know the problem customers being a little bit more fatigued yeah i think i'd add in to you know what kent said as well creating that optionality for customers you know can become critical and then providing them with some sort of certainty because i think the fatigue part does come from at least the customer I've spoken to, when they're uncertain and there's inconsistency across either when they're dispatched, the frequency, if they're expecting the baseline to be what it was. I mean, as we spoke earlier, our number of events have doubled year over year. So that means most likely customers' events have increased as well. Maybe not exactly doubled. It could be depending on where they are, you know, reasonably located. And so, you know, can they have some certainty going in and do they know if they are going to get, you know, curtailed for a period of time, what does that mean to them? Can they model around it and can they adjust their operations around it? Let's widen the aperture a little bit. There's a debate right now in the industry over whether to focus our efforts on building more or to utilize what we have. It's somewhat of an artificial debate because we need both, obviously. I'm curious, where you guys fall on this though? Because we do have people very passionately arguing, both sides of that debate. So tell me how you think it's playing out, how it's factoring the actual on-the-ground market design and where you guys sort of view the world in terms of how we utilize the grid versus how much we should build out. Who wants to start? I'll start. We need both. We need more. We need more generation and we need more load flexibility. The good news is, we need more generation. We need more load flexibility. The good news is, it is abundant. The load flexibility is like we have a Saudi Arabia of opportunity, of undeveloped potential to utilize load flexibility, to improve the grid reliability, to bring down costs. We just haven't figured out how to get that stuff into the market, how to access it, how to make it. What was that again? A Saudi Arabia of flexibility? Saudi Arabia, in the context of oil, you have Saudi Arabia. We have that potential. In the ground here in the United States. Totally. I've heard people use that before and I've never heard it for VPPs, so I'm going to use that. That's good. You know, there was that movie, I think it was called The Sixth Sense, where the guy says, I see dead people. Yeah. And I see load flexibility everywhere I look. I love it. It's a mic drop moment. I could agree more with you, Ken. It's definitely an all-of-the-above solution right here. It's not one or the other. It's an important time. If we don't get this right, there is real safety, military, economic stuff as a country. This is our moment to really, you know, this is our arms race here. That said, I don't really see a lot of, you know, mass central station power as an option in the three to five-year timeframe. There's not enough transmission, there's not enough distribution, and there's not enough gas distribution. Even if supply chain constraints went away. So, while I think it's firmly part, and we should not take our foot off the pedal there, and it's an important part, we need to do our job as the VPP sector here and step up and keep the machine running in the interim. Yeah, and I'd agree. I'm going to sound like a broken record, but I think it's both. I think you had mentioned as well, we need to build more, but we also need to leverage what we already have and unlock what we already have. The cheapest megawatt is the one. You don't have to build. And before we ask, you know, customers and rate payers, depending on if you're, you know, in a restructured market or a structured market, you know, to fund the next dollar of investment, we should prove that we have utilized or at least have a path to utilize what we have right in front of us. Because there is a tremendous amount, you know, and much like Ken, you know, we see load flexibility everywhere. It's in this room, it's all around us. How do we leverage that? How do we put that into play? And then how do we mirror that on a timeline with, Matthew had pointed out, our ability to actually build? Because again, we can't build our way out of what appears to be, you know, a massive demand spike or hockey stick. We're not going to be able to build our way out of that in the next three to five years. So we can't have this conversation without talking about data centers a little bit more. And one of the exciting developments right now is the curation of these bring your own capacity models, distributed capacity, new capacity. You know, PJM is focused on bringing new capacity. How much activity are you seeing on this front? What kind of driver will it be for the market, Matthew? Yeah, it's a huge driver. I mean, PJM is getting the rules down. We're expecting a filing to FERC any day now with those rules. And, you know, I think there's, but I think once those rules are set and provided that they're done in the way we think they might come in, I think it's going to open up a floodgate in PJM. And that's still the biggest market in this country and certainly the biggest data center market. So, yeah, I think it's going to open up a floodgate in PJM. So, it's there. Those talks are going on. You've heard, we had a panel earlier here today that talked about that. And they're out there. They're there. It's all lined up. It's just a matter of getting the right rules of engagement down there and then off to the races. And I think when I say, and, you know, in the last question that, can we do it? Yeah, this is our time. We have to make it work. Mm-hmm. I'll add two things. One is time to power is a value attribute. Right? So, these discussions are, there's an enhanced premium that isn't reflected in the capacity auctions that occur for how quickly can you get it built. And so, the bring your own new capacity arrangements allow for you to put a dollar figure and prioritize your investments. The second thing is, is that there's an important role for these types of arrangements. We have, it's called in PJM, the base residual auction. And if you think about it, it's not residual at all. It's the main event. It is how that system procures capacity to, across PJM. The idea was that you should have bilateral arrangements and then what you don't have procured bilaterally, load serving entities don't procure bilaterally, they would have an auction to procure the residue. So, I think what bring your own new capacity is doing is starting to make people think much more about bilateral arrangements. In a way that PJM hasn't seen in the last 25 years. Yeah. And I'll add on to that. I mean, I think we're seeing where I just came from, spent a lot of time with data centers, with hyperscalers, you know, NEO, the next and levels down. There's a lot of interest. They want to build or, you know, hire someone like NRG to build for them. They realize that they're, it's impossible to build as quick as they want to sell. So, they're trying to build as fast as they can. And so, they're trying to build as fast as they can. I mean, data centers can be built in 18 months. It takes a power plant, you know, right now it's going to take probably five to seven years to build a power plant unless you have a slot agreement. You know, for a turbine, can you even get it connected to the grid fast enough? And so, I think these loads have, and these loads are so large. I mean, we were talking about it. I think it was here. And then I know I've talked in the past months about it. And then in our industry, 100 megawatts used to be a very large load. That used to be the largest of loads. Now, 1,000 megawatts is not even a large load, unfortunately. I mean, it's large. But, you know, as Scott Hart had mentioned earlier, we're seeing, you know, projects of three, four, five plus gigawatts. Those are becoming talked about regularly. And so, these loads are becoming more passive. I mean, are shifting from becoming more passive to more grid-aware loads. And that's great. I think that actually will only benefit us going forward. The question is, again, how fast can we get there? And that is, you know, kind of add to the same broken record. That's where I think BPPs play a very important part. They can help bridge part of that gap or become part of this bring your own new capacity conversation. One just quick point to add on is, as we do these BYONCs, this new capacity that is important. Otherwise, it's just a shell game and we're switching costs and stuff from one to the other. So, I think it's really important. And that's one thing that I think PGM is getting right is that they add that N in that BYOC because if not, you're just going to have big, large loads contract at a fixed price and then what happens to the rest if there's not new supply coming on. And that goes the same for VPP or anything else. That is a good point because it was six months ago BYOG, bring your own generation. Now it's BYONC. I wonder what the next acronym will be. There's got to be another one out there soon. We've hired a full-time reporter just to keep up with it. Okay. So, the market really depends on the rule set in regional markets like PGM and in the states. And electricity affordability is now a front-page political story in states. Several states have passed real legislation to do something about it. It's just a huge driver right now. And I want to talk about three different states. New Jersey, where Governor Mikey Sherrill issued an executive order directing the BPU to design a VPP program in 180 days, among many other actions, which we heard earlier today. I'm going to sign my first in a series of executive orders to declare a state of emergency on utility costs. Virginia, the epicenter of the data center industry, has moved on a broader package tied to load growth, expanding VPP programs and storage interconnection. And Governor Abigail Spanberger is, you know, really making this a centerpiece of her administration. And in fact, she also intervened in the Dominion Next Era merger. If these two enormous companies are merging, what is going to be the financial benefit? to the people of Virginia. And I want to see evidence that there will be long-term sustained financial benefit when it comes to the electric bill that you get in the mail every month. And then finally, Maryland passed the DRIVE Act in 2024, requiring utilities to build out VPP and vehicle-to-grid programs. Then it followed with the Utility Relief Act, this affordability package that gives data centers an incentive to bring their own clean capacity. Demand response and VPPs are a part of that. And like all the other folks that we just heard from, Governor Westmore is laser-focused on affordability messaging. We need our private sector partners, many of whom are multi-state and multi-national conglomerates who are having a very good year. We need for these conglomerates to feel the same urgency that we feel. So this is the story of the moment. Ken, when you look across, these states, what commonalities and differences do you see? Well, the development is that these states are doing this, right? For the last 20-plus years, a lot of the integrated planning and resource adequacy thought was, well, this was all going to happen at PJM. But you now have the states that are engaged in a way that they haven't been until very recently. The common interest across those three in particular that's interesting, is this point I was making a little while ago about inviting innovation to your market. All three of the states, to a greater or lesser degree in their proposals, do leverage companies like CPower to bring solutions to the table. And that's unique, because in the past we've seen, even in a state like Virginia that was not fully retailed deregulated, their model envisions a role for third parties to bring solution sets to the table. And that's different than the utilities sort of trying to do it all, as we've seen in the past. Matthew, do you see any kind of playbook emerging? Yeah, I do. I mean, just to echo Ken, I applaud all three states for putting VPPs in the consideration set. That's a big step for where we are. But as they look to make these programs work, I do think there is a set of things that need to work. I think the innovation that Ken mentioned is key, and they're getting that right. I think stacking, and it's not, you don't need to have the state or the utility or the constituents there pay for everything on their own. It has benefits at the bulk grade level, the market level. It has benefits at the utility or the distribution grade level. And it has benefits at the home or the business where you have savings. And not putting those three things together is just increasing the cost for whatever other constituent. The last one is scale. These things need to be able to scale. I'm a pilot. I love it. I'm a big believer in fail fast. But they need to find a road to scale and broadcast that if we get the right proof points, we're going to scale. Otherwise, for 15, 20, 200 megawatts, it often doesn't pay to build customized software to save that solution. So we want to see places that we feel pretty sure that when we succeed, that there's a real business case there. Let me say something I think the states should look at carefully. There needs to be a common model framework across utilities to achieve scale. Why do people want to play in PJM? Because it's a great big common market. If you, and the traditional approach is to allow each utility to be its own island, to have its own programs, its own. If they do that, you won't see the type of participation. This is something that New York and New England have gotten right, where they kind of have like a common framework. The utilities can operate their own program, but we need there to be, if we design a program for PSEG, we also want to be able to sell on Atlantic City Electric. And we want to sell the same idea in other markets. So there needs to be this common framework. And I haven't yet seen that emerge in the policies from the states. Yeah, I think I'd agree with that. I mean, first, I want to applaud them for allowing customers to be part of the solution to champion what most people think is a new technology, even though we all know it's not necessarily new. These states are sort of like almost laboratories that will help design potentially what the future will look like. But to Ken's point, we need to make sure that there's some consistency. In order for companies like CPower to operate and to facilitate and to provide these services for hundreds or thousands of customers, you can't have a different operating system for each individual market. The states that work in this area will be the ones that are able to scale and have commonalities. And if you can create a role, or some sort of a program almost at the ISO level, maybe it's going to have some small nuances for each individual state, but that are common and are easy to execute, then I think you'll have more customer success. The more customer success, it's almost like a self-fulfilling prophecy. The more customers that participate, the better the program gets. That's going to attract more customers, which will attract more participation, which will probably attract, as Ken had mentioned earlier, more sort of new things that will come and so I think all of that working together becomes really, really key. Ken, you are a former regulator. You were chair of Maryland's Public Service Commission. What are the hard decisions that regulators are working through right now? Well, the hard decisions are prices are going up and there's a tendency to say, let me do whatever I can to stop that. Sometimes, you know, intervening, one, it may be, it may be illegal and then it gets thrown out by the courts and then you're scaring investment away in the process. So allowing the market to evolve despite having sort of impatient governors, impatient legislators, these solutions are going to take some time and the regulators, things like the rate cap was probably necessary to keep the idea of a market politically sustainable in the long term, they're not a long-term solution and, you know, that's what regulators need to be careful about, sort of short-term band-aids. Yeah, you know, we've been talking about how distributed assets should be able to play in the market for, I don't know, 15 years or so and I continually hear criticisms that regulators are not familiar with distributed resources, that, like, you know, regulators are kind of the linchpin here and I just wonder, like, why are the regulators not prepared when we've been talking about this for a decade and a half? So, you know, having a professional class of regulators is important. Ben that just joined the New Jersey Board of Public Utilities is a great example of that. When I came in, I came in through sort of political background and a lot of commissioners get appointed from a political background and the idea has been, well, we want them to be sort of not swayed one, or another bias because of their energy background, but many of them come to the role without a technical expertise and this stuff is hard and it takes a while to learn it. So, you know, I applaud Governor Sherrill for her recent appointments for just that reason. She's putting, you know, trained, experienced professionals into the job. So, are there any concerns that any of you have coming out of these states? Things that, you know, New Jersey is working through its straw proposal. I think it's unclear how the program will shake out. Like, are there any unknowns right now that you're actively working on, you're worried about? I think I'll go first and let them get into more technical stuff. I'm worried if, you know, sort of like what not to do to a certain extent. When you always ask your question, what do I want to do? There's a trade-off. If it doesn't work out and it's gotten a lot of publicity, we're talking about it. If it doesn't work out, if it doesn't work out at the first try, does that thwart what other states will try to do? Do people then think, oh, this doesn't work? Oh, we tried. We put some effort and it doesn't work. We need to go back to just building a bunch. And so, I think we need to understand that, you know, there are going to be some growing pains. We're going to have to kind of figure it out as we go. And if we don't get it right the first time perfectly, let's improve on that and make sure that we can perfect it and get it right. So, can they pivot quick enough if they don't get it right initially? I'm just worried about a diverse group of stakeholders, right? And I think it's really hard to work through the perfect solution that hits everyone in the right place. And I'm worried we get so wrapped up as we historically have in trying to make that work that we forget to stop and just take a second, score it, rack up the score and make it better for everyone and then get back to striving for perfection. You know, on the more particular, I would just go back. Does it have stacking? Does it have a clear path to scale, right? Are those, are those there and is there room for real innovation? I do think they all check the box on the innovation side. I think the other two are open questions that will work to make it as good as we could. That's really what I'm worried about too as well is getting the compatibility between programs or what you're referring to as stacking so that you capture the wholesale benefit, market benefits, you capture benefits for customers on the distribution network as well. If they don't get that right, you might be able TO BE TECHNICALLY ABLE able to earn two different revenue streams, but if they're not compatible, then the idea of stacking is sort of a lost cause. You need to be able to, like, for example, if you have a utility distribution program that also reduces the peak load contribution of the customer, well, then that customer cannot participate in the PJM program because they've eroded their peak load contribution. So, you can do, you could have, if you're trying to mimic what is happening at the wholesale market, you could end up with, while technically able to stack, you could have a compatibility problem. And I worry that the states are, they want to stack all of these things together, but they might do it in a way that actually means they won't be compatible. Yeah, can they align the incentives? The golden rule of economics, people respond to incentives. And so, can the incentives get aligned appropriately across the various markets? Yeah, I think that's a really good question. programs to get people to respond and then, you know, sort of incent more participation. You guys want to do some predictions? All right. So, we're going to end with some predictions from these gentlemen and from the audience. The next three years are going to be critical. I think many people believe that distributed capacity is one of the only solutions that can scale fast enough to accommodate new load growth over the next three years. So, I think that's a really good prediction. So, what is going to happen between now and close to the end of the decade? So, we asked our audience some questions earlier. I want to read some of those and get your reactions and then get some of your predictions about what might happen over the next few years. So, the first one is communities will be begging for bring your own new capacity data centers to come to their communities. This will create a YIMBY movement, specifically because of the benefits of the school districts from 10 to 100X the property tax. I couldn't read that last part. But the question really is how significant is bring your own new capacity in bringing communities along with these large loads? Thoughts? I've got a few on this. Having met with some of these large loads, they have tremendous resources that they bring into communities. And they really are trying, at least today, to make communities better through, you know, expanding sort of maybe the water or the water systems in communities, potential capacity, providing either jobs or tax benefits or money back into the community. And so, I think to a certain extent, communities may, I think it's going to shift. Right now, it feels like the sort of NIMBY movement has gotten on steroids on this where no one wants a data center near them. I think we'd all agree if anyone's been near a NIMBY. Some of them can be pretty loud. But some of the other items that are out there in the news are, I don't think, are as dire as it appears. And I think there could be a point where communities actually are trying to attract them more than what we're seeing right now. There needs to be tangible community benefits. I've heard Jigar on your show talk about that very thing to address the very real concerns that customers or people are having in their communities about the impacts of data centers and bring your own new capacity. So, there's going to be more focus of necessity to avoid, you know, moratoria, et cetera. They're going to have to come up with a way to do that. And then, we will see a lowering of community opposition, I believe. Yeah, I agree with both these guys. I think, you know, just last year, people were lobbying to have data centers come for exactly those reasons before this backlash started building, right? Or some communities were. How it relates to BYONC, I think, really just gets to, like, what is the definition of community? BYONC is a way to allocate the cost of that new capacity. And I think it does a good job, if implemented correctly, of taking that cost and allocating it to the people who are driving that cost. However, it's not going to affect the very hyper-local community unless that's the way their rates are structured. So, I think they're kind of different subjects as asked. But I do think if you're looking at the data center, you're going to see a lot of different things. And I think if you're looking at the larger community of, say, hey, the state of New Jersey or PJM, well, then, yeah, sure, that's the, then certainly there's benefits. Yeah, I'd agree. I mean, I think Matthew makes a good point. How do we define community? Are we looking at a state or, you know, an ISO? Or are you looking at literally someone's neighborhood? Because most people probably would be like, yeah, I'd like to have data centers here, just not next to me. You know, put them, put them in someone else's, it sounds great, you know, maybe more power, maybe if they expand the water infrastructure, but just don't put it next to my house. We're trying to define what it means to the community. Caroline has challenged the NRG team to define what does it mean to be a good grid citizen? And I think it goes exactly to this point, how to make these resources fit in a community. I'm split on this one. I think energy is important, but it's one of many factors. And we saw in Minnesota, the distributed capacity program, there's a lot of support for that. And you know, just for the distributed battery program, but also we saw a bunch of environmental groups still oppose the Google data center there. And so there was still plenty of conflict, even though there was this new innovative model. And Jiggers talked about this survey from Octopus Energy a couple of times on the show. And, you know, the survey showed that people are far more willing to accept data centers if you're giving them energy assets in their home. I don't know that we've seen, we don't know exactly what that looks like in the real world, but certainly energy is an important part of how people perceive data centers, but it's one of a very complex group of factors. Okay, here's one that's a little contrarian. VPPs are a short-term solution to energy demand and will take a backseat once nuclear and other power plants come online. I would disagree with that. I think there will be a cavalry, say, of central station generation, but then there's going to be the other problems, right? And we talked about it being a peaker. I talked about it being a peaker. There's going to be balancing issues down the line. There's going to be lots of things going on. And by the way, there's no stopping growth. We're at the front end of the growth thing, not the end. So, I mean, if you want to take a very long view, maybe that proves true, but I don't think there's, will you ever go, we're in a world of streaming TVs. Everyone ever going to go back to one-way TV? No, I just, I don't think that's the way things typically progress. I think it goes quite the opposite. Yeah, I would look at it like nuclear, even, you know, combined cycle. It's going to take years to build those at any sort of scale. I mean, especially, especially nuclear, even in SMR, you know, they really aren't proven yet. Before we get there, VPPs will be part of the stack. And once it's part of the stack, it will likely remain part of the stack. It's very unlikely that it becomes part of the solution for five years, and then we just abandon it. It will be worked into, sort of, the lexicon, the DNA of the grid, much like, you know, nuclear was at one point, or coal, and, or, you know, natural acid. Now we're, now we're staying with renewables. And so, once it becomes part, I think it's there to stay. Yeah, we, we, the, the, that question implies a future that will always be in the future. We, and once load flexibility is integrated in, in a more widespread basis across the grid, we won't be able to live without it. So, it's not going to go away for that reason, as well. Okay, here's another one. By 2029, every building will be an asset, continuously curtailing demand in real time. Very ambitious. Every building. Well, actually, I, I think. That's what it says. Where we're going to end up, we have an internet of things where we shouldn't look at a, a, a, a customer as a, as, as what sits behind the meter. We should look at individual devices. It may be that you don't want to cycle air conditioning, but maybe you have some, uh, optional lighting or lo, or other types of flexible loads. I think what we'll see in the future is at least some device, appliance will be participating continuously, uh, and, and, you know, sort of like the internet of things for flexible loads. We're not going to be looking at it as an EDC account number. We're going to be looking at controlling your pool pump or controlling your, your, your, your HVAC or your car or some other refrigerator or some other device at a, at a device level. Yeah, I'd say in a perfect world, every building could do that. That'd be great. But realistically, expecting every building and for anyone who knows folks who own buildings, especially older buildings. Complicated world out there. It's very complicated. Make it very expensive. It may be, you know, it may be cheaper just to build a new building at that point. And so I doubt that can happen by 2029. So I don't think every building, but I think the technology is going to rapidly expand and what we see three or four years from now will look a lot different than what we see right now. And so that, that technology continues to expand. The optionality continues to expand. And so I think that market will grow. Look, like Ken said, there's flexibility everywhere, right? I see flexibility everywhere, but, but if we're going to do that by 2029, we better get cracking because there's a lot of buildings out there. That's a good point. Okay. I want to make sure we have time for all of your predictions before we go. But one more that, uh, people are paying a lot of attention to. which is this person says that Microdata centers at the edge will deploy in the near term at one to five megawatts in scale, fully containerized. Each small business and home will have a permissionless solar and storage microgrid paired with a GPU. That's pretty ambitious. However, there's, you know, there's some interesting stuff happening in distributed inference. And I'm curious what you guys think about, you know, where distributed computing is heading and how that could intersect with distributed energy. Yeah, it's interesting. I think we're moving towards that. I mean, I think it may have said every home in there at some point. Did it say that or was I still thinking every building? You think you're thinking every building. No, each small business and home. You got it. Yeah. I just, I don't know if we can get to every one, right? I mean, the AI, it's fascinating when you talk to folks at AI or you listen to them and some of the leaders of companies will say in two years, every one. Your white collar job will be displaced by an AI agent. I don't think that's possible. I don't think they've worked in businesses like ours where you have to implement. The implementation is slow. Totally. That's going to slow things down. And so the same thing with that, the technology is likely going to get there. It's the question of how quick can we adopt it? And so within a couple of years, unlikely. Fast forward 20 years from now, 30 years from now, possible. I've struggled with this one, right? I'm a big fan of distributed solutions, not just in the energy industry. I'm a big fan of distributed solutions. But there is this concept I've heard it referred to as data gravity, that you need to be near the data and that there's, at least on the inference side, that you need to be close and that the latency starts to add up, kind of like high frequency trading and the data centers across the street. It's that similar piece. And I don't know how you crack that doing this. Do we get some distributed data centers? Probably. And there's some interesting models out there. But I don't think we ever fully get away from that data gravity. At least I don't see how that could happen. Ken, any thoughts on that future scenario? No, I don't actually have much more to add on that. All right. Well, with the few minutes we have left, I want to hear from you guys. Three years out, what is your prediction for how this market will shape up? Ken, let's start with you. Well, I was thinking sort of, I'm very optimistic. Computing is going to continually get more efficient. And at some point, we could even have a problem of an overbuild. And we actually ought to be starting to think about that now. Now it's all about let's build everything. We need solutions. We need more capacity. But at some point, you could have that condition reverse as demand becomes more efficient, et cetera. So I think we're going to start seeing the light at the end of the tunnel of this crisis within three years. Matthew? VPPs constructed of data centers. Data centers in space? We did have a data centers in space one, I think, that I didn't get to. That is fascinating. I would love to pick that up one day. But I think my big prediction here is kind of the contrarian to one of the cards. And that data, the VPPs will be around precisely to start solving the problem of keeping the grid balanced after we solve the generation and capacity issue and grid issues that we have now. So it's not, we are not done when we match supply and demand from a capacity side. We're only getting started. Every time those large loads ramp up or down, there's going to be, just like a power station, there's going to be a big need for a countervailing force on the other side to keep things balanced. David? My most radical prediction over the next three years is the Cowboys will win the Super Bowl. I'm a Cowboys fan. We're in New Jersey. I know. That's very radical. Believe me, I'm a sufferer for 30 plus years. So I don't think it's going to be that radical, by the way. But I do think one that may be a little extreme, but maybe not, is the biggest power plant added to any grid in the U.S. over the next three years will not be a power plant at all. It'll be millions of devices working together. And we will have the largest VPP that will eclipse anything built over the next three years. My prediction is that in three years, we're still going to be complaining about how hard it is to get the darn data. Let's say that. Yeah, absolutely. This episode was produced in partnership with CPower Energy, an NRG company. CPower is a leading virtual power plant platform. For over a decade, it has turned flexible energy into revenue for partners and large energy users, delivering $1.5 billion from demand response and energy flexibility programs to customers since 2015. For more on CPower's virtual power plant platform, head on over to cpowerenergy.com. Thank you so much for watching. I'll see you next time.