Kraken’s VPP platform is crossing the pond

In a first, energy management platform Kraken is rolling out its SmartFlex platform in the United States, via an upcoming pilot program with Avangrid subsidiary United Illuminating. Kraken is part of the U.K. energy retail  and services giant Octopus, which recently raised $800 million from its existing shareholders to accelerate its growth beyond the United Kingdom and "create a truly global clean energy giant," as founder Greg Jackson said at the time.

• The top line: Kraken’s latest pilot prioritizes VPP flexibility for consumers, combining multiple asset types into an intelligent demand program built on parameters set by the end users themselves. The asset-agnostic model goes beyond the traditional, scheduled program pilot — and is one that Kraken has already deployed with over 150,000 devices in the U.K.
• The nuts and bolts: Located in Connecticut, the UI pilot aims to minimize congestion during peak hours, optimizing energy usage during the cheapest, and greenest, periods. Kraken’s platform integrates with enrolled devices, for which consumers set their own preferences via an app — for instance, an electric vehicle owner who needs their car charged to 80% by 7am to commute to work can specify that. Kraken is predicting enrolled households could save up to 30% on monthly electric bills, depending on their device.‍
• The current take: This solution circumvents the central challenge of consumers not wanting to hand over management of their energy consumption, said Charlotte Johnson, Kraken’s global head of markets. “Customers basically get a reduced rate in exchange for being flexible,” she added, “although they're not really being flexible, because they're just giving some preferences, they aren’t giving up control.”

For most utilities, there’s an “economical gain” that comes from optimizing distributed energy resources as a portfolio rather than as a handful of separate, device-specific programs, Johnson said. That’s likely to be especially true in the U.S., where asset penetration rates are higher.

In parts of Europe, however, some utilities aren’t taking a portfolio approach because they don’t have enough smart thermostats or heat pumps, for example, on their grids. In those cases, customers usually start with EVs, Johnson added, because they tend to be the most flexible loads, and provide utilities with valuable tools like optimized charging times or bidirectional charging, for example.

In the United Illuminating pilot, set to kick off in June of this year, Johnson said Kraken recommended starting with a combination of EVs, smart thermostats, and home batteries.

UI will then have the option to send Kraken signals: usually day-ahead or real-time price signals, Johnson said, but the utility could opt to do something different at any time, like a shaving signal to mitigate an overloaded substation.

“We can also translate more physical characteristics of the network into a price signal that would then allow us to optimize against it,” she said. “But for us as a platform, we’d optimize against anything that UI gives us.”

Familiar model, new market

In the first phase of the UI pilot — the contract was signed just last month — the pair are focused on enrolling customers, and have a goal of around 700 devices. That’s a number based on asset penetration in UI’s region, but Johnson explained that it’s one that could expand depending on the level of interest they receive.

According to Latitude Intelligence managing director Matt Casey, engagement problems have plagued many VPP pilots, particularly those with traditional demand response formats. In some programs, participation rates for events have been below 50%, he said.

PG&E’s recent pilot with Sunrun avoided that particular issue by enrolling existing Sunrun customers — the company already owned all of the storage assets the pilot called upon. But Kraken doesn’t own assets, which may mean participant enrollment will come down to UI’s customer relationships. And, as Johnson put it, “most customers don’t like their utility.”

But Johnson also said the programs that Kraken is running with this model in the UK have been extremely successful, which she attributes in large part to the (highly unusual) customer preference-setting element. In fact, according to Kraken, the number of enrolled devices in that program is growing at a pace of around 30% each month.

That’s despite the fact that customers can override their preferences at any time sans penalties, she added. In total, that override option has been used only rarely across the whole of the company's U.K. VPP. “People just want the safety net of knowing that option is available,” Johnson said.

Thanks to machine learning, Kraken isn’t going into these pilots blind. The company already has a sense of the parameters different types of customers are likely to set before a pilot even starts enrollments. And it learns more with each enrollment.

“Essentially, we learned customers’ behaviors, and grouped them,” Johnson said. Kraken’s high-level models make predictions based on things like device types, behavioral patterns, household size, or number of EVs per charger, she added, but a lot of the training is happening at the utility level.

Despite the buzz around VPPs, though, Johnson doesn’t think that’s quite the right term to describe Kraken’s SmartFlex pilots. 

“Describing something as a VPP versus a DERMS doesn’t actually reflect the new energy system that we’re moving towards,” she said. “If you’re a utility, would you rather contract with one DERMs platform, one VPP platform, and one analytics or reporting platform? Or would you rather look for one vendor that does all of that?”

That’s the role Kraken is looking to fill for U.S. utilities with the rollout of this program model, she added: “We ultimately think that’s more efficient for the customer.”