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Successful VPPs require three distinct business functions working together (Swell Energy model):
### **1. Development Company ("DevCo")** - Customer acquisition & project origination
- Winning utility/grid operator contracts for future capacity delivery
- Enrolling customers (new installs OR existing battery owners) into VPP programs
- Structuring financial incentives that make battery addition worthwhile for customers
- Building installer/partner networks for deployment scale
- **Key metric**: Customer acquisition cost vs lifetime contract value
### **2. Finance Company ("FinCo")** - Revenue stream separation & risk management
- **Critical Innovation**: Separate the financing of (a) solar/battery self-consumption value from (b) grid services value
- Allows existing battery owners (who financed via other companies) to join VPP without refinancing everything
- Creates bankable revenue streams that lenders can underwrite independently
- Enables securitization of long-term VPP contracts (like residential solar loans evolved)
- **Customer Payment Structure**: Monthly fixed payments for VPP participation (predictable) vs one-time upfront bonuses (typical old model)
- De-risks both customer and utility sides for better economics
### **3. Grid Services Company ("GridCo")** - Technical orchestration layer
- Software platform managing real-time dispatch across thousands of devices
- Multi-manufacturer device integration (Tesla, LG, Enphase, Generac, sonnen, etc.)
- Bi-directional communication with utility grid control systems
- Measurement & Verification (M&V) - proving each battery did what it was told
- This is the DERMS (Distributed Energy Resource Management System) layer
- **Non-trivial engineering** - utilities have legacy systems that are hard to integrate with