![[Screenshot 2025-10-10 at 12.07.18.png]] 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