### **Utility/Grid Operator Pays For:** - **Capacity payments** ($/MW for availability) - just for being online and ready - **Energy dispatch** ($/MWh when actually called) - performance-based - **Ancillary services** (frequency regulation, voltage support, reserves) - **Avoided infrastructure upgrades** (localized grid relief, deferred substation upgrades) - Typical contract: 10-20 years, fixed capacity payments + variable dispatch ### **Customer Receives:** - **Upfront cost reduction** (subsidized battery installation, $5,000-10,000 value) - **Monthly VPP participation payments** (e.g. $20-50/month over 10 years = $2,400-6,000 total) - **Backup power value** (retained portion of battery capacity for outages) - **Net metering/bill savings** (separate from VPP, traditional solar value) - **Shorter payback** (battery ROI drops from 12+ years to 5-7 years with VPP) ### **VPP Operator Captures:** - **Spread** between utility payments and customer payments (core margin) - **Software/platform fees** (recurring SaaS model) - **Installation markup** (if doing hardware deployment) - **Data/optimization value** over time (ML improves dispatch efficiency) - **Ancillary revenue stacking** (same MW can serve multiple markets sequentially)