Interconnection Demystified: A Guide for VPP Aggregators and DER Developers

As Virtual Power Plants (VPPs) and Distributed Energy Resources (DERs) surge across the energy landscape, a critical process determines whether these assets can legally and technically operate: interconnection. While often overlooked outside of engineering circles, interconnection is the essential first gate every DER must pass through, before it can earn revenue, provide grid services, or support resilience.

What Is Interconnection?

Interconnection is the utility’s approval process that ensures a distributed energy system, like solar panels, batteries, or EV chargers can safely and reliably connect to the grid. It evaluates risks like transformer overload, voltage violations, and anti-islanding compliance.

A system cannot legally export energy or provide services like frequency regulation without receiving Permission to Operate (PTO) from the utility.

Interconnection for VPPs: Site-Specific, Not Aggregator-Specific

One of the most common misconceptions is that an aggregator (e.g., Sunrun, Haven Energy) can submit one interconnection application that covers all its VPP assets. In reality:

• Each interconnection request is asset-specific.

• Utilities evaluate each site based on:

  • Feeder location

  • Existing DER saturation

  • Inverter settings (IEEE 1547, Volt-VAR)

  • Transformer loading

    
    

So, even if Sunrun and Haven Energy use the same equipment (say, a Tesla Powerwall), each customer site undergoes a separate interconnection review.

Do Utilities Reuse Prior Reviews?

Yes, but with nuance:

• Utilities “learn” from volume. If they’ve already reviewed 10,000 similar systems, they may apply template-based reviews or “Fast Track” processes for new ones.

• Pre-approved equipment lists (e.g., Tesla, SolarEdge) speed up reviews.

• However, each site still needs to be filed individually, regardless of prior approvals.

  
  

Interconnection vs. Market Participation

Getting a PTO letter doesn’t mean the DER can participate in CAISO or ISO-NE.

Here’s the difference:

Feature	Interconnection (PTO)	ISO Market Participation
Administered by	Utility	ISO + Aggregator
Purpose	Safe grid operation	Energy/capacity sales
Telemetry Required?	No	Yes (5-min or sub-hourly)
Needed for VPP?	Yes	Yes
Example Requirement	IEEE 1547 inverter compliance	CAISO telemetry & DERP concurrence

Key Interconnection Request Types

Utilities typically accept interconnection requests under the following frameworks:

1. Net Energy Metering (NEM) Interconnection

• Common for rooftop solar.

• Fast-tracked if system exports are within limits.

• Often used in early VPP pilots with residential solar+battery.

  
  

2. Non-Export Interconnection

• Batteries designed not to push power to the grid.

• Useful for backup or demand charge management.

  
  

3. Export Interconnection (Wholesale-Eligible)

• Designed for DERs that sell into wholesale markets.

• Requires extensive review of telemetry, telemetry, and dispatch control.

  
  

4. Fast Track or Supplemental Review

• Applied when systems meet size/location criteria.

• May avoid full study but still require engineering review.

  
  

Common Aggregator Questions (FAQ)

Q: If Sunrun and Haven Energy both install Tesla batteries, can they share interconnection approval?

A: No. Each system must be individually reviewed by the utility.

Q: Do all utilities follow the same interconnection process?

A: No. For example:

• PG&E: Structured, has an online portal.

• SCE: Uses Fast Track, VPP-friendly but cautious.

• SDG&E: Slower, less DER experience.

• ERCOT (TX): No utility permission needed in deregulated areas.

  
  

Q: Is PTO enough for CAISO VPP participation?

A: No. You also need:

• DERP registration

• Utility concurrence letter

• Telemetry validation

• ISO-compliant metering

  
  

Q: Can one DER asset be used by multiple aggregators?

A: No. Market participation is tied to the aggregator’s specific telemetry, API, and Scheduling Coordinator setup.

Summary Table: What Is Shared and What Isn’t

Item	Shared Across Aggregators?	Notes
Interconnection study	No	Each DER asset reviewed separately
Equipment approval	Yes	Tesla, Enphase, etc. on pre-approved lists
CAISO DERP registration	No	Each aggregator registers separately
Telemetry & API approval	No	ISO validates aggregator’s systems individually

Conclusion

Interconnection is both a technical and regulatory prerequisite for VPP participation. While prior designs and pre-approved equipment can streamline the process, each DER site and each aggregator must go through their own compliance pathways. For successful VPP deployment, understanding the interconnection-to-market flow and utility-specific nuances. is essential.