Date of Award
Spring 5-2026
Language
English
Document Type
Honors Thesis
Degree Name
Bachelor of Arts
Department
Economics
Advisor/Committee Chair
Chun-Yu Ho
Committee Member
Benjamin Griffy
Abstract
The American electrical grid is one of the oldest, most complex, and most important systems in the country. For the first 100 years following its inception in 1883, the grid had primarily functioned as a one-way power provider, meaning that electrons flowed strictly from power plants to transmission lines to distribution lines and eventually to consumers. This system—often described as “unidirectional”—was built on the idea that electricity could not be stored in large quantities and that it therefore had to be produced as soon as it was demanded (Alliance for Innovation and Infrastructure, 2017). Although it was the primary method for providing reliable energy for over a century, the system became outdated and undependable towards the end of the 1990s. A new, more reliable, dynamic, and “smart” grid was needed (USCA, 2026). With a smart grid, electricity consumers would not rely on the old unidirectional system. Instead, users would be able to leverage the capabilities of Distributed Energy Resources (DERs)— technologies for generating and managing electricity at the place of consumption—to produce energy for themselves and sell excess energy back to the grid (ACEEE, 2026). This would change their role from solely consumers of electricity to consumers and producers, otherwise known as “prosumers” (USCA, 2026). This decentralized/DER-based power generation model of the 2000s is quickly being integrated into the formerly dominant centralized model (IEA, 2017). However, as individual households and buildings become their own power sources, problems with the fully decentralized model have emerged. For example, thousands of smart-thermostats in a neighborhood might ordinarily pre-cool or pre-heat at the same time as one another. However, their lack of coordination can create spikes in demand which can strain the grid. Although this is just one example, there are many other inefficiencies that arise simply because houses, buildings, and their DERs work as individual actors. In an attempt to solve these inefficiencies, Virtual Power Plants (VPPs) act as orchestrators by connecting and coordinating DERs to work as efficiently as possible (USCA, 2026).
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Recommended Citation
Torlasco, Emiliano, "Determinants of Virtual Power Plant Enrollment: The Role of Distributed Energy Resource Ownership Models" (2026). Economics. 10.
https://scholarsarchive.library.albany.edu/honorscollege_econ/10