It looks like batteries will be the brains of clean microgrids, as fossil-fuel based generators are generally excluded. I suspect that Tesla Energy will have no particular regulatory problem competing in this space. While the grid is viewed as backup, I think things will operate differently than thinking of the grid as some sort of NG backup generator. With batteries as the intelligent core for power management within the microgrid, the macro-grid serves more as a low cost way to maintain the SOC in local batteries. So the microgrids may draw grid power opportunistically, i.e., they mostly buy grid power when it is cheapest through the day. If this becomes the case, only a very low tariff may be needed. Essentially, the microgrids will make it easier for the macrogrid to manage it's power supply. For example, it will reduce the need for peaking generation capacity. It will also assure that demand on the transmission grid is more consistent throughout the day. This means greater utilization of existing infrastructure and less wear on components during times of stress. I actually think virtual power plant is a bad metaphor for a distributed storage system. The basic objective is buffer power locally so that local consumption can be served at lowest cost. The idea that you want to store power locally so that it can be transmitted across the state at another time is silly. It's a bit like saying I'll save groceries in my refrigerators so I can take veggies back to the market and ship them off to another state when they need them. Even if I have a small garden, this is a silly idea. There is a necessary one-way flow of power from centralized generators to consumers. So localized storage is only really needed for local consumption. Amassing more storage locally than what is needed to buffer local consumption means that storage is not well distributed. While local consumption may be the intent of VPP, the metaphor of a power plant creates a false impression. One would never call a refrigerator a virtual farm or even a virtual grocery store. We don't need silly metaphors like that because we know exactly how useful a refrigerator is. I submit that batteries don't need a metaphor. It is not a virtual anything, it's just a power storage device. Once we get used to how local batteries can optimize local power consumption, we'll have a hard time remembering how we got by without it.