What’s The Next Step For Virtual Power Plants?

Last month “Charging Ahead” looked at the technological shift taking place in many industries called technology agnosticism” often referred to as tech-agnostic. It’s a technological approach that’s not tied to any single technology, platform or vendor. For more details, see “Is the Grid Going Tech-Agnostic” in the December 2025 issue of T&D World. Tech-agnostic makes a great deal of sense to the power delivery system with its extensive application of digital technologies. The main emphasis of the December discussion was the tech-agnostic approach being applied to distributed energy resource (DER) technologies and distributed energy resource management systems (DERMS).

Residential customers have welcomed DERs, which encouraged DERMS as rooftop solar plus storage gained prominence globally. Experts have been pointing out that these DERs and DERMS represent an untapped behind-the-meter (BTM) power source. But in the last few years the power industry has been discussing virtual power plants (VPPs). Especially when the focus shifts to skyrocketing power demands from hyperscale and colocation data centers. Last October, S&P Global reported their projections for data center grid-power demand. It’s expected to be about 61.8GW for 2025 and it’s anticipated that these users’ demand will continue climbing.

Interestingly, many utilities are increasingly turning to VPPs for a non-wires solution to increase the power supply quickly. DOE’s “Virtual Power Plants — 2025 Update” states that “VPPs are aggregations of DERs that can balance electricity demand and supply and provide utility-scale and utility-grade services.” One group emphasizes that modern VPPs take advantage of AI (artificial intelligence), cloud computing, and blockchain technology. It allows them to enhance DER input at extraordinary scales. What’s the bottom line when it comes to BTM DER availability for aggregating into utility-scale capacities? Well, as 2025 closed, the magnitude of US DERs was projected to reach 397 gigawatts (GW).

Untapped DERs

Those 397GWs of BTM DERs consist of residential solar panels, battery storage systems, electric vehicles, smart thermostats, etc., which brings up another question. Does anyone have any idea how much of this BTM DER capacity is actually being used to power VPPs right now? Wood Mackenzie has one of the most comprehensive analysis on the subject with their “2025 North American Virtual Power Plant.” It found that between 2024 and 2025 the operational VPP capacity in North America increased from 33GW to 37.5GW. Sharp-eyed readers will say, technically that doesn’t answer the question.

They’re correct and reading further into the reports revealed that only about 10.2% or 3.8GW of the VPP wholesale market capacity can be attributed to the residential customers’ DERs. That is a small percentage because of barriers from regulators, policymakers, and the utilities themselves. These hurdles have impacted residential DERs from participating in VPPs, but it’s also opened these resources to third party aggregation. In effect, residential customers have pushed back by successfully contracting with companies like Sunrun, Renew Home, Stem Inc., and others.

Sunrun recently announced that 2025 saw a 400% growth in their VPP participation with enrollments of over 106,000 customers in 17 active VPP programs across the country. That brings their dispatchable battery capacity to approximately 3.7 gigawatt-hours for grid support. In 2024 Sunrun was able to dispatch 416 megawatts across its VPP programs. That’s the equivalent of a pretty good size power plant, but it comes from thousands of residential customers and it’s all clean energy!

Pushing Back Pushback

Stories like Sunrun’s give organizations like the Energy Policy Design Institute (EPDI) the facts and figures for their goal of, “overcoming policy barriers preventing large-scale VPP deployment.” EPDI stated that VPPs programs have a very successful track record, but there’s confusion and misunderstanding on the part of regulators and policymakers. EPDI has launched an effort to help state public utility commissions to “cut through the noise.” EPDI feels there’s a need for state commissions to make informed, evidence-based decisions. All that said, one way or another, VPPs are becoming grid infrastructure.

VP3 is the Virtual Power Plant Partnership; it’s a coalition led by RMI (formerly Rocky Mountain Institute). Like EPDI they are working to increase the numbers and sizes of VPPs by changing policies, regulations, and market rules. VP3 supports tech-agnostic applications as a way of doing this. There are a growing number of utilities, manufacturers, and suppliers who are taking part in the VP3 coalition. RMI’s VP3 Flipbook makes for some interesting reading. Its introduction reported that the members’ VPP projects “provide 1,500 megawatts of capacity from 3.9 million enrolled customers.

Experts are saying VPP technology’s future is tech-agnostic if VPPs are to compete with traditional power plants. According to Precedence Research the VPP global market size is about US$6.28 billion in 2025. It’s expected to grow to roughly US$39.31billion forecast to grow at a CAGR of 22.61% through 2034. In more tangible terms, Wood Mackenzie reported that active number of virtual power plant (VPP) deployments in North America reached 1,940 in 2025. That is a 33% increase from the 1459 deployments in 2024. That is good news because it suggests growing interest from new VPP participants and tech-agnostic VPPs are part of this activity.

VPP Expandability 

The numbers of tech-agnostic VPPs that can be found on the power grid are growing as the playing field is flattened. In 2024, Portland General Electric (PGE), a VP3 member, collaborated with Enbala to develop a tech-agnostic VPP that aggregates and integrates DERs like solar panels, batteries and smart thermostats into a utility-scale power source. It utilizes APIs (Application Programing Interfaces) for broader integration of DERs from a wide selection of suppliers.

Several months ago, PG&E, SCE, and SDG&E made history in California according to one press release. It said these utilities “tapped 100,000 residential storage batteries to form a first of its kind VPP.” It went on to say, “those batteries supplied about 535 megawatts of electricity to the grid — enough to supply the electrical needs of hundreds of thousands of homes during peak demand.”

Green Mountain Power (GMP) has about 6,000 customer batteries throughout Vermont through two programs. A GMP press release reported these are the first, fully tariffed, home battery programs in the country. These battery powered VPPs were utilized by GMP during the 2024 eclipse that darken New England skies. The VPPs’ 50 megawatts stabilized the grid while reducing customer energy costs during the event with its seamless backup power.

High Stakes

The challenges are growing, and the stakes are high. If expert projections are accurate, the balance of load to supply is getting more tricky every day and solutions like VPPs are essential. One school of thought believes those skyrocketing demands from hyperscale data centers are not going to slow down. They anticipate this load will continue and their 2030 expectations of roughly 134.4GW. Another school reminds us of the overbuilding that the grid experienced about 25 years ago with the dot.com bubble. They point out it was a situation much the same as we are experiencing today with AI and data centers potential demands and we can’t afford that overbuilding today.

Whichever school is correct, tech-agnostic VPP technologies fit nicely with either scenario. The resources are there because our customers have embraced DERs to the point where we have hundreds of gigawatts of clean efficient electricity available on the distribution system. We don’t need to rush to overbuild the transmission system like happened with the dot-com fiasco. Also, there’s no reason to damage the environment by wasting time and resources trying to resuscitate dead or dying antiquated fossil-fuel power plants. The VPP tech-agnostic technology is available, it’s been proven, and it has the flexibility needed to balance the load versus supply. Last summer should have removed anyone’s doubt about the VPP’s viability.

Rescued by VPPs

Remember last June’s severe heat dome event? It was an event that many of the popular media outlets referred to as the “VPP rescue.” That heat dome settled over the eastern and midwestern US, driving the temperatures into triple digits. It resulted in demand reaching multi-year peaks. VPPs were credited with helping those areas of the US power grid avoid widespread blackouts. It also proved VPPs were capable of providing the grid with support and resilience. The “rescue VPPs” were a mixture of tech-specific and tech-agnostic approaches. Tech-agnostic compliant elements, however, are going to replace old-school tech-specific methodologies completely, it’s only logical.

Tech-agnostic VPP platforms give DERs the capability of acting collectively as a single flexible power plant with real-time dispatchability and producing revenue. With hundreds of untapped gigawatts, they can address many of the challenges facing today’s power grid like balancing load with adaptable supply or decarbonization. One group calls VPPs software-defined power that’s redefining the physical infrastructure.

By themselves, DERs address the customer’s energy budget and lessen power outages. Add tech-agnostic applications and they are aggregated into utility-scale VPPs addressing the grid’s load demands. Maybe that’s what makes it so fascinating. Using technology to shift thermostats, rooftop solar, and home batteries into a powerplant. That’s the future!