As electricity demand in the United States continues to grow — from data centers, electric vehicles, and other large loads — utilities are struggling to keep up. Instead of building more traditional power plants, utilities can meet that demand in a cleaner and cheaper way by also turning to virtual power plants (VPPs).
VPPs are aggregations of distributed energy resources such as batteries, electric vehicles, smart thermostats, and other connected devices that can provide utility-scale and utility-grade services. Designing VPP Programs to meet utilities’ needs, however, requires planning. Just as traditional grid resources are weighed in utilities’ plans, VPPs should also be considered, modeled, and included in the utility planning process.
Today, existing and proposed VPPs are approaching and exceeding the scale of traditional power plants. In 2024, the average combustion gas turbine in the United States was 180 megawatts (MW). Meanwhile, several VPP programs across the country have met or exceeded this capacity:
- In Massachusetts, National Grid launched ConnectedSolutions in 2016, which has grown to 227 MW and includes residential thermostats, residential batteries, and commercial and industrial demand response. Beyond Massachusetts, ConnectedSolutions’ region-wide, open-access VPP shaved 375 MW of demand from the New England grid during a multi-day heat wave in June 2024.
- In California, the Emergency Load Reduction Program (ELRP) and Demand Side Grid Support (DSGS) programs were launched in 2021 and 2022 respectively, to shore up near-term reliability quickly in response to rolling blackouts. The ELRP reached nearly 800 MW as of 2023 and DSGS has reached 1,145 MW as of October 2025 with a majority of the program’s capacity — 768 MW — stemming from the market-aware storage pilot program.
- In Texas, NRG and Renew Home announced a partnership to develop a 1 gigawatt (GW) VPP by 2035 driven by smart thermostat usage; as of 2025 NRG has reached 150 MW. Meanwhile, CPS Energy started its VPP pilot over 10 years ago, which has grown to over 250 MW in size as of 2024 with 175,000 customers.
Recent policy and momentum in other states will drive further development of VPPs at this scale. In the past year, the Virginia legislature directed Dominion Energy to develop a VPP pilot program for 450 MW, New Jersey’s governor issued an executive order for the New Jersey Board of Public Utilities to develop a VPP program within six months, and the Colorado legislature directed Xcel Energy to create its first virtual power plant program, which has developed into a 125 MWproposal that was recently approved by state regulators.
Meanwhile, utilities have also directly taken actions to scale VPPs. For example, Xcel Energy in Minnesota plans to procure up to 200 MW of distributed storage, and Georgia Power recently agreed to procure up to 100 MW of new distributed solar and storage.
VPPs are grid-integrated, dispatchable aggregations of distributed energy resources such as batteries, electric vehicles, smart thermostats and other connected devices. Despite the futuristic name, VPPs are already in use across the country. According to the U.S. Department of Energy, roughly 30 GW of VPP capacity is deployed today, with potential reaching up to 160 GW by 2030. That would be enough to cover about 20% of peak demand.
For VPPs to reach their full potential, more investment will be needed. Data center companies — which are set to invest close to $3 trillion in American infrastructure by 2030 — could be the perfect group to boost this market.
Done right, data center-funded VPPs could deliver broad benefits: data centers get faster, lower-cost power; utilities get flexible tools for planning smarter grid growth; the VPP industry gets the capital it needs to scale; and communities benefit from new distributed energy resources that deliver bill savings and resilience.