Over the last couple of decades, electricity consumption has been fairly steady, but in 2024 it jumped about 2%, and that upswing is expected to continue. The figures differ based on the authorities discussing the issue, but it’s going up. One of the better dialogues comes from the Department of Energy (DOE) who has estimated the U.S. will need about 200 gigawatts of additional resources by 2030.
Transmission wise, NEMA (National Electrical Manufactures Association) reported the US electric grid has over 642,000 miles (1,033,000 km) of high-voltage transmission lines, but more is needed. Connecting the needed clean energy and preventing region-wide blackouts will require that the transmission infrastructure be at least doubled by 2030 and possibly tripled by 2050 according to NEMA.
Utilities and grid operators have also voiced their concerns and are working toward increasing capacity. A report from Deloitte said, “Utilities are responding to this dynamic landscape with record capital expenditures.” Still, high-voltage transmission line construction has been dropping steadily for the past decade.
Last year’s completed transmission line construction figures aren’t available yet, but they’re expected to be around 125 miles (201 km). Numerous factors affect transmission and generation projects. In today’s environment, it can take over ten years to complete a transmission project. So we’re dealing with the old double-whammy of not enough generation and not enough transmission capacity to delivery power if we had it.
The Practical Solution
Nevertheless, there’s a technological workaround to this complex situation that has been expanding and intensifying, and it’s located exactly where it is needed, behind-the-meter (BTM). It’s distributed energy resources (DERs), and our customers have been busy deploying a wide variety of DERs on their systems. In the process the capacities of DERs have increased to the point they are being measured in gigawatts nowadays, but these gigawatts are the summation of tens of thousands or more individual installations.
In February’s “Charging Ahead” we explored microgrids powered by increased numbers of customer-based DERs made possible with the integration of artificial intelligence (AI). We also touched on virtual power plant (VPPs) technology, but did not go into it too deeply. Now it’s time to look closer at this technology. VPPs are being seen as not only a simple solution, but a practical one when needing more generation and transmission capacity and needing it quickly.
Keeping it short, VPPs are an assortment of small-scale DERs like rooftop solar, small wind turbines, battery systems, electric vehicles, etc. operating as a single large-scale generation asset. A few years ago the DOE published its “Pathways to Commercial Liftoff” for VPPs and they have updated every year since then. In January the 2025 edition was made available on their webpage and makes for interesting reading.
DOE points out, “VPPs will be a vital near-term solution to existing energy challenges, including rising costs, interconnection backlogs, peak demand increases, and distribution system congestion.” They continue, “VPPs present a more efficient alternative to manage this rising demand while making electricity cleaner and more affordable for Americans.” DOE noted there were roughly 33 gigawatts of operational VPPs at the end of 2024. They estimate that between 80 and 160 gigawatts of additional VPPs will be operating by 2030.
Grid-Enhancing Technology Advantage
VPPs can be third-party owned and operated, utility owned and operated, and a combination of those along with a few other designations, but these cover what we’re focused on. VPPs are close to the load being located BTM, which really boost reliability and increases resilience, while reducing energy costs with lower transmission losses. Another tremendous advantage is their ability to be deployed in about six months or less. In addition, they don’t require substantial changes or additions to the high-voltage transmission grid, extensive permitting, or dealing with the interconnection queue delays.
February saw, the North Carolina Clean Energy Technology Center (NCCETC) and the Smart Electric Power Alliance (SEPA) published their 50 States of Virtual Power Plant and Supporting Distributed Energy Resources: 2024 State Policy Snapshot report. It’s full of information on what is happening state-wise with VPPs, and updates are being considered. NCCETC/SEPA report stated the goal is “providing insights on state regulatory and legislative actions related to VPPs and DER aggregations,” and like the DOE’s liftoff report, it makes for some very interesting reading.
It appears that 2024 was a very active year with 105 state and investor-owned utility actions related to VPPs taken place in 38 states and the District of Columbia (D.C.). Many of these actions are expected to continue in 2025. The most common of these were related to energy storage, multi-technology VPP programs, and demand response programs. There were several VPP trends identified like utilities driving VPP activities and expanding VPP programs along with state regulators developing statewide frameworks for VPPs.
Powering Up VPP Programs
One of the essential goals of power grid modernization is decentralized power generation by moving away from large fossil-fuel based generation to on-site clean energy generation technologies. “Charging Ahead” talked with representatives of Sunrun, one of the leading home solar panel and battery storage companies. In 2024 Sunrun expanded their VPP programs to include more than 20,000 Sunrun customers.
These customers are involved in 16 VPP programs across nine states and territories. The programs have successfully supported a combined instantaneous peak of nearly 80 megawatts of power. Their largest endeavor to-date is the CalReady VPP program. It has networked more than 16,000 customers’ solar-plus-storage systems. Sunrun said this VPP supports California’s electrical grid delivering an average of 48 megawatts to the power gird during peak evening hours in the summer months.
Another Sunrun VPP is the PowerOn Puerto Rico VPP. It’s the largest participant in Puerto Rico’s Battery Emergency Demand Response program with over 4,000 customers’ solar-plus-storage systems. This VPP provides more than 15 megawatt-hours of energy to back up the island’s power grid. It provided vital backup energy to the island’s power grid during more than 70 energy shortfall events keeping the lights on for communities across Puerto Rico.
Last February, Rocky Mountain Power (RMP) and Torus signed a memorandum of understanding. They will work together incorporating Torus’s Nova Spin and Nova Pulse technologies into RMP’s Wattsmart 70 megawatt demand response program. It will create a VPP platform that integrates directly into its grid operations system.
Basically, the Nova Spin portion stores energy kinetically using an advanced flywheel technology, and the Nova Pulse is a modular lithium-iron phosphate battery system. It delivers a sub-250 millisecond response time with 99% system uptime and real-time frequency regulation along with other features. The project is expected to be operational within 12 to 18 months.
Filling the Gaps
It's estimated that by the end of 2024 there were over 500 VPPs operating in the U.S., and they’re increasing. The experts say new VPPs can usually be deployed in less than six months, which makes them desirable right now. Overall there seems to be positive interest from our customers to install DERs and they’re interested in making money with their investments, which is good for VPP applications.
Still there are some issues impacting that deployment. The interconnection process for VPPs/DERs varies from region to region. It’s a straightforward process in most parts of the country. However, when programs with multiple parties meet complicated laws mixed with complex regulations it can take twelve months or longer.
As the NCCETC/SEPA report pointed out, 38 states and D.C. regulators are aware of the value VPPs represent and working to support this developing trend. VPP applications are maturing, advancing, and now they’re being integrated with AI technology, which is opening new opportunities for utilities and grid operators. Harnessing tens of thousands of DERs into a single generation source was once a dream for many involved with the power grid.
AI-driven VPP platforms have made that a reality, which is making the power grid more resilient. It’s another tool for our toolbox when it comes to the modernization of the power grid. AI-driven VPPs are capable of providing superior responsiveness for the grid. The interesting thing about these VPP applications is the fact that they are all off-the-shelf technologies and available for use.
Grand View Research (GVR) estimated the global VPP market was US$ 5.01 billion in 2024. They project it to grow at a compound annual growth rate of 22.3% from 2025 to 2030. GVR sees the rise of decentralized energy generation and the urgent need to transition away from fossil-fuels contributing to the market growth. In addition, GVR said, “VPPs play a critical role in aggregating and optimizing these DERs, ensuring efficient power generation and distribution.”
VPP technology continues evolving into more versatile applications with more features and capabilities. There are hundreds of gigawatts from untapped DERs living BTM that could be utilized by AI-driven VPP platforms to provide a wide array functions needed by the power grid. They’re a necessary ingredient for futurizing the grid and a trending technology to boot!
