Virtual power plant (VPP) provider CPower Energy provided 38 GWh to the grid between January and September, which was 137% higher than all of 2024, said Mike Smith, CEO at CPower Energy in my most recent Clean Energy Today podcast.
Who benefits from virtual power plants?
Not only the grid benefits from virtual power plants. Large customers that participate in Cpower’s programs can earn up to $100,000 a year, he said.
A VPP is a collection of small-scale energy resources that are aggregated together and coordinated with grid operations. They can supply the same reliability and economic value to the grid as traditional power plants, according to the nonprofit organization RMI, which recently released an update on the status of VPPs. Virtual power plants can earn money for utility customers and help utilities avoid investing in expensive — and often fossil-fueled — power plants. Companies like CPower and EnergyHub generally work with utilities to aggregate their customers’ resources into VPPs.
Not all utility customers can participate in VPP programs. RMI has established a goal of scaling VPPs so that every utility customer has access to VPP programs by 2035.
There’s some movement in that direction. According to the RMI report, 10 state legislatures introduced VPP bills and four states passed VPP legislation in 2024.
Virginia legislation calls for utilities to file 450-MW VPP proposals
For example, legislation passed in Virginia this year requires utilities in the state to file with state regulators 450-MW virtual power plant proposals, said Gabriela Olmedo, who heads up policy and regulatory affairs at VPP provider EnergyHub.
“Legislation like this can really spur utilities into action and have them create virtual power plants and take that first step,” she said.
Payments established by state programs can spur utility customers to join VPP programs, she said.
For example, the Connected Solutions program in New England pays utility customers who have batteries an average of $275/ kW for providing battery power when it’s needed, Olmedo said.
PJM capacity prices have increased significantly in the last two years
In PJM–the largest wholesale power market in the US–the price for capacity over the last two years has increased about tenfold, Smith said.
That boosts the amount that a customer can earn for participating in these markets by about tenfold, he added.
VPP programs tend to be available in the organized regional transmission organization markets, Smith said. In addition to PJM, those markets include MISO, ISO New England, New York, ERCOT and California.
Some utilities, like Arizona Public Service, offer VPP programs in non-RTO states. VPP programs are especially helpful to customers and the grid in the summer, when temperatures are high and people start turning up their air conditioners.
“In June, for instance, our customers alone provided PJM with 18.5 GWh of energy,” Smith said. “That’s energy capacity to the grid that would not otherwise have been there.”
Listen to the podcast: What’s Needed to Accelerate Virtual Power Plant Adoption to Meet Growing Energy Demand?