US DOE shows that virtual power plants are very real
The US agency’s 2025 VPP Liftoff Report Update offers a playbook to accelerate virtual power plant adoption
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Ben Hertz-Shargel
Global Head of Grid Edge

Ben Hertz-Shargel
Global Head of Grid Edge
Ben leads research across electrification and grid technologies, drawing on a decade of executive experience.
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Transformation in the US distributed energy resource market
Today, the US DOE (Department of Energy) released the second installment in its Pathway to Commercial Liftoff series on virtual power plants (VPP). Wood Mackenzie is proud to have been a key data provider for the report, contributing state-level forecasts of DER capacity as well as the scale and location of VPP deployments to date.
The VPP Liftoff Report comes at a pivotal moment for the US power sector, as utilities reel from load growth that has no precedent in the modern era and anchor on natural gas as the only near-term solution. This perspective misses the obvious: That capacity exists all around them, in the flexibility of air conditioners, electric vehicles, commercial chillers, and scores of other customer resources, which can be harnessed into a VPP with a few API calls. VPPs are not the silver bullet solution to data center demand, but they are an essential part of an all-of-the-above solution.
The Liftoff Report offers real-world examples of VPP deployment and highlights over 60 DOE and industry resources for utilities and regulators (including WoodMac’s 2024 VPP market report, 2024 DER outlook, and Missing money for DERs). The deployments embody replicable strategies that others can employ to accelerate the adoption and utility of VPPs.
Such strategies are sorely needed. As evidenced in our 2024 VPP scorecard, while VPPs have reached an impressive scale with respect to several key metrics, areas of immaturity remain.
In particular, the attachment rate of DERs to VPPs remains low. While the ratio of VPP capacity to installed DER capacity is nearly 20%, the vast majority VPP capacity comes from flexible commercial and industrial (C&I) loads, rather than dedicated DERs. Addressing this attachment challenge will require simplifying and improving the customer value proposition. It will also require opening utility and wholesale market programs across the US to more DER types. These remain limited today by legacy utility program designs and wholesale market participation rules that—even factoring in expected FERC Order 2222 reforms—erect barriers to residential and small C&I participation.
As the figure below shows, 80% percent of utility programs are open to a single DER type, such as smart thermostats or C&I batteries. (In fact, most are limited to a specific set of OEMs of that device type.) But for programs in which a load-serving entity (LSE) such as a utility or energy retailer procures capacity from a VPP provider, without regard to what technologies are involved, the share of multi-technology aggregations increases dramatically. This type of model would not only increase VPP attachment rates but unlock aggregator innovation, freeing them to work with the device partners they want and enroll customers as they see fit.
One of the most powerful figures in the Liftoff Report overlays WoodMac’s state-level VPP deployment counts with the number of progressive policy developments in that state. It demonstrates the criticality of sound policy for the VPP market to properly develop—and the cost of inaction. At a time when utilities need an all-of-the-above solution to meet unprecedented load growth, inaction is something we cannot afford.
You can access the 2025 VPP Liftoff Report here.