States and utilities took 106 actions to advance VPPs in 2025: SEPA Report
The Smart Electric Power Alliance and NC Clean Energy Technology Center’s latest report reveals a surge in Virtual Power Plant activity, with 35 states moving forward on policy and regulation as the industry shifts toward more holistic, multi-technology aggregation.
FEBRUARY 2, 2026 BEN ZIENTARA
ENERGY MANAGEMENT SYSTEMS
ENERGY STORAGE
EV
MARKETS & POLICY
UNITED STATES
Image: SEPA/NCCETC
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As the U.S. grid grapples with surging electricity demand and extreme weather events, legislators, regulators and utilities across the U.S. have taken action to establish Virtual Power Plant (VPP) programs using aggregations of behind-the-meter energy storage, smart thermostats, electric water heaters, electric vehicles and EV chargers.
A new report released jointly by the Smart Electric Power Alliance (SEPA) and the NC Clean Energy Technology Center (NCCETC) finds that 35 states and the District of Columbia advanced VPP and distributed energy resource (DER) aggregation policies in 2025.
The report, 50 States of Virtual Power Plants and Supporting Distributed Energy Resources: 2025 State Policy Snapshot, catalogs a total of 106 specific regulatory and utility actions taken over the last year. The majority of these actions established formal VPP programs, demand response initiatives and active managed charging for electric vehicles (EVs).
“We continued to see both state and utility leadership on VPP program development in 2025, with new states enacting VPP legislation and utilities filing major program proposals,” said Autumn Proudlove, Managing Director of Policy & Markets at NCCETC.
Proudlove noted a distinct shift in strategy compared to previous years. “Of note this year were efforts to take a more holistic approach to DER aggregation, utilizing portfolios of programs and expanding technologies eligible for participation.”
Key trends
The report authors highlighted four “Top VPP Trends” they identified in the data:
- Utilities proposing portfolios or suites of programs, often using distributed energy resource management systems (DERMS) to manage multiple different DER programs, or developing suites of new load flexibility programs based on existing demand response programs.
- Programs that go beyond battery storage by allowing smart water heaters, heat pumps and EV chargers to participate. Examples include Xcel Colorado’s forthcoming Aggregator VPP, and proposed programs in Maryland that allow for the participation of bidirectional EV chargers.
- A continued focus on pilot programs, which the authors assert “will be important to the design of future programs and the potential to scale them.” Critics of the continued use of pilot programs, on the other hand, have expressed frustration with the slow pace of VPP rollouts. One Wood Mackenzie report in late 2025 noted that the VPP market had “broadened more than it deepened,” which “prevented capacity from growing as fast as market activity.”
- Utilities in many states are deploying DERMS to support VPP programs. Again many of these systems are being used in relatively small-scale pilots, but they are being used to support existing portfolios of demand response (DR) and demand-side management (DSM) programs.
Notable state and utility actions
The report highlights several landmark decisions and proposals from 2025 that signal a maturing market where VPPs are integrated into core grid planning:
- Arizona: Arizona Public Service (APS) received approval for a new “Bring Your Own Device” (BYOD) battery pilot, expanding access for residential storage owners.
- Colorado: Regulators approved Xcel Energy’s Aggregator VPP program, which aims for 125 MW of enrollment. The program is notable for its performance-based compensation model for aggregators.
- Connecticut: The Public Utilities Regulatory Authority approved modifications to the state’s Energy Storage Solutions Program to improve program compliance and establish new incentives for active dispatch.
- Delaware: Delmarva Power proposed an “Affordability and Load Flexibility Portfolio,” signaling a move toward bundling flexibility services to lower ratepayer costs.
- Georgia: In a market traditionally slower to adopt distributed generation, regulators approved a new customer-side solar-plus-storage pilot for Georgia Power.
- Illinois: Lawmakers passed the Clean and Reliable Grid Affordability Act, which included specific directives for the development of new VPP programs.
- Louisiana: The New Orleans city council approved a suite of DR programs and a new phase of the battery storage pilot from Entergy New Orleans.
- Maryland: Following the state’s DRIVE Act, multiple utilities filed proposals for comprehensive VPP programs to meet new statutory requirements.
- Minnesota: Xcel proposed a new phase of its Distributed Capacity Procurement initiative to bring up to 200 MW of new utility-owned battery storage online by the end of 2028.
- Virginia: Dominion Energy filed a proposal to aggregate and manage a variety of new and existing DR and demand-side management (DSM) programs, including new battery storage and managed charging pilots, through a DERMS.
Moving beyond batteries
While battery storage remains a cornerstone of VPPs, the 2025 data shows a broadening of eligible technologies. Utilities are increasingly aggregating smart thermostats, electric water heaters, and EVs alongside stationary storage to create larger, more flexible capacity blocks.
Rusty Haynes, Senior Manager of Research and Industry Strategy at SEPA, emphasized that the industry is moving past the “pilot” phase mentality, even if the regulatory mechanism is still technically a pilot.
“Utilities and states tested and explored new approaches to VPPs in 2025,” Haynes said. “By analyzing state regulatory and legislative developments, we spotlight where policy is backing scalable DER aggregation, giving stakeholders across the energy landscape a clear view of how VPPs can meet surging energy demand.”
Growth toward a target
The Department of Energy continues to target 80 to 160 GW of VPP capacity by 2030 to support grid reliability, and the SEPA/NCCETC report confirms that the regulatory groundwork is being laid state-by-state to make that vision a reality.
A study of VPP capacity growth recently published by Ohm Analytics estimates a total capacity of nearly 40GW at the end of 2025, and a year-over year growth rate of 21%. If that growth rate were to hold steady, The U.S. would see nearly 100 GW by the end of 2030.
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