US Virtual Power Plant Deployments Surge 33% To 37.5 GW

 

US virtual power plant deployments surge 33% to 37.5 GW, with data center demand driving third-party energy storage as a core mechanism.

 

A Wood Mackenzie report indicates that North American utilities are increasingly seeking distributed resources to meet rapidly growing data center power demand, driving virtual power plant deployments to grow 33% year-over-year by 2025. The number of active companies deploying virtual power plants will reach 1,940, while total virtual power plant capacity will only grow by 13.7% to 37.5 GW, indicating that market breadth is expanding faster than depth.

 

The number of monetized virtual power plant projects is projected to increase 35% from 321 in 2024 to 433 in 2025, with the number of unique offtakers also increasing by 38%. Over half of offtakers saw deployments increase by at least 30% year-over-year, with the top 25 offtakers each procuring 100 MW or more. This growth is partially attributed to the emerging independent distributed power producer (IDPP) business model, which finances third-party energy storage through grid service revenue and energy arbitrage, as well as the relatively favorable regulatory treatment for energy storage under the Big Beautiful Act.

 

Ben Herz-Shagel, Global Grid Edge Director at Wood Mackenzie, emphasized that the growth of virtual power plant offtakers is tied to utility commitments to data center capacity, particularly in the PJM Interconnection and Electric Reliability Council of Texas regions. American electric utilities expect to interconnect 18 GW of data center capacity by 2030. Ryan Hledik, an expert at the Brutus Group, predicts that growth will be more pronounced in the next 12 to 18 months, with potential for explosive growth within three to five years. However, obstacles include utility project registration caps, capacity certification market reforms, and barriers to small customer markets. For example, California's demand-side grid supported a virtual power plant that discharged 539 MW on July 29th, projecting system cost savings of $28 million to $206 million by 2028. However, the state legislature unexpectedly defunded the project this month.