What Is a Virtual Power Plant?
Is anything real anymore? We’re all familiar with the column Cloud, Artificial Intelligence, and Virtual Reality. There are so many things that affect our lives, but we can’t see them. Well, let me introduce you to the concept of The Virtual Power Plant. (23450000)
Electric cooperatives nationwide are seeing pressures build in 2026: rising demand for electricity, pockets of constrained distribution capacity, and so many member-owned instruments showing up on the system like smart thermostats, phones, computers, and a variety of electric equipment. This combination is bringing about some interest in Virtual Power Plants (VPPs).
A VPP is not a single piece of equipment. It is a way to coordinate many small energy sources and other devices so they can act in concert to lower power usage during specific hours or times. In practice, a VPP might involve a signal that nudges smart thermostats a few degrees, shifts water heater operation, schedules EV charging at off-peak hours, and dispatches small generation sources. The goal is predictable performance during defined events.
VPPs have the most potential to solve specific, local problems with a clear value path. They can be used to contain or lower peak demand and other wholesale power costs, target distribution capacity constraints by deferring usage, and increase system resilience.
The use cases for VPPs:
- Smart Thermostat Demand Response, which is the fastest to scale and is a strong fit for summer peaks and event-based load reduction. Success is dependent on enrollment, program design, and member satisfaction.
- Controllable Electric Water Heaters. This is a good fit for rural applications. This can deliver dependable peak shaving and support for winter peaks in some regions.
- Managed EV Charging, which is critical for areas with high EV adoption. The benefit is the prevention of new peaks and the protection of utility equipment like transformers and primary power lines. This can also benefit the member by shifting the charging to a lower rate, during off-peak times.
The concept of reducing usage and demand at peak times is not new, and with the implementation of many smart devices, it may make this idea easier to implement.
While the concept of VPPs is straightforward, the actual implementation can be complicated and expensive. Starting with one item, like a thermostat, will likely increase participation and effectiveness. Many cooperatives are wary of third-party aggregators attempting to enroll members without involving the cooperative. Tight coordination is essential, and without it, operational risk to the utility’s system and confusion for members about who is responsible for performance, service, and device control can result.
Additionally, information gaps remain a barrier. About 25% of members nationwide decline energy programs because they don’t understand or see the benefit of them. 82% of interested members want household-specific savings estimates. This suggests that VPP success will hinge on clear, personalized communication that links participation to tangible member and cooperative benefits.
The concept of reducing usage and demand at peak times is not new, and with the implementation of many smart devices, it may make this idea easier to implement. However, as energy demands continue to rise strongly in the United States, the virtual power plant will likely become more of a means to keep both wholesale and retail utility bills lower while generators continue to look for long-term options and opportunities to produce more power.
Brandon J. Wittman
Chief Executive Officer