Virtual power plants (VPPs) are growing in popularity and use. Analysis in 2025 from Wood Mackenzie shows activity expanding by 33% year-on-year across North America, with more programs and participants entering the space. Capacity is also increasing, but at a slower pace (13.7%).
That gap reflects how the VPP industry is evolving. The focus so far has been on launching programs and engaging participants – a practical and proven way to make use of DERs in bulk. The next stage is translating that activity into consistent, scalable system value, for utilities, VPPs, and consumers alike.
What do VPPs solve today?
VPPs have made distributed energy usable in a way it wasn’t before.
They bring together assets that would otherwise be too small or too fragmented to have an impact on their own. They handle the complexity of devices and customer participation. And they give utilities a way to call on flexibility when it is needed.
That has moved the industry forward. DER flexibility can now be contracted, dispatched, and delivered in a way that fits within existing operational models and is already delivering value in real-world deployments.
Growth is different to coordination
That activity is expanding quickly. Utilities deploy a mix of initiatives across asset types – some run directly, others through aggregators. Different technologies are tied to different programs, with their own requirements and data.
Each of those elements can work well on its own. The missing piece is how to coordinate them all together at a system level.
VPPs respond to signals, typically through utility programs. In practice, that response depends on how clearly the system can indicate where flexibility is needed.
Providers have proven they can deliver value when they know where to focus. However, utilities are still developing a clear picture of where flexibility has the most impact across their networks at a given point in time.
That gap has implications for how flexibility is procured and used across the system.
What happens as VPPs grow
VPPs are designed to respond where there is value, but that doesn’t always line up with where the flexibility is needed most on the grid.
As more VPPs and programs come online, that dynamic becomes more visible. Providers optimize across the opportunities available to them, whether through flexibility markets, programs, or other value streams like ancillary services.
For utilities, it introduces a challenge. The flexibility is there, but not always aligned with system needs at a given location or time. That makes outcomes less predictable and harder to compare with other options.
How to streamline for scale
The future then becomes less about adding new sources of flexibility, as they will keep showing up where there is value. It is more about using what already exists with greater precision. That matters for both system performance and how efficiently costs are managed as demand grows.
It comes down to having a clearer way to determine where flexibility has the most impact, how it should be prioritized, and how that is communicated across the system.
When those pieces are in place, the role of VPPs becomes easier to integrate into planning and operations. The contribution they make can be assessed more consistently, and decisions become easier to justify.
In some regions, this is already starting to take shape through flexibility markets. In the UK, network operators are using these markets to signal where capacity is needed, and to procure and dispatch flexibility accordingly.
Recent examples include the use of day-ahead flexibility markets to support planned outages, and near real-time dispatch of flexibility to respond to network constraints.
These approaches are still evolving – and are not dissimilar to how programs are currently used – but they show how clearer signals of value can turn flexibility into something that can be used more deliberately.
Why this matters for both sides
Clearer signals of value help align how VPPs prioritize their assets with what the grid actually needs, improving both utilization and predictability.
Utilities gain more confidence in how flexibility is used across their networks. It becomes easier to factor into investment decisions and to explain in a regulatory context.
VPPs and providers gain better visibility of where opportunities exist and how they are rewarded. That supports more consistent participation and clearer prioritization of assets.
Over time, this all also supports more efficient use of existing infrastructure, helping to manage costs for consumers.
Recent analysis from The Brattle Group found that meeting load growth with a mix of flexible demand and DERs could reduce electricity rates by around 4.8% compared to a scenario relying on traditional infrastructure investment alone for a typical mid-size U.S. utility.
A shift in focus
VPPs have therefore taken the industry a long way already. They have made flexibility accessible and operational, and will continue to do so.
What comes next is about getting more value from that flexibility by realizing the full benefit to the system as a whole.
No single VPP is going to capture every asset on the grid. As more DERs are added, the focus shifts to making the assets VPPs manage more valuable, and prioritizing alternative investments where they are not – ultimately helping ensure that flexibility is used in a way that keeps the system efficient and affordable as it scales.
