U.S. Virtual Power Plant Market Enters Rapid Growth Phase
Ohm researchers kept track of more than 150 measures made by utilities, regulators, and lawmakers in 2025. They also saw a 153% growth in home battery enrollments from the previous year, with plenty of space to expand.
The first VPP Market Report from Ohm Analytics, a market intelligence and data company that works with customers in the solar, energy efficiency, and home improvement industries, says that the U.S. Virtual Power Plant (VPP) business is entering a new phase of rapid expansion.
Residential Batteries Lead Enrollment Growth
The data shows a huge jump in residential battery enrollments, which climbed by an amazing 153% year-over-year in 2025. This resulted in a 21% rise in total cumulative enrolled VPP capacity, which is currently over 38 GW nationally.
About a third of all enrolled VPP capacity by the end of 2025 came from the residential sector. This included smart thermostats, actively controlled EV charging, and distributed battery energy storage systems (BESS). If its share capacity keeps growing at the same pace as it did in 2025, it might pass the Commercial and Industrial (C&I) sector by 2028 if growth rates stay the same.
But California’s choice to slash funds for the Demand-Side Grid Support (DSGS) program might slow down capacity expansion in 2026. The DSGS program, which is the biggest VPP in the country right now, added 785 MW of capacity in 2025.
Teddy Storrs, a senior research and policy analyst at Ohm Analytics, says that even if residential batteries are growing, he thinks the C&I sector will still have a greater percentage of total capacity over the next several years. In a recent interview with PV Magazine USA, he said,
“There’s just so much more bang for the buck out there in the C&I space.”
The Puerto Rico Customer Battery Energy Sharing (CBES+) program was the second biggest reason for the rise of residential capacity in 2025. It rose by 460 MW when the Puerto Rico Energy Bureau approved auto-enrollment for battery systems.
Actions at the State Level Guide the Way
The Ohm Analytics team kept track of more than 150 things that utilities, regulators, and lawmakers did in 2025 to support VPPs as they were working on the study.
Without federal leadership on this issue, states are setting very high goals for clean energy for affordability programs that include DERs, according to Madeline Turner, a senior policy and research analyst at Ohm Analytics.
“Things have really started to move from the ground up to fix these problems in real time.”
Some important changes are:
- State Legislative Momentum: Virginia approved a law that requires Dominion Energy to start a 450 MW VPP pilot. At the same time, Maryland’s IOUs are pushing ahead with a VPP program that was created in response to the DRIVE Act of 2024 and would provide each utility up to 2% of its peak demand in VPP capacity.
- Location-Based Incentives: National Grid’s ConnectedSolutions+ initiative, which started in late 2025, was the first VPP program to pay more for Distributed Energy Resources (DERs) that were on feeders with limited capacity. Xcel Energy Colorado’s newly authorized Aggregated Virtual Power Plant (AVPP) will include distribution system asset deferral in its incentive structure. This means that qualified feeders will get a value of $64.74/kW-year for distribution-level services.
- Response From the Data Center Market: VPP providers say they can increase capacity faster and at a lower cost than new power plants. Ohm analysts point out that 18 new VPP programs have been proposed by utilities in PJM and the Midwest, mostly because they expect data center demand to rise by more than 100 GW by 2035.
Long-Term Funding Remains a Challenge
There has been a lot of development in VPP programs; pilot projects still make up 45% of all VPPs, which means they don’t have permanent funding. The people who wrote the paper said that continuous financing and growth beyond pilot programs is “mission-critical” for the long-term viability of VPPs.
They also say that programs that are paid for by ratepayers, like the ones being developed in Maryland, may be more stable and protected than programs that can lose financing if the legislature decides to do so, like California’s now-closed DSGS program.
You may read the report’s Executive Summary here. Ohm Analytics gets its data from its industry partners, who include some of the biggest installers, manufacturers, financiers, and distributed energy resource management (DERMS) suppliers in the business.
Ohm Analytics enterprise subscribers may read the whole report. The firm also gives solar contractors and developers free access to certain of its market data platforms.
