The digital energy plant (VPP) market grew quickly during the last yr, reaching 37.5 GW of behind-the-meter versatile capability, in line with a brand new report from Wooden Mackenzie.
The report, “2025 North America virtual power plant market report,” finds that the VPP market broadened greater than it deepened, with the variety of firm deployments, distinctive offtakers and market and utility applications monetized every rising greater than 33%, whereas complete capability grew a extra modest 13.7%.
“Utility program caps, capability accreditation reforms and market limitations have prevented capability from rising as quick as market exercise,” mentioned Ben Hertz-Shargel, world head of grid edge for Wooden Mackenzie.
Market maturation continues
The share of VPP wholesale market capability from residential clients elevated to 10.2%, from 8.8% in 2024, nonetheless reflecting market limitations to small clients. Third-party information entry for enrollment and market settlement are the first blockers.
Penetration of battery storage and EV in VPP deployments continues, with 61% as many deployments together with these applied sciences as these together with sensible thermostats, the incumbent expertise.
Main markets
California, Texas, New York and Massachusetts are the main states, representing 37% of VPP deployments. In the meantime, PJM and ERCOT, the areas with the best utility commitments to information heart capability, even have the best disclosed VPP offtake capability.
“Whereas information facilities are the supply of recent load, there’s an infinite alternative to faucet VPPs as the brand new supply of grid flexibility,” mentioned Hertz-Shargel.
Offtake development
The highest 25 VPP offtakers procured over 100 MW every this yr, whereas over half of all offtakers elevated the variety of deployments below them by a minimum of 30% in comparison with final yr, exhibiting the breadth of the market. An “impartial distributed energy producer” enterprise mannequin has emerged, whose thesis is that vitality arbitrage and grid service income can finance an electrical energy retailer’s third-party-owned storage providing.
Regulatory pushback
A majority of VPP aggregators and software program suppliers don’t assist utilities price basing DERs, a key plank of the Distributed Capability Procurement mannequin for utilities.
“This mannequin is seen as limiting entry of personal capital and aggregators from the DER market, somewhat than leveraging buyer and third-party-owned assets,” mentioned Hertz-Shargel. “In the meantime, there’s broad consensus amongst skilled wholesale market members that FERC Order 2222 was a missed alternative and won’t have a big impression on market entry.”
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