“We are living in the future of virtual power plants in places like Puerto Rico, and California, and New England, and increasingly Texas,” said Chris Rauscher, Sunrun’s head of grid services and electrification. “It’s just about other states putting that in place in their territories and letting it run.”
In May, Virginia passed a law requiring that utility Dominion Energy launch a pilot program to enlist up to 450 megawatts of VPP capacity, including at least 15 MW of home batteries, Anderson said.
The legislative effort has had less luck in New Mexico and Minnesota, where bills failed to advance, Anderson said. In Illinois, a proposed bill did not pass during the regular legislative session, but advocates hope to bring it back for consideration during the state’s “veto session” this fall, she said.
A lot more batteries are being added to rooftop solar systems in Illinois, Anderson noted — a byproduct of the state clawing back net-metering compensation for solar-equipped customers starting this year. Similar dynamics have played out in Hawaii and California after regulators reduced the value of solar power that customers send back to the grid, making batteries that can store extra power and further limit customers’ grid consumption much more popular.
Rooftop solar advocates have fought hard to retain net-metering programs across the country. But Jenny Chase, solar analyst with BloombergNEF, noted that most mature rooftop solar markets have shifted away from rewarding customers for sending energy back to the grid at times when it’s not needed.
“In some ways that’s justified, because net metering pushes all responsibility and cost of intermittency onto the utility,” she said.
VPPs flip this dynamic, turning rooftop solar and batteries from a potentially disruptive imposition on how utilities manage and finance their operations to an active aid in meeting their mission of providing reliable power at a reasonable cost. Utilities have traditionally been leery of trusting customer-owned resources to meet their needs. But under pressure from lawmakers and regulators, they’re starting to embrace the possibilities.
Similar tensions are at play in Colorado, where Xcel is under state order to build distributed energy resources like rooftop solar and batteries into how it plans and manages its grid. This spring, Xcel launched a project with Tesla and smart-meter company Itron aimed at “taking these thousands of batteries we have connected to this system over time and [being] able to use them to respond to local issues,” Emmett Romine, the utility’s vice president of customer energy and transportation solutions, told Canary Media in an April interview.
But waiting for utilities to deploy the grid sensors, software, and other technology needed to perfectly control customers’ devices runs the risk of delaying the growth of VPPs, Anderson said. Simpler approaches like those being taken in Puerto Rico — where aggregators manage VPPs — can do a lot of good quickly. “Once you get that to scale, there will be a lot of learnings for the next stage,” she said
Blunting the impact of tax credit cuts
State- and utility-level incentives that encourage individuals to participate in VPPs are also a vital countermeasure against the damage incurred by the “big, beautiful bill” passed by Republicans this month, Anderson said. Under that law, households will lose a 30% tax credit that offsets the cost of solar, batteries, and other home energy systems by the end of this year.
However, companies such as Sunrun and Tesla will retain access to tax credits for solar systems that they own and provide to customers through leases or power purchase agreement structures, as long as they begin construction by mid-2026 or are placed in service by the end of 2027. And tax credits for batteries remain in place until 2033 for these companies.
VPP programs can’t make up for the loss of the tax credit for customers who haven’t yet installed solar or batteries, Anderson said. But by financially rewarding participants, they can help consumers recoup initial costs, she said, as long as they aren’t hampered by ineffective state policies.
“Folks can earn over $1,000 a summer through [some VPPs],” she said. “You couple in the leasing model for solar and storage, which is going to get a little more popular in the aftermath of the bill,” due to its ability to continue to earn tax credits, “and I think it’s a pretty good way to get batteries for low or no cost up front.”
