Virtual Power Plants: Assessing Equity in Emerging State Policies & Programs

By Lima Hossain, Senior Policy Analyst

July 2026

As electricity costs and demand rise due to data centers, states and utilities are turning to Virtual Power Plants (VPPs) as a faster, cheaper alternative to building new gas infrastructure to meet growing energy demand. VPPs — networks of solar panels, batteries, smart thermostats, and electric vehicles that are coordinated to act as a single flexible resource — are moving from pilot projects to policy mandates and programs. VPPs use software and real-time data to coordinate millions of distributed devices across a network to respond dynamically to shifting weather conditions, peak demand events, and grid stress in ways that traditional power plants cannot. For utilities and grid operators willing to learn and implement these emerging tools, VPPs offer a path to meeting growing energy needs without the high costs and added pollution of new fossil fuel generation. At the same time, early program design decisions are determining whether VPPs extend clean energy benefits to those who need them most or replicate existing gaps in clean energy access.