An executive order in Massachusetts and a regulatory commission action in Minnesota are among the big moves this year that highlight the growing role of virtual power plants in grid management.
A virtual power plant, or VPP, is a network of resources that a central controller can call upon to send power to the grid or to reduce demand on it. Examples include batteries in homes and businesses as well as factories that can ramp down their power use when needed.
With a few clicks, hundreds or thousands of points in a network can behave like a power plant, with compensation for the resource owners. It’s a cheaper and cleaner way to provide short-term electricity than the main alternatives, such as natural gas peaker plants.
I spoke with Autumn Proudlove, managing director for policy and markets at the NC Clean Energy Technology Center at North Carolina State University, about her work tracking legislation and regulatory actions related to virtual power plants.
“We’ve seen kind of a steady uptick in activity and developing new programs,” she said about the year so far.
Proudlove highlighted actions in Massachusetts and Minnesota that stand out for their significance.
Massachusetts Gov. Maura Healey issued an executive order on March 13 that aims to boost energy supply and affordability, including a plan to require the commonwealth to develop 3.5 gigawatts of demand-management resources by 2035, which can include virtual power plants.
That’s a lot. For comparison, the entire New England grid, covering six states, had a peak demand of 26.1 gigawatts in 2025.
It’s also a lot compared to the country’s largest virtual power plant networks, such as the one in California, which generated a peak of about half a gigawatt last July.
Healey’s order takes an expansive view of which resources will count. It lists virtual power plants, electric vehicle charging management, energy efficiency and demand response programs.
An energy wonk may look at that list and remark that everything on it is a kind of virtual power plant. But the specificity is helpful at a time when the VPP concept can vary a bit depending on who’s describing it.
The order calls for the Massachusetts government to issue a report in September that identifies which demand response and related energy programs are already in place, serving as a baseline for the 2035 targets.
Counting what’s already here is encouraging to Larry Chretien, executive director of Green Energy Consumers Alliance, an advocacy group covering Massachusetts and Rhode Island. He thinks the Healey administration is starting this process in the right way.
“We’re excited,” he said. “We’re always impatient, though.”
The deployment of 3.5 gigawatts could reduce the need to invest in expensive grid infrastructure, such as peaker plants and other equipment.
“We’re hoping this helps kill off some peaker plants,” Chretien said.
In Minnesota, utility regulators on May 13 approved a plan from Xcel Energy to deploy 200 megawatts of neighborhood-based batteries, each ranging from 1 to 3 megawatts, to help improve reliability and reduce the need for investment in larger infrastructure.
The main concern for some consumer advocates is that Xcel would own the batteries and have complete control over them, as opposed to distributed VPPs, owned or leased by consumers.
“The Minnesota commission went about it the wrong way,” said John Farrell, co-director of the Institute for Local Self-Reliance, a nonprofit that works for community control of resources and seeks to reduce the power of large corporations.
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Farrell thinks utility ownership of battery networks will be inefficient compared to decentralized ownership, with inadequate incentives to control costs.
Xcel calls this initiative Capacity*Connect, and in an October news release, it said the program is designed to put batteries precisely where they’re needed on Xcel’s grid. The larger point, which the company reiterated in filings with regulators, is that owning the batteries is an important part of the plan.
The program is “different in that it is designed to prioritize the larger grid instead of first serving the single customer who owns the battery,” an XCel Energy spokesperson said in a written statement. “By owning and operating these batteries, we can ensure the batteries work safely and reliably and maximize the benefits to all customers by storing energy when prices and demand are lower so that we can distribute that energy to the grid when prices and demand rise.”
I don’t know of any other program quite like Capacity*Connect and will be watching to see how it works.
One term that appears nowhere in the Xcel news release is “virtual power plant.” This may be because this program isn’t like other VPPs comprised of participating consumers.
It also may be that the term lacks a clear definition. But until there’s something better, I’ll keep using it.
Virtual power plants are a promising part of the transition away from fossil fuels. If you want to learn more, a good place to start is a report issued in January 2025 by Lawrence Berkeley National Laboratory, with a companion report that has an inventory of about 180 projects nationwide.
At that time, California had about one-third of all projects, with 62, followed by Colorado with 16 and Massachusetts with 15. The country’s VPPs had a potential capacity of 19 gigawatts—close to three-quarters of the peak demand of the New England grid—showing this resource is large enough that we all need to pay attention.
Other stories about the energy transition to take note of this week:
Electrification Is the Biggest Loser as DOE Restarts Home Efficiency Rebates: The Department of Energy issued long-awaited guidance on home efficiency rebates programs, making some big changes, including a limit on receiving rebates for fossil-to-electricity switching for home heating, as I wrote for ICN. The rebates were part of the Biden administration’s Inflation Reduction Act and the Trump administration tried to cancel the programs before losing in court to a coalition of states. Now, funding for the rebates will move forward but with modifications that align with the administration’s support for fossil fuels and hostility to electrification.
New Mexico Has Best Interconnection Process for Distributed Energy, Report Says: New Mexico gets the best marks for the ease of getting grid connections for rooftop solar and other distributed energy resources, according to a report from the Interstate Renewable Energy Council and Vote Solar. One takeaway is that many states are improving their processes, as Brian Martucci reports for Utility Dive.
Expensive Insurance Is a Hidden Cost of Owning an EV: Insurance for an EV costs 42 percent more than for a gasoline vehicle on average, as Tik Root reports for Grist. This figure, part of a recent analysis by the insurance marketplace Insurify, shows an often unrecognized cost for EV owners.
Data Center Developers Are Getting Gas Turbines Anywhere They Can: Michael Thomas, CEO of the research firm Cleanview, issued an update to his February report showing how many data center developers are providing their own power plants, and many are using inefficient and unconventional gas turbines because of long wait times for the most efficient models. The report uses satellite images and other data to assess whether projects are moving toward completion. Developers continue to favor quick and dirty power sources, despite tech companies often professing a desire to power data centers with renewable energy.
Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].
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Dan Gearino covers the business and policy of renewable energy and utilities, often with an emphasis on the midwestern United States. He is the main author of ICN’s Inside Clean Energy newsletter. He came to ICN in 2018 after a nine-year tenure at The Columbus Dispatch, where he covered the business of energy. Before that, he covered politics and business in Iowa and in New Hampshire. He grew up in Warren County, Iowa, just south of Des Moines, and lives in Columbus, Ohio.