VPP Week-In-Review — May 5, 2026
Your weekly brief on virtual power plants in the US & Canada.
Three Takeaways
The most important near-term fight for VPPs is inside PJM’s stakeholder process: two design details in the reliability backstop auction — the definition of “net new” capacity and the planning requirements imposed on DER aggregators — will determine if up to 10 GWs of behind-the-meter resources can actually participate.
NERC’s rare Level 3 alert over data center load instability makes the case for dispatchable demand-side resources having increased value in ancillary services markets.
Two data points from Texas — Base Power’s research that 60% of customers never switch providers and findings from TXU’s EV charging partnership with ChargeScape — make the case that DERs convert the REP’s core liability (a commodity product with no retention mechanism) into a service relationship that can enable differentiated offerings.
News Roundup
Regulatory & FERC · 🟢 Bullish (with caveats)
PJM’s data center auction may be the break VPPs have been waiting for 📅 Published: May 4, 2026 (one day before coverage window — included for direct VPP relevance)
PJM’s emergency backstop procurement could unlock over 10 GW of behind-the-meter capacity, according to Voltus CEO Dana Guernsey — but two design questions will determine whether that potential is realized. First, PJM’s definition of “net new” VPP capacity must account for new assets installed at existing sites; defining it too narrowly excludes some of the cheapest, fastest-to-deploy options in the market.
Second, DER aggregators are currently being asked to produce locked-in 15-year retail contracts while traditional generators only need a “pathway to readiness.”
Running in parallel: a Voltus/Mission:data FERC complaint arguing that PJM’s smart meter data barriers effectively block residential participation — without statistical sampling allowances, the backstop auction remains out of reach for homeowners regardless of how the design question is resolved.
Regulatory & FERC · 🔴 Bearish
PJM floats three paths to overhaul its capacity market — all of them structural 📅 Published: May 7, 2026
PJM’s CEO declared the “current situation not tenable” in a white paper outlining three reform paths: Path A stabilizes the existing capacity market with longer forward contracts; Path B introduces differential reliability standards and potential rationing; Path C replaces the capacity market entirely with an energy-only market. Stakeholder discussions will run through 2026, but VPP and demand response developers are now facing a world where their primary revenue stream is structurally unsettled.
Grid Reliability · 🟢 Bullish
NERC issues rare Level 3 alert over data center load losses 📅 Published: May 5, 2026
NERC activated its highest-level alert after data centers unexpectedly oscillated load, creating instability across the bulk power system. Seven mandatory actions were issued to grid entities, with an acknowledgment deadline of May 11. The alert underscores a secondary value for VPPs: the same large loads driving capacity demand are themselves introducing a new category of reliability risk — and dispatchable demand-side resources may be further valued to stabilize the grid, especially in ancillary services markets.
Policy & Legislation · 🔴 Bearish
Scoop: Trump is sitting on an executive order pushing advanced transmission 📅 Published: May 5, 2026
The White House has been holding a long-delayed EO that would direct FERC to require grid operators and utilities to identify where advanced transmission technologies — dynamic line rating, advanced reconductoring, power flow control — can substitute for new wires. For VPPs, the congestion relief ATTs deliver is a supply-side story: more electrons reaching load pockets collapses the locational price premiums that demand response depends on, more renewable throughput compresses the energy market spreads that battery dispatch monetizes, and improved deliverability adds supply-side competition that drives down capacity clearing prices. A parallel signal: the Pennsylvania House unanimously passed a bill this week requiring utilities to study ATT potential before proposing new transmission, suggesting state-level momentum is building independent of the EO.
Policy & Legislation · 🟢 Bullish
New Jersey regulators announce structural review of the utility business model 📅 Published: May 8, 2026
The New Jersey Board of Public Utilities announced it will examine whether the state’s “century-old utility business model — one that rewards electric distribution companies for capital spending even when cheaper alternatives exist — should be replaced with a framework tied to performance, affordability, and long-term cost stability.” Pennsylvania Governor Shapiro made a near-identical argument to his state’s utilities in the same week — both moves point to coordinated political pressure on the capex-reward model from which VPP economics benefit.
Opinion: Competitive markets are best for virtual power plants, consumers 📅 Published: May 7, 2026
Shannon Anderson, director of VPP policy at Solar United Neighbors, argues that utility ownership of behind-the-meter storage crowds out the private-sector competition that makes VPP programs scale. She cites Puerto Rico’s customer battery-sharing program — which grew from 40 MW to 500 MW in one year — and California’s 1,100 MW Demand Side Grid Support program as evidence that third-party-led VPPs outperform utility-owned alternatives. The piece is a useful map of where the utility-versus-aggregator ownership fight is currently being contested state by state.
Research & Reports · 🟢 Bullish
Rewiring America: six state policies could make home DERs a “win-win-win” for utilities, data centers, and ratepayers 📅 Published: May 7, 2026
A Rewiring America report published exclusively with Latitude Media found that six state policy changes — including simplified interconnection, requiring data centers to fund residential DER capacity, and utility-funded electrification recovered through bill savings — could deliver an average of $26,000 in lifetime savings per household. The group’s prior research estimated that household energy upgrades could meet 93 GW of near-term data center demand. The report frames households as energy infrastructure, not passive bill-payers — a framing that directly supports the BYOC (bring-your-own-capacity) paradigm gaining traction in several state legislatures.
E3: managed EV fleet charging could cut PG&E residential rates 4.5% by 2035 📅 Published: May 7, 2026
An E3 analysis found that managed electric truck fleet charging could reduce PG&E residential rates by roughly 4.5% — about $20 per year — by 2035, while unmanaged charging delivered materially less benefit. The finding validates flexible large-load management as a rate-reducing strategy, strengthening the economic and political case for VPP programs that compensate fleet operators for demand curtailment and time-shifting.
Base Power bill study: 7,000 Texas electricity bills reveal loyalty penalty, neighbor rate gaps, and a brand premium 📅 Published: May 2026
Base Power analyzed 7,148 real Texas electricity bills and found non-switchers pay a median 16.0¢/kWh vs. 14.0¢ for customers who’ve switched seven or more times — a gap worth roughly $307/year at average Texas usage. Only ~40% of the bill submitters had ever exercised their right to choose a provider. For VPP aggregators operating in ERCOT, the data quantifies the customer inertia they’re working against: the same switching friction that lets incumbent REPs charge loyalty premiums also makes DER enrollment slow and expensive. Caveat: this is self-published marketing content by Base Power, a Texas REP-plus-battery company; bill sample is voluntary and likely skewed toward cost-conscious consumers.
Utility Programs · 🟢 Bullish
Ann Arbor launches first U.S. city-owned residential solar-and-storage utility 📅 Published: May 5, 2026
The Ann Arbor Sustainable Energy Utility (A2SEU) began installing FranklinWH solar-plus-storage systems in the city’s Bryant neighborhood — the first time a U.S. city-owned utility has directly purchased and deployed residential solar and battery systems at scale. Texture’s energy management platform will aggregate the installations into a utility-scale VPP. The pilot targets 150 homes this year, scaling to 1,000 in 2027. The ownership model is distinct: A2SEU is neither a traditional utility-owned program nor an aggregator-led VPP, but a municipality acting as direct owner and operator of distributed assets — a new template for how cities can build behind-the-meter capacity without relying on the incumbent IOU. A separate November ballot initiative would begin full municipalization; DTE Energy has spent $1.8M opposing it.
TXU Energy’s managed EV charging model could work in any competitive retail market, ChargeScape says 📅 Published: May 6, 2026
Ford’s EV Free Miles program, run through TXU Energy and ChargeScape, shifted 515 MWh of EV charging off-peak across the ERCOT market in 2025. ChargeScape’s CEO told Utility Dive the model is replicable in any of the 13 states plus DC with broadly competitive retail electricity markets. The company is also piloting bidirectional (V2G) charging with PSE, which would convert EV fleets from passive load-shifters into active grid resources — a meaningful expansion of the addressable VPP asset base.
📊 By the Numbers
10+ GW — Behind-the-meter capacity Voltus CEO Dana Guernsey estimates PJM’s backstop auction could unlock, if the design questions are resolved correctly
$11.5B — Cost of transmission congestion in the U.S. in 2023, according to Grid Strategies; the figure the White House EO proponents cite as the case for ATT deployment
4.5% — Projected reduction in PG&E residential electricity rates by 2035 from managed electric truck fleet charging (E3 analysis)
$26,000 — Average lifetime savings per household if six state-level DER policies are enacted, per Rewiring America
🗓️ On the Radar
May 11 — NERC Level 3 alert acknowledgment deadline; grid entities must confirm receipt and intent to comply with all seven mandatory actions
May 20 — DOE SPARK program full proposal deadline; $1.9B available for advanced transmission projects including ATTs; awards expected August 2026
💬 My Take
There is a lot happening in VPPs across the US this week. Here are the themes that stand out to me:
I don’t buy that 10 GWs of VPP capacity will get bilateral contracts through the PJM incremental auction. And I still see a very feasible path to growth of 2.5-5 GW being added with higher prices bringing possible sidelined assets to market and more batteries being installed. In September 2025, Wood Mackenzie estimated there were 37.5 GWs of VPPs participating in the US. Voltus’s CEO, Dana Guernsey, estimates that up to 10 GWs could come from VPPs. That alone would represent a 26% increase in growth for the market; more than double last year’s growth rate for the entire market. I am skeptical that enough blockers will be removed for VPPs to show up with incremental capacity at this scale. In particular the barriers to residential participation stem from how utilities implement customer data access. This means PJM will have to work with a utility to enable any change prior to September. I think the timeline is too tight to make any changes for this year on data access because of the latency for utilities to prioritize and implement changes to their customer data systems.
I am skeptical of any significant changes to be implemented from within PJM in the next 8-10 years in spite of the recent market reform white paper. For context, I went back to FERC Order 2022 implementation timelines. The order was released in 2020. PJM plans to implement changes to come into compliance with this order by 2028. That timeline is roughly what I’d expect for any major internal PJM reform, given the number of stakeholders required to align. I am more concerned about states or utilities leaving PJM individually within 2-3 years that could pose risk to future VPP revenues from the wholesale market. New Jersey’s review of the utility business, Governor Shapiro’s similar concerns in Pennsylvania and AEP’s threats about exploring leaving the market are all recent signals for this risk.
I realized this week that AI training loads are likely to increase the need and value for ancillary services. Prior to the NERC level 3 alert, I have always considered AI development as primarily a capacity problem: we need to build enough power plants and VPPs to enable more load to come online. But seeing the load drop concerns in NERC’s alert, I realize adding all these large loads could destabilize the frequency of the grid and cause blackouts. NERC had a prior white paper in March 2026 walking through the high likelihood of oscillation of hundreds of MWs in a few seconds. I am skeptical that data center operators are going to change their behind-the-meter batteries and backup generation to provide these ancillary services because they traditionally have wanted these assets exclusively for reliability and the revenues pale against value from their core business. This leaves real upside for VPPs, especially batteries, to help stabilize the grid.
Base Power’s research and the summary of TXU’s Free Miles program build the case that sculpting residential DERs’ loads can allow residential retail energy providers (REPs) in Texas to win on price and customer experience. What most struck me in Base Power’s research is that Octopus delivers the lowest average cost of any supplier. They have been framing their customer value by shaping customer load. This data reflects that they are able to pass that value onto customers through lower prices. The psychological pull of ‘free gas’ for EV drivers would drive loyalty on its own. Smaller REPs are building flexibility as part of their core value proposition. These companies include Octopus, David Energy, Rhythm and Tesla. Larger REPs are acquiring these capabilities through partnerships: Vistra is working with Sunrun and Enphase; NRG has announced a VPP partnership with Renew Home that already has 150 MWs with a target of 1 GW by 2035. I am confident that competition for services enabled through flexible assets will only increase in Texas.
What Did I Miss or Do You Disagree?
Disagree with the way I’m interpreting the facts? Spot a story that should have been in this week’s issue? Just comment in notes with a link to the story or your take.
Opinions are my own and not the views of my employer. Research and drafting for this issue was produced with the assistance of Claude AI. All editorial decisions are mine.