Markdown Content - From Demand Response to Dispatchable Capacity: The Rise of Storage-Led Virtual Power Plants

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# From Demand Response to Dispatchable Capacity: The Rise of Storage-Led Virtual Power Plants

**URL:** https://virtual-peaker.com/blog/from-demand-response-to-dispatchable-capacity-the-rise-of-storage-led-virtual-power-plants/
Date: 2026-05-13
Author: Syd Bishop
Post Type: post
Summary: To explore the evolution and expanding capabilities of virtual power plants (VPPs), Grid Forward invited experts from Virtual Peaker, Tesla, […]
Categories: Demand Response
Featured Image: https://virtual-peaker.com/wp-content/uploads/2026/05/Screenshot-2026-05-12-at-10.18.15-AM.png
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To explore the evolution and expanding capabilities of [virtual power plants (VPPs)](https://virtual-peaker.com/topline-demand-control/), Grid Forward invited experts from Virtual Peaker, Tesla, and Ohm Analytics onto its GridPulse podcast. Over a 35-minute discussion, the group laid out current research and real-world experience demand flexibility initiatives like demand response, particularly in expanding the value stack for VPPs with the addition of energy storage [distributed energy resources (DERs)](https://virtual-peaker.com/blog/distributed-energy-resource/). Below are excerpts from the podcast, lightly edited for clarity and readability. You can listen to the whole episode on [the Grid Forward website](https://gridforward.org/resources/grid-forward-gridpulse-podcast/) or on your favorite podcast app.

## Flexibility & Capacity

**Bryce Yonker, Grid Forward:** What's happening on the grid? Why do we need more flexibility?

**Kevin Joyce, Tesla:** We're very focused on just affordability, like everyone is in the utility space right now. There are a lot of challenges putting pressure on rates right now. There's the need for extra capacity with load growth returning. There's the need to control distribution spend. All of these things are putting unwelcome pressure on utility rates.

VPPs are a right-down-the-middle solution to all of these problems, part of the all-of-the-above kind of solution that we need. When capacity is scarce, it's a grid-edge resource. So much of utility spend is going into the distribution side of the business, and VPPs are uniquely positioned to provide the services and control costs on exactly that, to drive up utilization on the distribution system.

**Jeff Quigley, Virtual Peaker:** One of the things I'll add is obviously the cost of capacity and affordability has always been a core focus, but it's become so acute in the last 18 months. It's always been a structural challenge. A lot of utilities have been looking forward, thinking, "Hey, this is going to be a challenge in the future.” Now it's here. That urgency is a really somewhat new and exciting dynamic for VPPs.

## Virtual Power Plant Growth & Interconnection

**Bryce Yonker:** Madeline, when we think about the growth that the VPP space has seen, how much of this resource is coming onto the system?

**Madeline Turner, Ohm Analytics** (*see *[*2025 VPP report here*)](https://www.linkedin.com/posts/ohm-analytics-is-excited-to-release-our-2025-share-7422692654964006913-ShKw/?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAAD82gB1oI0Xmo2TS7o55ppFVNbJ-0pCgo)**:** In 2025, we saw total enrolled capacity in virtual power plants grow 21% year-over-year versus 10% year-over-year growth in 2024. So 2025 was a really impressive growth year, and I think we're well-positioned to see that trend continue. The vast majority of that is still made up of this more [traditional C&I](https://virtual-peaker.com/blog/unlocking-the-full-value-of-ci-customers-in-distributed-energy-resource-der-programs/) [demand response](https://virtual-peaker.com/solutions/demand-response/), but some of the most impressive growth occurred in these really new, really interesting, really innovative segments. Residential battery enrollments jumped 153% year-over-year to just over two gigawatts. That was the fastest-growing segment across all of the technologies that we covered in our report, followed by [EV managed charging programs](https://virtual-peaker.com/solutions/ev-charging/), which grew 122% year over year.

In 2025, we saw total enrolled capacity in virtual power plants grow 21% year-over-year versus 10% year-over-year growth in 2024. So 2025 was a really impressive growth year, and I think we're well-positioned to see that trend continue.
- Madeline Turner, Senior Policy and Research Analyst, Ohm Analytics

This really highlights that there's been a shift towards these more advanced multi-device programs. You know, smart thermostat growth plateaued at about 4% year over year growth, so we're really seeing that torch pass to storage.

**Bryce Yonker:** Kevin, Jeff, anything to add on this?

**Kevin Joyce:** Madeleine highlighted one of the biggest, most important transitions, and that's towards more advanced load flexibility technologies, the inverter-based resources, things like Powerwalls, things like vehicle-to-grid. These have capabilities that traditional demand response hasn’t had all along. One of the challenges facing us is to push through preconceptions that people have in terms of what load flexibility can actually do. VPPs are doing the advanced services.

## The Potential of DER Orchestration

**Bryce Yonker:** Jeff, continuing on that thread, as far as what these aggregated resources are doing in reality, what are we achieving as they're coming onto the system?

**Jeff Quigley:** The evolution of the asset classes and types is really changing the way that they show up and how they're being utilized. This all-of-the-above mindset that we've had for quite some time, certainly at Virtual Peaker, has allowed us to get to scale and then evolve into different types of expressions of capacity.

The more diverse the set of assets under control, the more flexibility it gives utilities and other stakeholders to meet those different use cases.
- Jeff Quigley, SVP, Strategy & Growth, Virtual Peaker

What I mean by that is you have smart thermostats being this long-standing, at least on the residential side, as an aggregated resource, primarily just because that's what's out there and available to dispatch. We've seen varying degrees of success in different markets. In some places, especially Texas, where it gets incredibly hot, you can see immense savings on these types of programs.

But like Kevin and Madeline are saying, the evolution to more inverter-based dispatch is giving us as a company more flexibility to dispatch them in more interesting and unique ways, bidirectionally or more localized dispatch opportunities. In terms of scale, we see programs all across the board, some still small in the piloting stage, some in the more mature, tens of thousands or above level. But overall, the more diverse the set of assets under control, the more flexibility it gives utilities and other stakeholders to meet those different use cases.

**Bryce Yonker:** Kevin, what deployments would you want to highlight that give us a different perspective on the sorts of value that they're bringing to the system?

**Kevin Joyce:** The two big examples that I can think of, the first one has got to be California last year. There was a 500-megawatt test event in California-- demonstrated capacity of that much. The programs that created that much capacity pulled it together in two and a half to three years. You can't build a “natural gas combined cycle’s worth” of capacity in California any other way these days.

The other big, super exciting example from the last year or so is the massive growth in Puerto Rico. Of course, Puerto Rico is a unique case in terms of the actual need, in terms of the capacity crisis that they have on that island, where load shedding is a routine fact of life for utility customers responding to that crisis. Many of us, many aggregators, rapidly expanded that program and, as a consequence, have been able to create a very reliable VPP resource on that island. So reliable, in fact, that, unofficially, more than ten times last summer, there were megawatts, tens of megawatts of VPP capacity dispatching on the island, which allowed Luma, the island utility, to avoid the need for load shedding. So it's a really exciting story.

Puerto Rico is a unique case in terms of the actual need, in terms of the capacity crisis that they have on that island, where load shedding is a routine fact of life for utility customers responding to that crisis. Many of us, many aggregators, rapidly expanded that program and, as a consequence, have been able to create a very reliable VPP resource on that island.
- Kevin Joyce, Lead for Virtual Power Plants & Electricity Retail, Tesla

You can draw a straight line between the fact that this VPP is a reliable resource on the island, and the fact that nonparticipating customers are not having their utility service shut off. So one customer buys a resiliency solution, and the consequence is that another customer has greater resiliency. It's a wonderful success story, in addition to being a proof point of scaled, reliable capacity.

## Latent Vs. Available Capacity

**Bryce Yonker:** On that topic of benefits to everybody, not just the participating customers, Madeleine, as far as latent capacity, how much resource is showing up in these programs?

**Madeline Turner:** From our research, we know that around 40% of all deployed residential batteries across the US and in Puerto Rico are actually enrolled in a VPP. So think about the headroom for growth that exists with just enrolling devices already on the grid.

We're seeing storage continue to take off at a really healthy growth rate over the next five years as more folks turn to this for backup reasons, resiliency reasons. They want it for the grid services, they want it to retrofit their solar system, etc. So as we move to 2030, we're projecting to see over 30 gigawatt-hours of new storage come on the system from standalones, retrofits, and these PV paired systems. If we can enroll what's already existing and what's already out there, we're going to see the capacity just continue to take off.

## Matching Rapid Demand Growth & DERs

**Bryce Yonker:** Most operators in North America had forecasts of maybe 0.5% growth, just even a handful of months, let alone years ago. Now they're shifting that 10x to 5%, that sort of number in a lot of jurisdictions. How does a flexible resource like these aggregated distributed resources that we're talking about help to meet that delta?

**Jeff Quigley:** The first element is speed to availability. A lot of the growth that we're seeing, to your point, is catching utilities somewhat off guard, which is requiring a sort of rapid response. As we start to think about what it would take, even if steel were put into the ground today, how long would it take to actually realize additional capacity? It's creating this perfect storm where standing up a VPP provides a number of different value props, speed, as well as the ability to diversify the location of those different assets.

**Bryce Yonker:** With regards to aggregated storage in these VPPs, what are we achieving when it's coming into the system?

**Jeff Quigley:** One of the chief concerns that grid operators tend to have is the predictability of that load. So what is the shape? Is it going to look like a power plant when it shows up? We've developed a lot of technology over the last several years, including what we call [Topline Demand Control (TDC)](https://virtual-peaker.com/topline-demand-control/) to make hardware that's installed show up in a more predictable fashion. And we've dispatched that multiple times.

We're also using that technology in a number of different utility programs as well. So, I think that as we start to think about what the reliability of that capacity looks like, we're trying to bridge the physical availability of the resource with how we can utilize software to make it interchangeable with other forms of capacity.

**Bryce Yonker:** And I know each program is going to be unique, but how are a lot of the resources showing up most days?

**Jeff Quigley:** When we get engaged with a utility or somebody who's going to be participating in some kind of VPP program, usually we focus on the different stacks of value or parts of the value stack that we can provide. Generally speaking, event-based dispatch is the core. Doing that dozens of times during the course of a season is very, very common.

We're also seeing these very much more frequently, almost daily short dispatch events, maybe 15 or 30 minutes of batteries have that flexibility to respond to things like pricing signals and others like an [energy arbitrage](https://virtual-peaker.com/blog/buy-low-use-high-energy-arbitrage-explained/) against rapid changes in price. We are doing that in a number of different markets, including ERCOT and ISO-New England.

And then we also have seen some rate-based responsive dispatch, almost like a daily shift. Some utilities, as they think about time of use rates and other areas, how can they actually help the customer benefit their own pocketbooks? Obviously, being able to dispatch for capacity at the utility level is important, but some customers are actually buying these resources and are looking for assistance in determining how they can utilize them most effectively.

So, daily dispatch for time-of-use or other arbitrage, and then sort of the traditional event-based dispatch are all in market at varying levels today with our programs.

## From Demand Response to Dispatchable Capacity: The Rise of Storage-Led Virtual Power Plants Conclusion

Virtual Peaker is a sponsor of season 7 of the GridPulse podcast, inspired to foster conversations between utility industry professionals about the power of aggregate load shifting to meet rising demand. Fortunately, tools like the aforementioned [Topline Demand Control (TDC)](https://virtual-peaker.com/topline-demand-control/), which combines AI, model predictive control, [forecasting software](https://virtual-peaker.com/platform/forecasting-suite/), and the [*Shift* Grid-Edge DERMS](https://virtual-peaker.com/platform/derms-suite/), are designed to optimize DERs at a granular level to ensure reliability in output. Follow the GridPulse podcast for more conversations about the power and continued promise of DERs in mitigating rising demand, lowering operational costs, and enhancing grid resiliency.

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