U.S. Virtual Power Plant Regulations: Every Major State Policy Explained

Virtual Power Plants & Grid Policy

Virtual power plants have moved from pilot programs to statewide regulatory mandates. Here is a state-by-state guide to the legislation, programs, and policies driving the VPP market in 2026 — and what they mean for electric utilities.

 

Quick Reference: Key Regulations & Programs

Why VPP Legislation Is Accelerating in 2026

Providing reliable, continuous electric service has always been the core mission of utilities. In 2026, that mission faces an unusually convergent set of pressures:

• AI and data center demand — surging electricity consumption from large-scale compute facilities is accelerating load growth faster than traditional planning models anticipated
• Supply chain and tariff challenges — constraining the pace of new conventional generation build-out
• Extreme weather — increasingly frequent and severe weather events are stress-testing grid infrastructure at both ends of the temperature spectrum
• Fossil fuel retirement costs — aging plants are expensive to operate, creating financial pressure to find lower-cost alternatives
• Decarbonization mandates — state-level clean energy laws are driving a structural shift toward renewable generation

 

Key figures:

• 20%+ — share of U.S. demand that VPPs can meet by 2030
• $550 million — estimated annual ratepayer savings from VPPs in California alone
• 3 GW — grid-scale storage mandated by the Illinois CRGA by 2030
• 8 — states with active VPP legislation or mandated programs in 2026

VPPs address all of these pressures simultaneously: they add flexible capacity without new physical generation infrastructure, reduce peak load cost exposure, support decarbonization goals, and leverage the growing installed base of behind-the-meter DERs. That is why legislation is shifting VPPs from optional pilot programs to regulatory mandates.

 

Maryland: The DRIVE Act

Maryland is leading on DER interconnectivity and flexible load shifting. The centerpiece of its current legislative agenda is the Distributed Renewable Integration & Vehicle Electrification (DRIVE) Act, which tasks Maryland electric utilities with leveraging vehicle-to-grid (V2G) functionality to better manage EV charging programs and bolster grid resiliency against rising demand.

 

Key legislation:

• DRIVE Act — Mandates V2G-enabled EV charging management for Maryland utilities, targeting grid resiliency and demand flexibility.
• EmPOWER Maryland Energy Efficiency Act (2008) — Requires state electric utilities to implement affordable energy efficiency and demand flexibility initiatives.
• Renewable Portfolio Standard (RPS) — Mandates that 50% of all electric retail sales come from renewable energy sources by 2030.
• Maryland legislators in 2026 are also pursuing a proposed customer rate protection program and efforts to regulate data center electricity accountability at the state level — directly connecting AI-driven load growth to grid stability policy.

 

Washington State: Clean Energy Transformation Act

Washington’s Clean Energy Transformation Act (CETA), signed into law in 2019, commits electric utilities to supplying greenhouse gas-free electricity by 2045. It has since generated a suite of complementary mandates reshaping how utilities plan and operate.

Key legislation:

• Clean Energy Transformation Act (CETA) — Requires 100% greenhouse gas-free electricity supply by 2045.
• Clean Buildings Performance Standard (HB 1543) — Mandates alternate compliance pathways and energy data reporting for commercial buildings.
• Large Combination Utilities Decarbonization Act (ESHB 1589) — Requires utilities to create integrated system plans aligned with CETA’s decarbonization trajectory.
• Utility implication: For utilities like Puget Sound Energy, satisfying CETA requirements necessitates a device-agnostic approach to customer DER programs — lowering enrollment barriers, expanding program participation, and creating the scalability needed to meet the 2045 mandate through demand flexibility rather than new generation alone.

 

California: DSGS Program & SB 913

As the world’s fourth-largest economy, California has some of the most aggressive clean energy legislation in the world. Its regulatory framework targets 100% clean electricity by 2045 while managing customer costs — a combination that makes VPPs an essential operational tool.

Key legislation:

• Demand Side Grid Support (DSGS) Program — Incentivizes aggregate load reduction during grid stress events; a direct operational mandate for VPP-style demand flexibility.
• CA SB 913 (2026) — Advances the use of DERs — including solar, BESS, EVs, EVSE chargers, and smart home devices — through DERMS for demand response, managed EV charging, and virtual power plant programs.
• SB 100 (100% Clean Energy Act) — Mandates 100% carbon-free electricity by 2045.
• Net Billing Tariff (NBT / NEM 3.0) — Pivoted the residential solar market toward solar-plus-storage configurations, directly expanding the pool of VPP-eligible behind-the-meter assets.

California’s regulatory environment has also produced a compelling economic case: ratepayers can save an estimated $550 million annually through virtual power plant deployment.

 

Florida: Statute 366.91 & The Affordable Energy Reform Act

Florida’s regulatory approach is driven by the Florida Public Service Commission and focused on lowering customer rates while ensuring infrastructure can withstand increasingly severe weather. Florida also ranks third in the U.S. for solar generation, making it a strong VPP candidate market.

Key legislation:

• Florida Statute 366.91 — The primary state policy promoting renewable energy development and fuel diversification.
• Florida Rule 25-6.065 — Promotes the development of behind-the-meter DERs for renewable energy generation.
• SB 1532 — Affordable Energy Reform Act — New measure geared toward regulating and protecting customer electricity costs.

 

New York: The GREAT Act (2026)

New York’s 2026 GREAT Act is among the most significant pieces of VPP legislation passed anywhere in the United States. It represents the maturation of years of clean energy policy into a mandated statewide VPP program.

Key legislation:

• GREAT Act — Grid Reliability and Energy Affordability Transition Act (2026) — Establishes a statewide VPP program; requires investor-owned utilities (IOUs) like ConEd to create specific rate riders for home batteries and EVs.
• CLCPA — Climate Leadership and Community Protection Act — Mandates 70% renewable electricity by 2030 and a zero-emission grid by 2040.
• Accelerated Renewable Energy Growth & Community Benefit Act (2020) — Streamlines the grid interconnection queue to accelerate renewable energy project approvals.

Why it matters: The GREAT Act moves New York from voluntary VPP pilots to a mandated, funded, statewide program — with specific provisions for home batteries and EVs. This is the model other states are watching closely as they develop their own VPP frameworks.

 

Illinois: Clean and Reliable Grid Affordability Act (2026)

Illinois passed two landmark pieces of clean energy legislation — the 2021 CEJA and the 2026 CRGA — that together establish one of the most ambitious grid storage and VPP mandates in the country.

Key legislation:

• CRGA — Clean and Reliable Grid Affordability Act (Public Act 104-0458, January 2026) — Directs the state to procure 3 GW of grid-scale energy storage by 2030; mandates that utilities establish virtual power plant programs for households.
• CEJA — Climate and Equitable Jobs Act (2021) — Sets Illinois’s 100% clean energy goal by 2050; the foundational legislative basis for subsequent grid modernization mandates.

Illinois is also addressing the intersection of energy policy and AI-driven demand growth, examining regulations as they pertain to energy-intensive data center developments. The CRGA specifically supports leveraging both front-of-meter and behind-the-meter DER assets for use in virtual power plant programs.

 

Texas: ADER Pilot Project

Texas leads the U.S. in renewable energy-generated power. Renewable energy provided more than 190,403 MW, yielding 32.3% of all energy production in the state. Texas also has one of the highest rates of electric demand acceleration in the country — making demand flexibility programs an operational necessity.

Key legislation:

• ADER Pilot — Aggregate Distributed Energy Resource Pilot — Texas’s unique approach to VPPs: allows distributed devices like Tesla Powerwalls to participate directly in the ERCOT wholesale energy market.
• SB 6 — Strengthens grid resiliency in ERCOT by regulating the planning, interconnection, and operational processes of large electrical loads and generation resources.
• SB 2627 — Texas Energy Fund — Provides low-interest loans for dispatchable generation and has influenced firming requirements for new renewable projects.

 

Georgia: IRP 2025/2026

In 2024, 12% of electricity generated in Georgia came from renewable energy. The state has installed more than 7,760 MW of solar and holds a total storage capacity of 423 MWh, ranking 8th nationally for solar installations.

Key legislation:

• Integrated Resource Plan (IRP) 2025/2026 — Georgia Power’s primary planning vehicle; recently expanded to include significant increases in battery storage and solar to meet data center demand growth.
• Distributed Generation (DG) Renewable Program — The state’s primary mechanism for behind-the-meter solar participation, driven by regulatory mandates.
• The Southern Renewable Energy Association’s Powering Georgia initiative aims to bring affordable, clean energy to the state — complementing the regulatory and resource foundations already in place for expanded VPP deployment.

New Jersey: Executive Order No. 2 & The Garden State Energy Storage Program

New Jersey Governor Mikie Sherrill signed Executive Order No. 2 on day one of her administration, declaring a state of emergency on grid supply and directing the NJBPU to rapidly expand in-state clean energy generation — with battery storage and VPPs at the center of the strategy.

Key legislation & directives:

• Executive Order No. 2 (January 20, 2026) — Declares a grid supply state of emergency; directs the NJBPU to accelerate solar, battery storage, DER interconnection, and virtual power plant program development on tight regulatory timelines.
• Garden State Energy Storage Program (GSESP) — A multi-phase, competitive incentive framework targeting 2,000 MW of battery storage by 2030; Phase 1 awarded 355 MW of transmission-scale storage, while Phase 2 expands incentives to distribution-scale and behind-the-meter systems.
• Statewide VPP Program (180-day mandate) — EO No. 2 directs the BPU to develop a formal VPP program administered by electric distribution utilities and third-party suppliers to aggregate behind-the-meter DERs and reduce peak demand.
• New Jersey Clean Energy Act (2018) — The foundational statute mandating 2,000 MW of energy storage by 2030 and authorizing the GSESP incentive structure. 

States to Watch: Additional Markets with VPP Implications

• Virginia — Virginia Clean Economy Act (VCEA) Mandates 100% renewable electricity by 2045.
• North Carolina — House Bill 951 Mandates 70% CO₂ reduction by 2030 and carbon neutrality by 2050.
• Michigan — Clean Energy & Climate Action Package (2023) Mandates 100% clean energy by 2040.

 

Frequently Asked Questions

What is a virtual power plant (VPP)?  A virtual power plant is a network of distributed energy resources — including residential solar, battery storage, EV chargers, and smart thermostats — aggregated through Grid-Edge distributed energy resource management systems (DERMS) to function as a single, dispatchable power source. VPPs provide utilities with flexible capacity for demand response, grid balancing, and wholesale energy market participation without requiring new physical generation infrastructure.

What states have virtual power plant legislation in 2026? As of 2026, states with active VPP legislation or mandated programs include New York (GREAT Act), Illinois (CRGA), California (DSGS Program, SB 913), Maryland (DRIVE Act), Washington (CETA), Florida (Statute 366.91), Texas (ADER Pilot), and Georgia (IRP 2025/2026). Virginia, North Carolina, and Michigan also have significant clean energy mandates with direct VPP implications.

Why is VPP legislation growing so quickly in 2026? VPP legislation is accelerating due to converging pressures: surging demand from AI and data centers, supply chain constraints on new generation, increasingly severe weather, high costs of aging fossil fuel plants, and state-level decarbonization mandates. VPPs offer fast-deployable, cost-effective flexible capacity that can meet more than 20% of U.S. demand by 2030.

 

Conclusion: From Pilot Programs to Permanent Policy

Virtual power plants have completed their transition from industry buzzword to legislative mandate. Across the country — from New York’s GREAT Act to Illinois’s CRGA to California’s DSGS program — state governments are enshrining VPPs in statute as essential infrastructure for a reliable, affordable, and decarbonized grid.

The drivers are structural and unlikely to reverse: AI-driven demand growth, weather volatility, fossil fuel retirement economics, and renewable portfolio mandates are all pushing in the same direction. VPPs represent the most scalable, lowest-capital-cost path to flexible capacity — and policymakers at every level are taking note.

Bottom line for utilities: Every major DER management initiative — demand response, managed EV charging, solar-plus-storage programs, grid-edge DERMS deployment — now has regulatory tailwinds in most major U.S. markets. Utilities that build the program infrastructure today will be best positioned to meet compliance timelines and capture the cost, reliability, and customer engagement benefits that VPPs deliver.