| Resource Type | Report |
| Author / Source | Jesse Cohen, Lauren Shwisberg, Mark Dyson (RMI) |
| Publication Date | November 2025 |
| Location | United States |
| Initiative Type | Technology, Policy |
| Project Complexity | Advanced |
| Recommended For | Staff, Board |
Estimated reading time: 15 minutes
Why This Matters for Rural Electric Co-ops
As data centers and other large loads seek grid connections, rural electric cooperatives face growing pressure to expand capacity quickly, often without the resources to build traditional generation or upgrade infrastructure fast enough. This report makes the case that virtual power plants (VPPs), built from aggregated customer-sited batteries, EVs, and smart devices, can meet over 20% of US peak demand by 2030 at a fraction of the cost of new gas generation or grid upgrades.
For co-ops managing load growth while protecting rates for existing members, VPPs offer a modular, scalable tool to balance new demand without overbuilding. Co-op leaders can use this resource to evaluate whether VPP-enabled flexible interconnection models could apply in their territory and inform conversations with G&Ts and regional planners.
Key Takeaways
| › | VPPs (aggregations of distributed customer-sited batteries, EVs, and smart devices) can meet AI-driven load growth faster and more affordably than new fossil fuel capacity, offering co-ops a viable alternative to committing to new gas generation under uncertain demand forecasts. |
| › | VPPs can be deployed far faster than conventional generation, making them viable as both near-term bridges and long-term grid assets. Programs like California's Demand-Side Grid Support enrolled 750 MW of customer-sited storage within months. |
| › | RMI and Brattle research show VPPs can deliver resource adequacy capacity at roughly 5% of the cost of equivalent new gas plants and grid upgrades, directly reducing stranded asset risk and rate pressure for co-op members. |
| › | Three new commercial models (utility-managed pass-through funding, third-party VPP capacity transfer, and VPP-as-reliability-reinforcement) offer structured ways for large load customers to fund VPP development and receive expedited interconnection in return; co-ops operating in deregulated markets or with large load interest should understand these structures. |
Implementation Considerations
- Regulatory or Governance Considerations: VPP deployment at scale requires interconnection tariff reform and clear accreditation frameworks, areas where FERC, RTOs, and state regulators are still developing policy. Co-ops in RTO/ISO markets may have more near-term pathways to VPP participation than those in vertically integrated territories, where utility agreement is required before any program can launch.
- Staffing or Technology Requirements: Developing and managing a VPP program requires data systems capable of enrolling, dispatching, and verifying distributed customer devices, capabilities many smaller co-ops don't currently have in-house. Regional collaboration, G&T partnerships, or third-party VPP aggregators may be necessary for most distribution co-ops to participate.
Notable Examples
- Green Mountain Power (Vermont): Uses customer batteries to reduce resource adequacy obligations; proposed major program expansion for local resilience.
- California Demand-Side Grid Support Program: Enrolled 750+ MW of customer-sited storage rapidly; demonstrates speed of VPP deployment at scale.
- National Grid Connected Solutions (New York/New England): VPP program providing both local network relief and bulk system services through wholesale market participation.
- Arizona Public Service Cool Rewards: Thermostat-based VPP adding up to 40 MW of capacity annually.
- Ontario residential VPP: 90 MW program enrolled 100,000 homes in six months.
Estimated reading time: 15 minutes
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