A disagreement exists in the clean energy community about what to prioritize — a small number of large-scale projects, like wind farms and transmission lines, or many small distributed energy systems like rooftop solar and batteries.
Big project advocates argue that the US can’t meet climate and supply goals without utility-scale solar and wind. They tag microgrids and home solar and storage as mere reliability plays, essentially backup power.
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Meanwhile, local energy proponents point to the many untapped rooftops on homes and buildings across America where solar could scale without disturbing farmland or natural areas. They call for leveraging these resources first, then filling whatever need remains with large generation projects.
The let’s-build-big crowd has begun to lose one key argument — that distributed energy lacks scale. Virtual power plants, the aggregation of many small distributed energy devices, are now being planned at gigawatt scale.
Google and Voltus change the conversation
A turning point came this week when Google and Voltus announced a tenfold expansion of their virtual power plant agreement in PJM. Initially planned as 100 MW when it was announced in June, it’s now sized at 1,000 MW to be ramped up over four years.
“For a decade, distributed energy was treated as a rounding error in capacity planning. A hyperscaler contracting more than a gigawatt of homes and businesses through 2040 ends that argument,” says Nicole Tomasin, chief commercial officer at Energy Access Innovations, a clean energy portfolio company.
“Google isn’t buying this for a sustainability report. It’s buying the fastest megawatts it can get in PJM,” Tomasin says.
Virtual power plants are considered quicker to bring to market than physical power plants because they often tap into energy resources that already exist in homes and buildings.
But it isn’t just the size or speed-to-build of the virtual power plant that’s noteworthy; it’s also the length of Voltus’ contract with Google — 14 years.
“A gigawatt in PJM, contracted through 2040, is the part that matters,” says Archit Patnaik, a senior project manager at Pure Power Engineering. “Long-term contracts helped make utility-scale solar financeable. Distributed capacity now has the same kind of commitment.”
The deal suggests that distributed energy can become a financeable alternative to generation and transmission. And it opens the question: Where Google goes, will other hyperscalers follow?
Google/Voltus wasn’t even the biggest virtual power plant this week
Two days earlier, Verantum and Yotta Energy announced plans to assemble a 5-GW virtual power plant from commercial buildings across North America.
The partnership combines Verantum’s building energy management software with Yotta’s rooftop battery technology.
Though larger than the Google/Voltus virtual power plant, the project appears to be in an earlier stage of development. The 5-GW figure is a long-term goal and not contracted or operational capacity.
The companies envision drawing on the 42,000 buildings Verantum already manages across grocery chains, retailers, and other multi-location businesses. They will start with a pilot in early 2027.
Other gigawatt virtual power plants are also on the drawing board, including a 16 GW project announced in June by Sunrun, Everyday Electric and Tesla that will make flexible residential energy capacity available to utilities and hyperscalers. The initiative combines hundreds of thousands of home batteries with more than 8 million smart thermostats and other connected devices.
The caveats
These projects still have to prove themselves, or Tomasin puts it: “An announced gigawatt and a dispatchable gigawatt are not the same thing.”
“Aggregation is the easy part,” Tomasin says. “Performance is the hard part. PJM pays for capacity that shows up and penalizes capacity that doesn’t.”
Getting there takes three things, according to Tomasin.
- Hardware that ships dispatch-ready, so aggregators aren’t integrating brand by brand.
- Enrollment that happens at the install, not in a separate sales cycle
- Measurement and verification that grid operators trust as much as a power plant’s telemetry.
“Each of those is solvable. None of them is solved at gigawatt scale yet,” Tomasin says.
But who can still say “too small to matter” with a straight face as virtual power plant developers talk in gigawatts, sign long-term contracts, and position in capacity markets. They still have to show they can deliver at that scale. But in just one week, the argument that local energy can’t play in the big game took a serious hit.
