North American virtual power plant (VPP) deployments increased 33% in 2025 as data center electricity demand surged, according to Wood Mackenzie's Sept. 17 report.

The consultancy counted 1,940 active VPP deployments this year, up from 2024, while monetized VPP programs -- which compensate owners of distributed energy resources (DERs) for providing grid services -- increased 35% to 433. The number of unique offtakers also rose 38%, with the top 25 each procuring at least 100 MW of capacity.

Despite the surge in deployments, overall VPP capacity grew only 13.7%, reaching 37.5 GW. Ben Hertz-Shargel, Wood Mackenzie's global head of grid edge, said the numbers reflect "a market that is broadening faster than it is deepening," citing enrollment caps, market barriers for small customers, and reforms reducing VPPs' capacity accreditation.

The growth is partly linked to utilities' commitments to connect large data center loads, especially in ERCOT and PJM Interconnection regions. American Electric Power expects to interconnect 18 GW of data center capacity by 2030 in those markets.

Wood Mackenzie noted the rise of "independent distributed power producers," electricity retailers that finance third-party-owned storage systems through grid services and energy arbitrage, as a key driver of VPP expansion.

Ryan Hledik, principal at Brattle Group, said the findings match broader trends in the distributed energy sector. While capacity growth has lagged, he expects more noticeable gains within 12 to 18 months and "explosive" growth in three to five years as utilities and hyperscalers align on solutions.

Source: woodmac.com