Virginia has become the first state to require a utility company to pilot a virtual power plant (VPP) program.

While a number of VPPs have been launched voluntarily across the country, in May, Virginia enacted the Community Energy Act, mandating that Dominion Energy’s Virginia subsidiary develop a pilot program to evaluate the effectiveness of VPPs to provide grid services, including peak-shaving, during times of large electric demand.

The VPP pilot needs to consist of aggregations of distributed energy resources located in multiple regions of the state, totaling up to 450 megawatts (MW). Dominion also needs to craft programs of at least 15 MW incentivizing residential customers to purchase battery storage devices.

By Dec. 1, 2025, the utility must submit its proposal to the State Corporation Commission for approval. Then by Nov. 15, 2026, Dominion must petition the Commission for a tariff structure for residential, commercial and industrial customers to enroll in the VPP pilot. The program should conclude its initial phase by July 1, 2028, after which the commission will conduct its own evaluation in preparation for a permanent VPP program in the state.

Separately, the new law requires Dominion to propose an electric school bus program by Dec. 31, 2027, after which the commission may extend the competitive bidding process to utility- and nonutility-owned resources.

Similar legislation has been introduced in other states, modeled after templates developed by advocacy groups.

A 2024 report from RMI found that VPPs can help utilities meet heightened demands during extreme heat waves—an increasing necessity as electricity use is projected to grow significantly in the coming years.

Indeed, summertime peak demand, driven by the electrification of industry and consumer adoption of electric vehicles and heat pumps, is projected to grow by 38,000 MW by 2029, “equivalent to adding another California to the electric grid,” according to RMI.

VPPs, aggregations of distributed energy resources, can help utilities meet the challenges of peak demand at a cost that is roughly 40% of a gas peaker and 60% of a battery, avoiding between $15 billion and $35 billion of potential capital investment nationwide, according to RMI.

“More than 500 VPPs have already been deployed across North America, realizing these benefits,” the authors wrote. “However, given the increasingly urgent need for adaptable and low-cost near-term solutions, regulator and utility interest in VPPs is increasing as are the number of VPP policies and utility programs.”

The report details a set of VPP policy principles released this year by the Virtual Power Plant Partnership, or VP3, which is a coalition of hardware and software technology solution providers, distributed energy resource aggregators and others.

The 17 principles, divided into five main categories, are intended to help regulators and policymakers understand how to leverage VPPs “to achieve reliability and affordability outcomes for customers and the grid.”

“Utilities need not reinvent the wheel to implement VPPs: enabled by effective policy, utilities and grid operators can join their peers to use VPPs to meet summer peak and other grid challenges,” according to RMI.