The Future of Virtual Power Plants: Embracing Technology Agnosticism for Grid Efficiency
Published September 19, 2025 — By Molly Podolefsky
As the energy landscape faces unprecedented changes driven by industrial growth, AI data centers, and mass electrification of transportation, the electric utility sector is under increasing strain. Addressing these challenges calls for innovative solutions to augment grid capacity and flexibility. Virtual power plants (VPPs), which aggregate distributed energy resources (DERs) such as rooftop solar, battery storage, and smart thermostats, have emerged as a promising technology. However, the current VPP market is fragmented and locked into technology-specific silos, limiting their potential. The future lies in a technology-agnostic approach grounded in interoperability.
Current Challenges in the VPP Market
Today’s virtual power plants are predominantly designed around single types of DER technologies and often limited to a select group of original equipment manufacturers (OEMs). This siloed approach prevents the market—along with VPP providers—from achieving significant economies of scale. Moreover, the platforms currently in use frequently suffer from connectivity issues and latency, as many do not adhere to widespread interoperability standards.
Less than 20% of installed DER capacity is currently enrolled in VPPs, illustrating how much of this distributed resource potential remains untapped. The consequence is a system that cannot fully leverage diverse DER assets to provide dispatchable, firm power that can alleviate grid pressures.
Why Interoperability Is Key
A technology-agnostic future for VPPs depends on interoperability—the ability for diverse DERs and VPP platforms to communicate seamlessly regardless of manufacturer or device type. Molly Podolefsky, managing director at Clarum Advisors, highlights the evolution of electric vehicle charging networks as an instructive parallel. Just as EV chargers must serve multiple vehicle models and integrate smoothly with various charging stations to scale effectively, VPPs must foster cross-technology participation among a broad range of DERs.
Interoperability enables VPPs to consolidate varied DER types into unified, dispatchable grid resources. It also incentivizes DER manufacturers to design products compatible with multiple VPP platforms, ultimately increasing consumer choice and market competition.
Economic and Market Dynamics Driving Tech-Agnostic VPPs
From an economic standpoint, VPP providers that can integrate multiple DER technologies stand to capture more market share. Conversely, OEMs will gain a competitive advantage by offering DER products compatible with a spectrum of VPP platforms. This mutually reinforcing cycle is expected to advance the market toward universal interoperability.
However, this transition will not be uniform. Regional regulatory frameworks, utility business strategies, and existing partnerships will shape how quickly and extensively tech-agnostic VPPs are adopted. Some providers, especially those with exclusive OEM agreements and proprietary platforms, may prefer to maintain closed systems, while others that rely on integrating diverse DERs will push for open protocols and standardization.
Industry Initiatives Supporting Interoperability
A range of collaborations and consortiums is actively fostering the development of open protocols and interoperability standards. Examples include:
- The Electric Power Research Institute and Kraken’s Mercury Consortium
- IEEE’s 2030.5 DER interconnection standard
- Rocky Mountain Institute’s VP3 Consortium
- Duke Energy’s Open Field Message Bus (OpenFMB)
- Linux Foundation’s open-source microgrid initiatives
These efforts aim to create a robust ecosystem of interoperable DERs and VPP platforms, accelerating the adoption of technology-agnostic virtual power plants.
The Road Ahead: Challenges and Opportunities
Adopting universal interoperability protocols will take time, as many existing DER devices were not designed for compatibility and legacy APIs will still need to bridge gaps. Nevertheless, the rising value of flexible, dispatchable resources—especially given rapid load growth from data centers and AI deployments—outweighs the costs of transitioning.
Regulatory actions can also catalyze progress. State-level mandates for open communication protocols or utility-led, tech-agnostic VPP programs could accelerate adoption. Conversely, inconsistent policies or the expiration of incentives might slow momentum in certain regions.
Guidance for Utilities
Utilities stand to benefit significantly by preparing now for a tech-agnostic VPP future. Since the market will evolve incrementally, utilities should:
- Engage with emerging tech-agnostic VPP aggregators today, even if integration is via product-specific APIs, to increase DER participation and operational learning.
- Continue working with single-technology VPPs in the short term, while advocating for broader adoption of interoperability standards.
- Invest in infrastructure and regulatory strategies that encourage open protocols and support diverse DER integration.
By taking these steps, utilities can position themselves to efficiently manage growing load demands and maximize the value of distributed energy resources.
Conclusion
The shift to technology-agnostic virtual power plants represents a critical evolution in modernizing the power grid. Through embracing interoperability and fostering collaboration across devices, manufacturers, and utilities, VPPs can unlock the full potential of DER assets. As energy demands intensify, a flexible, integrated, and scalable grid will be essential—making the future of VPPs not just technology agnostic, but indispensable.
This article originally appeared on Utility Dive and was authored by Molly Podolefsky, managing director at Clarum Advisors.
