The Need for Virtual Power Plants Heats Up When the Weather Cools Down

*This article first appeared on Environment+Energy Leader on Feb. 25, 2025. Click here to view.

As a blast of Arctic air swept through the U.S. on Jan. 22, PJM’s winter electricity demand reached an all-time high of 145,000 MW, breaking its 2015 record. The new record may not last 10 years though, as extreme cold and disruptive winter storms, from Uri (2021) to Elliott (2022), to Enzo (2025), have become the new norm in the U.S., increasing demand for electric heating and straining the grid when supply falters.

As our national demand for electricity surges and extreme weather intensifies, we can expect to see more winter consumption records, like that of PJM’s, broken in the coming years. We could also experience dangerous blackouts if we don’t improve the grid’s ability to handle ever-greater peaks in demand.

Grid Strains Worsen as Extreme Weather Intensifies

Intense winter weather further strains an aging grid that is already struggling to keep up with demand as utilities and grid operators retire near-end-of-life generation resources faster than they bring replacement generation online. When winter storms topple power lines and disrupt generation resources, the grid’s capacity is stretched even thinner, and this can result in higher energy costs and potentially dangerous outages when temperatures plummet.

Just a few months before experiencing its record-setting winter demand in January,  PJM had expressed concern about maintaining adequate supply if extreme weather conditions were to persist this winter.

Winter grid strategies must evolve beyond the playbook of centralized generation if we are to guard against interruptions in supply as demand surges. This evolution has begun with the rise of distributed energy resources such as onsite generation and variable load (DERs), but we can—and should—do more to strengthen the grid with the DERs available to us now.

The Role of Virtual Power Plants in Grid Resilience

Virtual Power Plants (VPPs) offer a perfect solution due to their immediate availability and unique flexibility. A cost-efficient way to balance the grid with existing DERs, VPPs have emerged as an increasingly valuable resource for making the grid more resilient, regardless of the season.

Traditionally focused on meeting peaks only on the hottest summer days, utilities and grid operators now grapple with surging demand year-round. As weather patterns shift, the grid faces vulnerabilities from extreme cold and winter storms as well as heat waves and triple-digit temperatures.

VPP operators can cheaply and efficiently reduce consumption during any period of peak demand by aggregating DERs and collectively dispatching hundreds and thousands of megawatts of distributed energy from customer variable loads and onsite generation resources and batteries.

This decreases the reliance on gas peaker plants, which have been shown to cost 40% more than a VPP and are at risk of failing during extreme cold due to mechanical problems, fuel supply issues, downed trees, or heavy snow bringing down power lines and transformers. By eliminating the reliance on peakers, utilities can pass cost savings to customers, driving down energy bills.

Furthermore, customer-powered VPPs are an immediate way to maintain a consistent and reliable energy supply when the traditional grid is struggling to accommodate demand growth in winter weather conditions. Because of their inherent flexibility, VPPs can adjust to meet fluctuations in supply or demand. They can also be deployed locally where they’re most needed during emergencies.

Proven Impact: How VPPs Have Helped in Past Winters

VPPs have rescued the grid in previous winters. On Christmas Eve 2022, customer-powered VPPs helped prevent blackouts in the Northeast and Mid-Atlantic regions during Winter Storm Elliott. The Texas grid operator, ERCOT, has similarly turned to them for help, using the integration of VPPs and an increase in renewable energy to improve its preparations for major winter weather, after Winter Storm Uri devasted the state in 2021, leaving 4.5 million residents and businesses without power.

As pressure on grids mounts nationwide, these examples serve as blueprints for other regions to follow in leveraging VPPs to strengthen the grid’s ability to handle extreme weather.

Expanding the Role of VPPs in Future Grid Planning

As winter storms grow in frequency and strength, our power infrastructure weakens with age and wear. Meanwhile, the full extent of demand growth has yet to be realized. Therefore, we need innovative, flexible strategies to take us reliably into tomorrow.

One of the most flexible strategies, VPPs are an affordable and adaptable solution for managing demand response during summer and winter months and integrating DERs into the grid at any time.

Most importantly, while infrastructure upgrades and large-scale power plants will take years to deploy, VPPs can bridge the gap between our aging grid and the modern, resilient energy grid of the future.

With winters growing more severe, VPPs are ready to improve resilience.

Michael Smith is an innovative leader with more than 25 years leadership experience in the energy industry. Michael joined CPower from ForeFront Power, where he was the CEO of the company’s North American solar and energy storage business, responsible for strategy and all business areas across the U.S. and Mexico.