Navigating the US energy market can be a complex task, as it is constantly evolving with new regulations and opportunities. While California often grabs the headlines for its advanced policies, other states are making significant strides in adopting distributed energy resources and virtual power plants that are creating major market opportunities. For stakeholders in the demand response and DER markets, keeping an eye on these emerging leaders is crucial.

Texas

Despite operating an independent grid that is not subject to FERC’s jurisdiction, Texas is at the forefront of the DER and VPP movement. The state’s unique, deregulated market has fostered a competitive environment that is conducive to VPP adoption.

  • The Texas legislature passed Senate Bill 1699/Docket No. 56966, which aims to reduce residential load by 20% through demand response programs.
  • The Aggregate Distributed Energy Resource (ADER) Pilot Project is a key initiative led by ERCOT. This project is in Phase III of scaling up and plans to increase capacity to 160 MW for energy, 80 MW for non-spin, and 80 MW for ERCOT Contingency Reserve Service. However, the pilot has faced some challenges with participation, with a task force working to “tear down barriers” to increase enrollment.
  • IEEE 1547 adoption is ongoing at a utility level. Austin Energy, for example, is ahead of the curve, requiring OpenADR in its building codes and commercial demand response programs since 2016. The utility has also referenced IEEE 1547-2018 compliance in its latest proposal for its solar rebate program.

Illinois

Illinois is another state with significant activity in the DER and VPP space, primarily driven by state legislation and utility-led initiatives.

  • The state has a house bill (HB3758) and a senate bill (SB2497) in progress that seek to create a virtual power plant program, a peak remediation program, and a standalone energy storage distribution deployment program.
  • Major utilities like ComEd and Ameren are implementing Beneficial Electrification Plans (BE Plans). ComEd’s plan includes demand response and electric vehicle pilots, and its 2024-2027 integrated grid plan highlights the development of VPPs. Ameren’s BE Plan includes a new residential managed charging program and an electric school bus VPP pilot.
  • Illinois is also pursuing IEEE 1547 Adoption at a utility level and has established an interconnection working group to support this ongoing effort.

Colorado

Colorado has emerged as a key state to watch due to its progressive state legislation and aggressive utility pilots.

  • Senate Bill 218, passed in May 2024, requires investor-owned utilities like Xcel Energy to propose and build their own VPP programs. In response, Xcel Energy is moving forward with its VPP execution.
    • The utility’s proposed Aggregator Virtual Power Plant (AVPP) program has a five-year budget of $78.5 million and is designed to support 125 MW of enrollment. The program offers performance-based compensation for aggregators, and eligible DERs include battery storage, smart thermostats, smart water heaters, smart heat pumps, and EV chargers.
  • The state is also home to the federally funded Prime Virtual Power Plant pilot project in Boulder, which is in its early stages.
  • IEEE 1547 adoption is ongoing on a statewide basis and is overseen by the Colorado Public Utilities Commission.

Other Notable States

Other states are also presenting significant opportunities in the DER and VPP space.

  • California continues to be a leader, with active regulations like Rule 21 and Title 24 building codes that are increasingly focused on DERs.
  • In New Jersey, Atlantic City Energy is in the early stages of implementing a demand response direct load control (DLC) program and a flexible load management (FLM) pilot program.
  • Washington is home to the Wattsmart Battery Program, which requires the IEEE 2030.5 communication protocol and is driving the growth of battery technology in the state.
  • In Massachusetts, Eversource has selected its DERMS aggregator for a grid-level DERMS pilot project.

The Evolving US Demand Response Landscape: a State-Level Deep Dive (Webinar Recording)