As data centers scour the U.S. grid for capacity they can get online as quickly as possible, they’ve widened the stack of energy technologies they’re willing to rely on. For the last few years, hyperscalers have pursued advanced nuclear, enhanced geothermal, and long-duration storage — and now distributed capacity as well.
Voltus got things started a year ago with its “bring your own capacity” framework, wherein hyperscalers finance a VPP program in a region where capacity is constrained, in exchange for the aggregator delivering the needed megawatts to the local utility. In June, the company announced that Google will be its first customer for the offering.
Voltus develops commercial VPPs, but residential energy companies are now pursuing a similar approach as well. Also in June, Sunrun, Tesla, and Everyday Electric (formerly Renew Home) announced joint plans to offer a combined 16 gigawatts of both new and existing flexible capacity to hyperscalers and utilities. They dubbed the offering “capacity as a solution.” Like Voltus’ 2025 pitch, that initial announcement wasn’t yet rooted in actual deals, at least none that were public.
But that’s soon to change. According to president and chief revenue officer Paul Dickson, Sunrun is moving from the conceptual stage into commercial negotiations. Speaking at Latitude Media’s inaugural Flex Summit in Austin this week, he said the company is actively in conversation with hyperscalers about subsidizing new home energy installations, pitching the program in part as a way to get online faster — especially for data centers planned for constrained areas of the grid.
Dickson’s argument to hyperscalers: “Rather than spending the money you would spend to build [on-site] or fund some new development of generation, subsidize a consumer offering for people around the data center, and offer…batteries at a subsidized rate.”
“Capacity as a solution” isn’t just a speed-to-power pitch, Dickson continued, but could also mitigate some of the local pushback that data centers are experiencing nationwide, especially in connection with rising electric bills.
“[You take] people who are frustrated and nervous about rate hikes and availability of power, and equip their home with solar and a battery,” he said. “You fix those two problems, and it’s subsidized by the very hyperscaler they were frustrated with.”
As for the specifics of who, when, and where? “Stay tuned,” Dickson told the audience at Latitude Media’s inaugural Flex Summit in Austin this week.
A pilot is underway that will somewhat test the model, with some caveats. Last month, the utility Pacific Gas & Electric announced a VPP “proof of concept” relying on residential capacity from Sunrun, Tesla, and Everyday Electric, in partnership with the nonprofit Rewiring America. Unlike the typical model Google will fund the program, which will rely on 21,000 energy devices in the San Jose area: all existing DERs, not new capacity. Google says the capacity won’t be directed to any data centers in the region — though the company has faced growing scrutiny over a planned 250-megawatt cloud facility in the area.
The hurdles to dealmaking
For Sunrun, however, executing these deals beyond the pilot stage is complex and varies by market.
In the places where it’s possible — such as ERCOT — Sunrun is planning to rely on simple, bilateral commercial agreements with hyperscalers. But in regulated markets, the company is exploring trilateral deals that involve utilities and “potentially even a regulator” as well, Dickson said.
And regulation, he made clear, is one of the biggest hurdles to this model’s success; the pace at which decision-makers are moving to consider whether behind-the-meter capacity can be counted as firm is “frustratingly slow,” Dickson said.
PJM, for example, is in the process of developing rules for BYOC deals. But just last week, federal regulators rejected PJM’s proposed rules; as Mary Yang, former regulatory counsel for PJM and chief operating officer at 804 Advisory, told Latitude Media, the decision meant that the uncertainty “is going to keep dragging” for stakeholders like Sunrun.
“If we can get regulators to recognize this resource as planned capacity, you instantly lift the peak capacity headroom, can interconnect more, and have more comfort in controlling costs for consumers,” Dickson said, adding that he wishes PJM in particular would pick up the pace. “If there’s a perspective of insufficient reliability of an asset, give the feedback and let us react.”
But Dickson is still bullish on capacity as a solution, and thinks the model will be widespread fast — perhaps within months or a year, rather than many years, as deep-pocketed hyperscalers invest in the resource.
“Candidly, I think when you have that much money and push behind it, you’re either going to see capitalist solutions…work inside the bounds of regulation but work around it, or you’re going to see regulators realize they need to make decisions and enable solutions,” Dickson said. “And I think you’re going to see a combination, depending on the market.”
