Virtual power plant provider Voltus is doubling down on the bring-your-own-capacity paradigm for data centers, via a partnership announced today with Octopus Energy U.S.
Starting in 2026, Octopus will supply Voltus — which has previously specialized in commercial and industrial demand response — with aggregations of residential consumer devices in key markets including PJM, MISO, New York, and California.
Voltus launched the first bring-your-own-VPP program for data centers last fall, in partnership with data center infrastructure developer Cloverleaf Infrastructure. Under that framework, hyperscalers can finance a VPP program in a capacity-constrained region, and then Voltus will deliver the megawatts from distributed resources directly to the local utility to offset the data center’s load.
This is an evolution of the contracting frameworks that hyperscalers have long used to transfer accredited capacity directly into a utility’s portfolio to satisfy reliability requirements. It’s designed specifically to help data centers bridge the capacity gap they’re facing in the next five years, Voltus CEO Dana Guernsey told Latitude Media in September.
This out-of-market financing structure has the potential to both bypass the yearslong interconnection queues for new generation, and, according to Octopus Energy U.S. CEO Nick Chaset, could help developers mitigate the significant hurdle presented by community opposition.
It’s also a workaround for the ongoing debate over what it means for data centers to be flexible, and whether grid operators can or should consider that potential in their planning. As Guernsey explained, data centers are much happier to pay for others to flex load than to flex their own.
And while market analysts in places like PJM worry that an ISO’s inability to physically shut off data center load will render promised flexibility useless from a grid planning standpoint, VPPs don’t have the same deep pockets and are therefore much more sensitive to financial penalties levied for failure to respond.
Making VPPs bankable
Voltus has been at the forefront of VPPs as a tool to enable the AI buildout for the better part of the last two years. And according to Caroline Golin, Google’s former head of global energy, speaking on a recent episode of Open Circuit, the company has become the benchmark for where the wider industry needs to be heading.
Last year, when Google was seeking large-scale flexibility capacity in PJM, Voltus was the only provider in the region up for absorbing the accreditation risk (meaning the financial liability if a grid operator doesn’t credit a resource at its expected value) and able to provide a contract that looked like “every other PPA we’ve ever signed,” Golin said.
That made VPP capacity bankable for the hyperscaler, and is part of what pushed the VPP industry towards a tipping point in terms of dispatches and adoption, she added. In the past, it wasn’t that Google and its peers didn’t want or understand VPPs as a capacity solution, but rather that there wasn’t a “menu” of ready-to-scale, standardized solutions for large energy buyers.
Part of Voltus’ success has been its decision to install thousands of dollars worth of its own telemetry equipment at every commercial site, added Golin’s co-host Jigar Shah, former head of the Loan Programs Office at the Department of Energy; the technology enables the company to get granular, real-time visibility into performance that many utilities keep under wraps.
LPO — which has since been renamed the Office of Energy Dominance Financing — vetted dozens of VPP companies during Shah’s tenure, he explained. Figuring out how to make their contracts bankable was a challenge, but making them look like standard wind and solar PPAs, as Voltus and Google were able to do, was essential.
VPPs, and especially Voltus with its newly beefed up portfolio of assets, would likely be significant players in the proposed “emergency reliability backstop auction” in PJM in September, Shah added.
That event stems from a proposal by the Trump administration and a bipartisan group of governors in the region, which called for a one-time auction as a way to curb electricity prices by requiring data centers to bid 15-year contracts to fund new power plants directly. PJM itself has proposed a similar plan as part of its Critical Issue Fast Path process that would also establish a reliability backstop to procure new generation.
That said, it has not formally agreed to hold a September auction. If it happens, Shah said, it will be a “go-for-broke” moment for companies like Voltus. “I think these companies are all gearing up to bid 1,000 megawatts,” he said. “There is nothing else that can actually deliver in a 12- to 18-month period.”
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