Virtual power plants fueled by distributed energy resources (DERs) are increasingly important as we transition to a more resilient, flexible, and cost-effective grid. Continuing the robust state-level policy momentum in 2024, 2025 has already seen a swarm of regulatory advancements, legislative proposals, and utility initiatives that will shape the future of VPPs and DER aggregation.

This blog builds on our previous analysis – 50 States of Virtual Power Plants and Supporting Distributed Energy Resources: 2024 State Policy Snapshot – by highlighting significant policy actions in Q1 2025 and forecasting what lies ahead for the rest of the year.

Energy efficiency, simply put, means using less energy to complete the same task. As a homeowner, there are many opportunities to reduce utility bills by transitioning to more energy-efficient products. However, one major obstacle consumers face is the high upfront cost of these technologies. Fortunately, federal programs such as the Home Energy Rebate Programs can help offset these costs through grants, loans, or tax credits. Specific eligibility requirements for these incentives can be found on your state energy office’s website. Before discussing the current status of this program and its financial incentives, let's briefly examine its legislative source, the Inflation Reduction Act (IRA) of 2022.

Energy storage has been a hot topic and growth sector in the sustainable energy space for years. Utilities, regulators, and customers see value in various types of energy storage such as electrochemical storage in batteries, thermal storage in ice or water, or mechanical storage designs. Consumers, utilities, and policymakers also consider storage "duration" or how long an energy storage system can continuously output its rated power. As of February 2025, twelve states have energy storage targets, the largest of which is New York with a goal of 6,000 MW by 2030. 

Since the start of deregulation in the 1990s, electricity markets in the United States have only continued to grow. Wholesale electricity markets serve around two-thirds of Americans, and cover a majority of the contiguous 48 states. That number is only going to increase as wholesale markets grow their footprint, with new utilities joining every year.

The Public Utility Commission (PUC), the Public Service Commission (PSC), the Utility Regulatory Commission - while the name may vary, these regulatory bodies exist in every state and are tasked with the regulation of utilities (this post will focus on electric utilities, however, PUCs may also regulate gas, telecommunications, and water utilities as well). As a general rule, commissions assure that utilities provide adequate and efficient service to customers at reasonable prices. This regulation often includes price regulation, resource planning and acquisition, and reliability and quality of service regulation. In layman's terms, PUCs hold major power and can make decisions impacting the cost of electricity, sources of energy production, and whether new energy facilities are approved. 

The basic model for interconnection of distributed generation (DG) customers has historically involved the customer exporting electricity to the grid, as with net-metered systems. In recent years, however, as in some states the value of traditional net metering has declined and as energy storage has become more common in the DG market, some customers are choosing to not export power and instead use their systems solely to supply their own load. States and utilities are adopting new interconnection rules for customers that choose this route, typically expediting the usual interconnection process due to non-exporting systems having smaller grid impacts.

Advanced metering infrastructure (AMI) is a network of smart utility meters, communications methods and protocols, and data management systems that aim to capitalize on the capabilities of new metering technologies for broad benefits. While utilities receive direct benefit in labor costs from remotely read and managed meters, many of the benefits come from being able to access the outputs of the meters, especially because smart meter data can be gathered at shorter time periods than manually read meters. Depending on configuration, smart meters can report energy use in real time or at other intervals such as every 15 minutes or every hour. 

Offshore wind, while mature in some parts of the world, is still a budding energy resource in the United States. At almost 12,500 miles, the United States has one of the longest oceanic coastlines on the planet (not to mention 4,500 miles along the Great Lakes!), providing a host of opportunities for offshore wind development. States are advancing offshore wind in a variety of ways, with two big pillars: statewide targets, and competitive solicitations. This post will cover those two main pillars, along with a look at existing offshore wind capacity and recent investigations into offshore wind deployment.

California has long established itself as a national leader when it comes to environmental policy and regulation, and with the adoption of the Advanced Clean Cars II program, the state continues that legacy. While lawmakers in many states work to adopt or emulate similar emissions reductions programs, others are attempting to prohibit the adoption of these regulations altogether.

Interconnection is a hot topic in the electric power sector. Indeed, new generator connections to the grid, the duration of the process, and the costs are long-running concerns for several parties. Federal and state regulators, independent power producers (IPPs), state legislatures, and utilities consider what reforms might be needed and how to implement them. Each of these entities present different, sometimes conflicting, perspectives on the needed changes to the interconnection process and the overall goal of reforms. Over the last three years, the DSIRE Insight team has noted an uptick in interconnection-related actions.

The concept of additionality is an important consideration for purchases of renewable energy certificates (RECs) by large corporate customers. Corporate purchases of unbundled RECs have been criticized for not actually increasing the amount of renewable energy available, particularly when the RECS are sourced from areas without renewable portfolio standards (RPS) and large surpluses of renewable energy. Many corporate purchasers have tightened their standards for renewable energy purchases, seeking contracts with specific renewable energy projects or seeking out utility programs that offer dedicated renewable energy capacity.

With the end of 2023 upon us, our team likes to take the opportunity to look back on all of the policy and regulatory activity we’ve tracked through the year and think about some of the overarching trends and themes that we’ve seen. Across the areas of distributed solar, grid modernization, transportation electrification, and power decarbonization, our team tracked more than 2,500 actions taken by states and utilities this year, including introduced legislation, active regulatory proceedings, executive orders, and utility initiatives. From enabling virtual power plants and expanding clean energy targets to supporting building electrification and studying market reform, states and utilities took significant steps to advance clean energy in 2023.

Earlier this month, the NC Sustainable Energy Association held its annual Making Energy Work conference. The DSIRE Team, as part of its work at the NC Clean Energy Technology Center (Center or NCCETC), hosted a pre-conference workshop on Growing the On-Site Solar Generation Market in North Carolina. The workshop covered the challenges and opportunities associated with the on-site solar market in the state. The workshop was organized and framed by the Center, with the Center also leading discussions to gather input from interested distributed solar stakeholders. Participants came from solar installers, state and local government, non-profit and advocacy groups, financing entities, and end-use customers.