Can Real-Time Incentives and Payments Boost DER and Microgrid Deployment in VPPs?
When Michael Grasso was executive vice president and chief revenue officer at Sunnova, he ran what the company touted as the largest virtual power plant (VPP) in the nation, aggregating residential solar, storage and smart devices to support the grid.
Under that program, Sunnova–which filed for Chapter 11 bankruptcy protection on June 8, 2025 and was later acquired by Solaris Assets–entered VPPs in real-time markets in Texas and California that pay for VPP participation.
Sunnnova was also active in Puerto Rico. In 2024, the company said its Battery Emergency Response Program there managed more than 1,000 enrolled customers, providing about 10 MWh to support resilience against outages.
In spite of such successes, uncertainty created by the Trump administration and other market conditions made it difficult to obtain capital, the company said in its bankruptcy filings.
But VPPs continued to gather steam.
Some VPP programs meet or exceed gas turbine deployment
A May 2026 report from RMI found that in 2024, several VPP programs across the US had met or exceeded the average gas turbine deployment of 180 MW.
For example, ConnectedSolutions’ region-wide VPP cut 375 MW of demand from the New England grid during a multi-day heat wave in June 2024.
When Grasso left Sunnova, he wanted to do more to leverage the 50 million DERs in the U.S., only 20% of which are part of VPP programs that provide capacity, peak shaving and other benefits to the grid.
Addressing increased load with DERs and VPPs
Grasso is taking on the challenge of meeting increased load growth from electrification and data center deployment, growth that can prompt utilities to invest in expensive peak power plants. With the right incentives for DER owners, utilities could integrate more DERs onto the grid to lower peak demand, add capacity, potentially avoid those investments and help lower customers’ rates, he said.
VPPs aggregate consumers’ DERs and deploy them like a traditional power plant, often helping out during periods of high demand.
But in a traditional VPP, months can pass before consumers and businesses are paid for offering their storage, solar, electric vehicles (EV) and other DERs to help support the grid. For example, Portland General Electric now offers customers “peak time rebates” for responding to requests–sent by text and email–to cut back during high demand periods. Customers learn what they earned a day or so after the event is over–not in real time.
Gaining visibility into individual DER performance
In addition, under traditional VPP programs, it’s difficult to identify exactly how the DERs are performing in markets, Grasso said.
“It typically took a pretty significant period of time and a lot of manual intervention to figure out the measurement and verification of the platform and how it performed in an event,” he said about Sunnova’s VPP program. He had no way to view individual devices and their unique performance through Sunnova’s program or any of the platforms available today, he said.What was needed, he said: visibility into and control of DERS–including microgrids–in real time–plus options for consumers and businesses to get incentives and payments in real time.
To meet these goals, Grasso launched Grid Rails, a software-as-a-service platform for utilities and other energy suppliers that provides real-time visibility into and control of DERS, along with real-time incentives and payments, said Grasso, Grid Rails' CEO.
How real-time incentives can help community microgrids
For community microgrids, the platform could provide both financial and energy control, he said.
“Since you're sharing in an energy pool and that energy pool fluctuates at a pretty high frequency depending on what else is going on in the community, this would allow you to add an overlay that would have both financial control,” he said. Rates could be flexed in real time to incentivize specific outcomes, such as reducing demand charges.
Participants in community microgrids need to understand their unique behaviors, Grasso said. With real-time visibility and incentives, the platform can help provide insight into energy usage and modify microgrid participants’ behavior.
Communicating with EV drivers in real time
For EV drivers, the platform could “see” that an EV is not plugged in and ask the owner to plug it in, then offer a discount on charging rates or a payment, in real time.
The ability to gain visibility into a fleet of EVs and communicate with their owners in real time enables this type of communication and payment to EV owners. Utility programs often pay EV owners for managing their charging as late as two billing cycles after their owners offer up their EVs for control, Grasso said.
It’s not just later payments that make EV owners reluctant to participate in VPP programs. They worry that such programs will draw down their batteries too much or undermine their EVs in some way, Grasso said.
To help allay such fears, the Grid Rails platform can tell the EV owner, for example, that the EV is 60% charged and that charging will stop in 30 minutes. The platform will identify the value of controlling charging.
Six hundred EVs, 45,000 charging sessions monitored and controlled
Grid Rails is monitoring and controlling 600 EVs that have had 45,000 charging sessions and driven 1,800 miles, with a total capacity of 6,800 kW, he said.
The company began by focusing on the residential market, but is also talking to data center developers and commercial entities, he said.
Grid Rails’ ability to provide visibility into DERs on the grid could, at some point, help DER and microgrid developers decide where to deploy resources, Grasso said.
Meanwhile, traditional VPPs are making their mark.
Market data shows North American VPP capacity was expected to reach 37.5 GW in 2025, with programs expanding beyond demand response to include EV charging and building portfolio management. Emerging business models include utility-led programs, third-party aggregators, EV managed charging and building portfolio aggregation. They each offer unique control, ownership and compensation mechanisms.
Sunrun and Sparkfund are two companies that offer traditional VPPs using different models.
In one pilot, Sunrun aggregates home solar and storage systems — residential microgrids — and provides the power to Orange & Rockland. The utility pays for some or all of the residential customers’ batteries and homeowners sign power purchase agreements (PPA) with Sunrun for the solar so that homeowners make no upfront payments. The aggregated solar and storage supports Orange & Rockland during peak demand periods.
Under Sparkfund’s distributed capacity procurement model, utilities include VPPs as part of their integrated resource planning efforts, identifying where on the grid they need DERs most. Sparkfund then recruits customers and deploys the assets.
Grasso argues that VPPs can provide even more impact than they’re now yielding.
“If you look at our energy market over the next five to 10 years, it's going to be a $3 trillion global energy industry annualized. So it's a huge opportunity,” he said. In Europe, at least 50% of DERs participate in virtual power plants, he added. “I know we can go from 20% to 50%. There's a real opportunity in the near term just to improve the performance in the U.S.," he said.
About the Author
Lisa Cohn
Contributing Editor
I focus on the West Coast and Midwest. Email me at [email protected]
I’ve been writing about energy for more than 20 years, and my stories have appeared in EnergyBiz, SNL Financial, Mother Earth News, Natural Home Magazine, Horizon Air Magazine, Oregon Business, Open Spaces, the Portland Tribune, The Oregonian, Renewable Energy World, Windpower Monthly and other publications. I’m also a former stringer for the Platts/McGraw-Hill energy publications. I began my career covering energy and environment for The Cape Cod Times, where Elisa Wood also was a reporter. I’ve received numerous writing awards from national, regional and local organizations, including Pacific Northwest Writers Association, Willamette Writers, Associated Oregon Industries, and the Voice of Youth Advocates. I first became interested in energy as a student at Wesleyan University, Middletown, Connecticut, where I helped design and build a solar house.
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