AI's Hunger Turns Homes Into Power Plants

Virtual power plants surged 33% in 2025 as data center demand turned millions of US homes into grid resources

14 May 2026

In Texas, a programme that set out to shave 20 megawatts of household electricity use ended 2025 managing 150 MW, more than seven times its original target. It is a small example of a large shift. Across North America, virtual power plants (VPPs), networks that stitch together home batteries, smart thermostats and rooftop solar panels into a single controllable resource, are growing fast. The reason is not idealism. It is data centres.

Wood Mackenzie's annual tally counted 1,940 active VPP deployments in North America last year, a 33% rise on 2024. Programmes that actually pay households to curb or dispatch power on command rose 35%, to 433. Total capacity reached 37.5 GW. Each of the 25 largest buyers secured more than 100 MW. Four states, California, Texas, New York and Massachusetts, account for 37% of all deployments, blending friendly regulation with dense concentrations of server farms.

The link to artificial intelligence is direct. Data-centre builders have clogged interconnection queues with years-long backlogs. Grid operators in PJM, the sprawling mid-Atlantic network, and ERCOT, which runs Texas, face peak-demand surges of 14 to 18%. VPP procurement is heaviest in precisely those regions. NRG Energy, whose Texas pilot ballooned so quickly, is now extending its model into PJM territory, aggregating demand response from households across the Midwest and mid-Atlantic.

For homeowners, the arrangement turns a battery in the garage into a modest revenue stream. For utilities, it offers dispatchable capacity without the multi-year wait for new transmission or generation. The appeal is obvious. The constraints are less so.

Utility enrolment caps and tangled wholesale-market accreditation rules kept actual capacity growth to 13.7% last year, well below the frenzy of new contracts. Several regional operators are unlikely to integrate distributed resources fully before the end of the decade. The gap between signing up homes and reliably dispatching them at scale remains wide.

Still, the direction is clear. Distributed energy was long dismissed as a curiosity at the grid's fringe. Data centres, of all things, are dragging it toward the centre.