VPP and Supporting DER Policy Developments: Q2 2026

Hawaii began developing a VPP grid-services program, two utilities proposed innovative pilot programs, Illinois and Maryland pushed forward with Herculean virtual power plant (VPP) efforts, and Virginia enacted a swarm of new laws — all during the past three months. This quarterly update from the Smart Electric Power Alliance (SEPA) and the N.C. Clean Energy Technology Center (NCCETC) summarizes major regulatory, legislative, and utility actions addressing VPPs and supporting distributed energy resources (DERs) in Q2 2026.

The U.S. maps below illustrate the breadth, prevalence, and types of VPP and supporting DER developments in Q2 2026. State-by-state summaries of major developments follow.

Figure 1: State and Utility Actions Addressing VPPs and Supporting DERs, Q2 2026

Figure 2: Legislative and Regulatory Actions Addressing VPPs and Supporting DERs, Q2 2026

Figure 3: VPP and Supporting DER Actions by Type, Q2 2026

Hawaii

2026-0084 (Utility Storage Program) – pending

The Hawaii Public Utilities Commission launched this proceeding to develop a VPP grid-services program to improve upon Hawaiian Electric’s existing scheduled dispatch grid services programs. To expedite development, the PUC specified several preferred program design elements: (1) remote dispatch, managed by a 3rd-party edge DERMS agent, selected competitively; (2) a five-year minimum duration; (3) simple enrollment; (4) a diverse range of eligible batteries, with other DERs eligible immediately or seamlessly in the future; (5) a specified range of dispatch events and exceptions; (6) compensation that prioritizes performance; and (7) incentive adders for income-qualified participants.

Illinois

ERM 26-096, ERM 26-097 (Utility Storage Program) – approved

In June, the Illinois Commerce Commission approved ComEd’s and Ameren’s Rider SDVPP – Scheduled Dispatch Virtual Power Plant tariffs, filed pursuant to the Clean and Reliable Grid Affordability Act (S.B. 25 of 2026). The programs offer a performance-based annual incentive. Storage systems that receive a rebate under the Illinois Storage for All program and community renewable energy generation projects paired with storage systems must participate.

Illinois

25-0678 (Utility Storage Program) – decided

In February, ComEd proposed a new Bring Your Own Device Load Reduction (BYODLR) Program, having withdrawn a similar previous proposal after S.B. 25 was enacted. The newer proposed program – which ComEd plans to incorporate into a VPP program – expands eligibility (and provides incentives) to residential customers with smart thermostats and thermal storage devices. In June, the Illinois Commerce Commission approved the proposal, including a provision for ComEd to evaluate cost-effectiveness by the end of 2026 to determine whether to implement the program.

Louisiana

U-37595 (Utility DR Program, Utility Storage Program) – decided

In May 2025, Entergy Louisiana proposed a suite of demand response (DR) programs with a budget of $81 million from 2026 to 2030. Residential programs support smart thermostats, battery storage, and behavioral EV-charging. A non-residential aggregated capacity program would provide seasonal incentives to participants who reduce their load during certain emergencies called by MISO. Customers would participate via direct load control, manual response, or eligible behind-the-meter (BTM) assets. Entergy also proposed a tiered performance incentive mechanism (PIM) for achieving specific DR program targets. In April, the Louisiana Public Service Commission approved a settlement supporting Entergy’s proposed DR programs (with minor revisions) but denying the proposed PIM.

Maryland

9778 (State Rules) – pending

In May, the Maryland Public Service Commission issued a meaty order addressing VPP/DER conceptual reports filed by utilities in October 2025. The PSC’s order: (1) established a Data Exchange Work Group to support 3rd-party data access; (2) supports the development of a DER registry accessible by 3rd parties, including DER aggregators; (3) directed BGE, Delmarva, and Pepco to align their interconnection management tools with forthcoming VPP applications; (4) requires utilities to file periodic registration reports, accessible by aggregators; (5) declined to accelerate certain utilities’ DERMS timelines, while ordering others to report progress; and (6) allows utilities to report DER aggregator non-compliance with cybersecurity standards.

Maryland 

9761 (State Rules, Utility Storage Program) – pending

In May, the Maryland Public Service Commission partially approved utilities’ proposed demand management plans for summer 2026 under the DRIVE Act, green-lighting proposals that can be executed within existing budgets. The PSC approved: (1) Potomac Edison’s residential DR proposal, which embraces performance-based compensation; (2) BGE’s proposal to use limited-time offers, pre-enrollment strategies, PeakRewards thermostat replacements, and residential aggregator partnerships; and (3) Delmarva’s and Pepco’s proposed coupons for device purchase, limited-time offers, and exploration of aggregations of additional BTM devices.

Subsequently, in June, to comply with the Utility RELIEF Act (enacted in May), the PSC issued an order approving certain individual utility programs, while revising or denying others. Notably, the order distinguished incentives from payments for grid services, while clarifying their funding source; addressed cost-recovery (including via rates); distinguished EmPOWER DR programs from DRIVE programs; and set export requirements for new VPP programs.

Michigan 

U-21653 (Pilot Program, Utility Storage Program) – pending

In June, DTE Electric proposed to create a new, two-year Residential Battery Virtual Power Plant Pilot that would provide incentives for utilizing customers’ existing battery systems. Participants would receive $105/kW-year, with a maximum annual incentive of $504.

Minnesota 

25-378 (Planning & Procurement) – decided

In April, the Minnesota Public Utilities Commission approved Phase 2 of Xcel Energy’s Capacity*Connect program, allowing Xcel to deploy, by the end of 2028, up to 200 MW of utility-owned, utility-operated, front-of-the-meter (FTM) battery systems ranging from 1 MW to 3 MW. (See our Q1 2026 blog for a summary of Xcel’s approved program.)

New Mexico

26-0000079 (Utility DR Program, Utility Storage Program) – pending

In April, El Paso Electric proposed a new pilot that would provide up to 260 residential customers a FTM solar-plus-storage system, a smart panel, and an inverter. By aggregating solar, storage, DR, and energy efficiency, the systems would support phase balance correction for distribution feeders, benefiting all customers. Systems would be installed, owned, and operated by a 3rd party. EPE would communicate dispatch and scheduling needs to the program administrator. The first-year pilot budget is $1.64 million (assuming nearly all systems are operational), with a nominal cost of $66.5 million over the 30-year term.

Virginia

(State Rules, Investigation, Planning) – enacted

Virginia enacted a swarm of legislation relevant to VPPs. H.B. 1467 requires Appalachian Power to propose, by July 2027, a pilot to evaluate methods to optimize demand through various technology applications, including VPPs. The pilot will consist of DER aggregations totaling up to 150 MW. Appalachian Power may use DER programs as part of the pilot and to advance VPP deployment. H.B. 285 creates a DER Task Force to develop a comprehensive strategy to advance energy affordability and Virginia’s transition toward integrated DER markets, while supporting FERC Order 2222 compliance. The Task Force also will recommend how to improve DER interconnection and advance solar-and-storage microgrids, community resiliency hubs, and VPPs. H.B. 429 requires utilities, when developing integrated resource plans, to model scenarios that exceed their maximum energy savings targets by deploying numerous measures, including VPPs, that utilize aggregated DR or energy storage. H.B. 434 requires utilities to propose grid-utilization metrics, while directing the Virginia State Corporation Commission to gauge the potential to expand grid utilization through the use of certain non-wires alternatives, including VPPs.

Contacts

SEPA and NCCETC collaborate to develop summaries of major state policy developments addressing VPPs and supporting DERs. We anticipate publishing new quarterly updates in the future.

Rusty Haynes, SEPA:  [email protected] 

Autumn Proudlove, NCCETC:  [email protected] 

Additional Resources

SEPA Customer Programs Working Group (virtual monthly meetings)

SEPA Distribution System Working Group (virtual monthly meetings)

DSIRE® (Database of State Incentives for Renewables & Efficiency®)

DSIRE Insight

RE+ Mid-Atlantic 2026 (August 12-13 | Philadelphia, PA)

RE+ Florida 2026 (August 25-26 | Tampa, FL)

RE+ Midwest 2026 (September 9-10 | Schaumburg, IL)

RE+ 2026 (November 16-19 | Las Vegas, NV)