Three of the largest residential VPP players in the U.S. are teaming up to deliver capacity for data centers. Sunrun, Renew Home, and Tesla announced today an agreement to deliver a combined 16 gigawatts of flexible capacity to hyperscalers and utilities. 

They’re essentially developing many smaller VPPs in places where new data centers may strain the grid. The flexible capacity would be delivered under what the group is calling a “capacity-as-a-solution” framework: Data centers pay for VPP capacity from nearby distributed energy resources, then in moments of grid stress, the utility calls upon those resources rather than asking the data center itself to curtail its load.

“When data centers are asked to throttle down operations during the most expensive and stressful hours of the day, we can activate our distributed power plants to help provide them the power they need,” Sunrun CEO Mary Powell said in the press release. 

It’s not an entirely new concept. Momentum to leverage distributed energy resources to meet data center load growth began last September, when VPP provider Voltus announced a partnership with data center infrastructure developer Cloverleaf Infrastructure to establish the first “bring your own capacity” framework for VPPs and data centers. 

The framework allows data centers to finance the flexibility potential of communities around them; Voltus is selling distributed capacity out of market, and at a higher value, to hyperscalers trying to build locally, but delivering the capacity straight to the utility. It’s a way for hyperscalers to demonstrate that there’s enough headroom on the grid to build, and to interconnect. Earlier this month, Voltus announced its first major BYOC deal, a 100-MW VPP contract with Google.

At 16 GW, the Sunrun, Renew Home, and Tesla effort represents a major scale-up of the concept.

While the three companies did not release many technical details on how their framework will work, capacity-as-a-solution seems to be bring-your-own-capacity by another name. The three companies are planning to aggregate capacity from demand-side and energy-exporting devices, including home battery systems operated by Sunrun and Tesla, as well as smart thermostats operated and managed by Renew Home. 

This would create what they are characterizing as the largest distributed power plant in the country,” though it’s one that spans many utilities and service territories. They haven’t announced any customers yet, but say the capacity would be allocated on a “first-come, first-served” basis. The announcement does not provide a timeline for when the companies expect the full 16 GW of capacity to be available; the companies did not immediately respond to a request for comment from Latitude Media. 

At the moment, however, the three companies said they have more than 300 MW “readily available” in Virginia, a figure expected to increase to 500 MW by 2030. The state, which is home to one of the highest data center concentrations in the world, is also at the forefront of encouraging grid utilization. Earlier this year, it signed into law a first-of-a-kind bill directing state energy regulators and the utilities Dominion Energy and Appalachian Power to develop ways to quantify and reduce waste on the grid, including through DERs.

They also say that they have committed to providing capacity to PJM’s proposed Reliability Backstop Process, which aims to procure 14.9 GW of new power for large loads by 2031. The companies said that they could unlock over a gigawatt of capacity in the area “today.” 

PJM released its proposed framework for the auction in mid-April, which included capacity coming from demand response and DERs as an eligible way to service new loads. While the finalized framework is not out yet, if it stays as is, Voltus CEO Dana Guernsey told Latitude Media that it could be a key turning point for the deployment of VPPs and DERs more broadly. 

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