Google is paying Voltus to recruit homes and businesses in the PJM region that will cut their electricity use when the grid is strained, and counting that reduction as capacity for its own data center growth. The deal turns building flexibility into a product with a corporate buyer. Commercial owners in PJM can earn from it through enrollment payments and lower capacity charges on their own bills.
Key Takeaways
Google and Voltus expanded their virtual power plant agreement in the PJM region to 1 GW, ten times the deal signed in June.
Voltus pays homes and businesses to cut power use during grid emergencies, and Google counts that capacity toward its own growth.
Google says paying others to shift use is often faster and cheaper than slowing its own data centers.
PJM capacity cleared at its $325 per MW-day cap for 2028 to 2029, which sets the value of flexibility in the region.
Owners with batteries, controllable HVAC or process loads can enroll; contract prices are undisclosed and performance carries penalties.
Peak Capacity Becomes the Scarce Product in PJM
1 GW. That is the size of the virtual power plant Google and Voltus agreed on October 22 to build in the PJM Interconnection region, the grid that serves 67 million people across 13 states and Washington, D.C. It expands a 100 MW agreement the companies signed in June by roughly ten times.
A virtual power plant is a network of homes and businesses that agree to use less power, or draw on their own batteries, when the grid is close to its limit. A grid operator can count that reduction much as it counts a power plant, because the effect on the system at the critical hour is the same.
PJM needs that kind of capacity. Its July auction for 2028 to 2029 cleared at the $325 per MW-day cap and still fell 6,831 MW short of the reliability target. Demand response, the formal term for paid reductions in use, made up 5% of what cleared.
Why Google Pays Buildings Instead of Pausing Its Own Chips
Google already runs some of its own data centers flexibly. It has 1 GW of demand response written into contracts with Indiana Michigan Power, the Tennessee Valley Authority, Entergy Arkansas, Minnesota Power and DTE Energy, allowing it to slow certain computing work when those grids are strained.
The company says that approach has limits. “The cost of capital in the data center, of our chips, can be billions and billions of dollars,” Amanda Peterson Corio, Google’s global head of data center energy, told Utility Dive in June. She said it is often faster and cheaper to pay other customers to shift their use. In its June announcement, Google said expanding the grid to meet short periods of peak demand is “a primary driver of costs for electricity customers.”
Voltus calls the structure “bring your own capacity.” It enrolls flexible resources that already qualify for PJM’s capacity market, manages them as a portfolio and pays the participants. Google buys the capacity and, in return, can point to new supply when it asks for more grid service. What Google gains is reduced demand at the hours that matter most.
What a Building’s Flexibility Earns
Voltus says participants receive bill savings and direct payments. The companies have not disclosed what Google pays or what participants receive under this contract.
PJM’s existing programs give a sense of scale. Voltus says commercial and industrial customers can access about $112,000 per MW-year through PJM’s Emergency Load Response Program, and cites a manufacturing site that earned $75,000 and offset 55% of its capacity costs. The same Voltus account cites a data center that supplied 139 MW through load shifting and backup generation and earned $11 million. Those figures come from a company that sells the service and should be read as marketing claims.
Enel X, another aggregator, describes how the program works. Dispatches historically occur one to two times a year in a given zone, last two to four hours and come with 30 minutes to two hours of notice. Participants earn standby payments for being available and energy payments for what they deliver. Typical reductions in commercial buildings include dimming noncritical lighting, adjusting HVAC and changing freezer settings. Enel X also enrolls sites in a faster program, PJM’s Synchronized Reserve Market, which calls 10 to 20 events a year, most under 10 minutes, and requires full reduction within 10 minutes. It suits sites with large loads that run more than 12 hours a day.
Flexibility also lowers an owner’s own costs. In PJM, each account’s capacity charge depends on its demand during the grid’s busiest hours, so the same actions that earn payments can shrink next year’s bill.
The Same Model Is Spreading Beyond PJM
Other projects this month show building flexibility moving into contracts. In Buffalo, New York, battery maker Viridi and developer Good Carbon installed a 3.75 MWh battery inside Peace Bridge Place, an all-electric affordable housing building. National Grid pays the building to reduce its draw and send power back during grid strain, and the battery can keep the building running during outages for several days. Viridi says its design meets Underwriters Laboratories (UL) standards for indoor use without added fire suppression.
Budderfly, an energy-as-a-service company, announced a program to finance, install and operate solar, storage and efficiency upgrades for small and midsize cities at no upfront cost, repaid from savings, and to combine the sites into a 150 MW virtual power plant. Its first contract covers seven municipal buildings in Cadillac, Michigan, for $4.4 million over 15 years.
The U.S. Department of Energy (DOE) counts about 33 GW of virtual power plants in North America and sees 80 to 160 GW possible by 2030, enough to serve 10% to 20% of peak demand.
Why the Buyer Showed Up Now
The deal arrives as forecasts for PJM demand keep climbing. A study by the U.S. Energy Storage Coalition, cited by Energy-Storage.News, projects that if PJM’s 2025 load forecast holds, its summer peak would rise by 16 GW by 2028 and by a further 30 GW by 2032. Building new power plants and transmission to meet a few hours of peak demand each year is expensive and slow, and capacity prices reflect that scarcity.
Policy is moving toward paying smaller resources for the same service. The Solar Energy Industries Association (SEIA) published a framework on October 26 that would let state regulators pay building-sited solar and storage for deferring utility upgrades, through standard tariffs and targeted solicitations. The Senate permitting bill now before Congress would require grid operators to let groups of behind-the-meter resources sell into wholesale markets within 18 months.
Residential programs are scaling at the same time. In early October, Sunrun and Tesla said they can dispatch 745 MW from home batteries across multiple states, according to Forbes. Commercial buildings bring something homes often lack: large, controllable systems in one location, operated by facility staff who already manage schedules.
Federal research has long pointed to the size of that resource. A 2020 DOE analysis estimated that flexible operation of building systems could reduce national summer peak demand by about 97 GW in technical potential, with commercial buildings accounting for a large share.
The Risks Behind the Revenue
Capacity is a promise with penalties. PJM’s rules reward resources that perform during reliability events and penalize those that do not. Google and Voltus have not said how they divide that risk.
Resource choice matters to neighbors. Jacques Beaudry-Losique of GridSparq warned that counting diesel backup generators as regular resources would hurt local air quality. Owners should know what equipment their aggregator plans to dispatch.
Supporters see a financing opening. Jigar Shah, former director of DOE’s Loan Programs Office, said a long-term offtake from Google could give developers the confidence to finance batteries and other flexible assets, much as corporate buyers helped scale wind and solar. A Voltus spokesperson told Utility Dive the contract runs through 2040; the companies have not published the term.
How Owners in PJM Can Take Part
List the flexible loads. HVAC, lighting, refrigeration, EV charging and batteries are the usual candidates. Note which can pause or shift for two to four hours.
Check controls and metering. Programs require reliable interval data and the ability to reduce use on short notice.
Compare aggregators. Ask about payment terms, penalty sharing, event frequency, which equipment will be dispatched and whether Google-funded capacity is available in your zone.
Coordinate with tenants. Leases should state who controls building systems during events and how payments are shared.
Watch the auction calendar. PJM capacity prices set the value of these programs, so results from each annual auction will change what flexibility is worth in the years that follow.
Google’s deal sets a market price signal for something buildings already have. The owners who measure and organize that flexibility will be the ones who get paid for it.
Frequently Asked Questions
What is a virtual power plant?
A virtual power plant (VPP) is a network of homes and businesses that reduce power use or draw on their own batteries when the grid is strained, managed together so the grid can count the reduction like output from a power plant.
Does Google get electricity from this deal?
No firm supply. Google buys capacity, meaning reduced demand at peak hours, which it can count toward its own growth in the region.
How often would a building be asked to cut power?
In PJM’s emergency program, dispatches have historically occurred one to two times a year in a given zone, lasting two to four hours.
Who can participate?
Voltus enrolls homes, businesses and industrial sites in the PJM region with flexible loads such as batteries, smart thermostats and adjustable processes.
Sources
https://www.energy-storage.news/google-and-voltus-expand-pjm-virtual-power-plant-agreement-to-1gw/
https://www.utilitydive.com/news/google-virtual-power-plant-vpp-pjm-voltus/821838/
https://www.voltus.co/blog/pjm-capacity-auction-results-2027-2028
https://www.enelnorthamerica.com/solutions/energy-solutions/demand-response/pjm-demand-response