Utilities across the country are racing to build new power plants and transmission lines to keep up with data center demand forecasts. But what happens if those forecasts don’t pan out? A new analysis from Canary Media points to virtual power plants as a way to avoid getting stuck with expensive, unneeded infrastructure if the AI boom slows down.
What’s a virtual power plant, anyway?
A virtual power plant, or VPP, isn’t a single building with smokestacks. It’s a network of smaller resources, think home batteries, smart thermostats, rooftop solar, electric vehicle chargers, and industrial facilities that can scale their power use up or down, all coordinated together to act like one large power source. Utilities can call on a VPP during peak demand hours instead of firing up a new gas plant or building new transmission lines.
Why this matters right now
Data center operators and the utilities serving them are currently projecting enormous, sustained growth in electricity demand, driven by AI computing. Those projections are the basis for billions of dollars in new power plant construction and grid upgrades, costs that often get passed on to everyday ratepayers through utility bills.
The problem is that nobody knows for certain how much electricity AI will actually need five or ten years from now. Tech companies have paused or scaled back data center projects before. If utilities build massive new generation capacity based on today’s AI hype and the growth doesn’t materialize at the scale predicted, regular customers could be left paying for power plants that sit underused.
A flexible alternative
Virtual power plants offer a middle path. Instead of locking in decades of new fossil fuel or nuclear capacity, utilities can tap flexible, distributed resources that scale with actual demand. If AI demand keeps climbing, VPPs can be expanded. If it doesn’t, the financial exposure is much smaller than a half built power plant.
What everyday people can do
Ratepayers have a direct stake in these decisions. State utility commissions typically hold public hearings before approving major new power plant spending, and residents can weigh in on whether that spending makes sense. It’s also worth asking whether local utilities are exploring demand flexibility programs, some of which let households earn credits for letting their thermostat or EV charger be part of a VPP.
Track how these buildout decisions play out in your area on our interactive map, learn the basics of grid planning in our explainer hub, and find out how to make your voice heard at take action.
Source: Canary Media