Google Bets on Virtual Power Plants for Data Center Growth

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Google Bets on Virtual Power Plants for Data Center Growth
Google and Voltus launch a 100 MW capacity deal in PJM, testing whether hyperscalers can secure power without waiting for new generation or transmission.
Google and demand response provider Voltus have signed what the companies describe as the first large-scale “Bring Your Own Capacity” (BYOC) agreement, a new approach to securing power for data center growth.
Under the three-year agreement, Voltus will assemble up to 100 MW of capacity from batteries, smart thermostats, and other distributed energy resources (DER) across the PJM Interconnection region.
A single hyperscale campus can require several hundred megawatts or more, making the 100 MW commitment modest in scale but notable as a procurement model that targets capacity rather than energy.
The announcement marks the first commercial deployment of Voltus’ BYOC model, introduced in 2025 to help data center developers navigate growing interconnection bottlenecks. Instead of building generation, BYOC draws capacity from batteries, demand-response programs, and other grid-connected resources.
Utilities and grid operators are confronting a surge in AI-driven data center demand while new transmission projects, power plants, and grid upgrades take years to permit and build. BYOC proponents argue that distributed resources can free existing capacity and move faster than traditional infrastructure projects.
Why Google Is Buying Capacity, Not Energy
For Google, the agreement represents an alternative to the traditional utility procurement model. Hyperscaler energy strategies have largely focused on securing generation through power purchase agreements, behind-the-meter resources, or direct investments in generation projects. The Voltus agreement instead targets capacity, a market product designed to ensure resources are available during periods of peak system stress in PJM.
BYOC does not create a new capacity product. Voltus aggregates DERs that already can earn capacity value in PJM markets and packages that accredited capacity for large-load customers. Google’s payments ultimately flow to distributed energy assets that provide grid capacity; Voltus manages the portfolio and compensates participating customers for making those resources available.
Google framed the deal as part of a broader effort to expand the tools available for supporting future infrastructure growth.
“We are excited to add this new solution to a growing toolkit that can accelerate a robust, flexible energy system, and to partner with Voltus to scale a first-of-its-kind model for unlocking capacity to meet new data center growth,” said Michael Terrell, Google’s head of advanced energy, in a statement.
Google has not tied the agreement to a specific campus or expansion project. Instead, the company described the effort as a way to strengthen the grids serving its data centers and help new facilities come online more quickly, suggesting the arrangement is intended as a broader capacity strategy rather than a project-specific power supply agreement.
Former DOE Loan Programs Office Director Jigar Shah compared the arrangement to the role that large technology companies played in scaling renewable energy procurement a decade ago.
“Google is providing a long-term offtake, which then can be used to more confidently secure demand flexibility assets like batteries in the same way that they led the way on virtual power purchase agreements for solar and wind farms 10 years ago,” Shah told Data Center Knowledge.
No major hyperscaler has publicly announced a comparable BYOC arrangement, making the Google-Voltus deal an early test of whether capacity procurement can join power purchase agreements, behind-the-meter generation, and other strategies in the race to secure data center power.
Grid Asset or Grid Burden?
PJM’s capacity market has become a focal point of the AI infrastructure boom. Capacity prices have risen sharply amid rising load forecasts and concerns about resource adequacy, while utilities across the region face mounting pressure to connect large new loads without compromising reliability.
Like other capacity resources participating in PJM markets, DERs providing capacity value are expected to perform during periods of grid stress. PJM’s market rules include financial incentives for performance and penalties for non-performance during designated reliability events. Google and Voltus have not publicly detailed how performance obligations or risk are allocated between the companies under the agreement.
The composition of the virtual power plant may matter as much as its size.
Jacques Beaudry-Losique, founder and CEO of energy consultancy GridSparq and a former director of the Solar Energy Technologies Office at the US Department of Energy, said the model’s success will depend heavily on the resources supplying that capacity.
“The catch is the nature of the DER assets employed to supply Google,” he told Data Center Knowledge. Battery storage and clean distributed resources could support the model, he said. But the US also has roughly 37 GW of backup generators that could participate in distributed capacity programs.
“If these become continuous resources as part of this deal, local PJM air quality will deteriorate, and community pushback will become intense,” he said.
Beaudry-Losique also raised questions about who ultimately pays for the interconnection and grid upgrades needed to support distributed energy resources participating in such programs. “Who will pay for DERs’ safe interconnection to the grid and for the transmission and distribution network upgrades?” he said. “Will Google pay for it, or will all electricity users pay?”
Shah argued that regulators should recognize a distinction between data center developers that contribute capacity resources and those that simply seek service. “A hyperscaler that finances and delivers accredited capacity to the grid is acting more like a grid asset than a grid burden,” he said. “Utilities and regulators need to develop frameworks that recognize this kind of proactive contribution rather than treating it the same as a company that just shows up asking for a 500 MW interconnection.”

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