Contributed by Michael Grasso | CEO of Grid Rails
After decades of predictable demand growth, utilities across North America are facing a convergence of pressures: data center and AI infrastructure expansion, industrial electrification, electric vehicles, and rising reliability requirements. The result is the steepest demand-growth challenge the industry has seen in generations.
At the same time, millions of distributed energy resources (DERs) are already connected to the grid. Residential batteries, electric vehicles (EVs), smart thermostats, flexible loads, and commercial energy assets collectively represent an enormous pool of potential capacity. Yet despite years of investment in adoption, most of these resources remain operationally invisible.
The challenge is no longer deploying distributed energy. It is transforming distributed resources into dispatchable capacity that supports grid operations when and where it is needed most.
Creating Value for the Grid
A battery in a customer’s garage does not automatically create grid value. An EV plugged into a charger is not inherently a grid asset. To become useful, these resources must be discoverable, measurable, dispatchable, and able to participate in programs that compensate customers for performance. They must operate as part of a coordinated system.
This is where much of the industry’s focus is now shifting. Federal guidance and state programs increasingly require utilities and market operators to open pathways for distributed resources to participate in grid services, and FERC Order 2222 has made participation in wholesale markets a question of when, not whether. Virtual power plants (VPPs) have emerged as one of the most promising frameworks for getting there.
But the industry too often discusses VPPs as though the problem is already solved. Orchestrating thousands, and eventually millions, of customer-owned devices is far harder than enrolling them in a program.
Utilities must determine which assets qualify. They must set telemetry standards, validate device performance, coordinate dispatch events, measure outcomes, and compensate participants accurately. Every step depends on data integrity, operational visibility, and trust among customers, utilities, and program operators. These operational requirements, not device adoption, are becoming the defining challenge of the next generation of grid modernization.
The Real Roadblock
We have seen this firsthand at Grid Rails through our work supporting OpenVPP, a community-based virtual power plant focused on EV participation. Even at a few hundred vehicles, the operational complexity was immediately apparent. Coordinating that fleet meant continuously monitoring asset availability, charging behavior, state of charge, communication reliability, and performance verification, all in real time.
The most important lesson is that customer participation is not the primary obstacle. Consumers are willing to participate when programs are simple, transparent, and provide clear value. The hard part is operational, and it compounds with scale. Coordinating qualification, dispatch, telemetry, and settlement across thousands of devices from dozens of vendors and technologies is a different problem entirely than running a pilot. Without that foundation, virtual power plants remain pilot programs rather than dependable grid resources.
The industry has navigated this kind of transition before. Distributed generation moved from niche to mainstream once common interconnection standards such as IEEE 1547 gave everyone a shared definition of how a resource connects, performs, and is verified. Standards, not enthusiasm, made deployment at scale possible. VPPs and distributed flexibility are now entering the same phase.
The conversation has moved past whether DERs can support the grid. They can. The harder question is whether utilities can operationalize them with the same confidence they apply to traditional generation, and that requires treating distributed resources not as isolated devices but as a coordinated network of flexible capacity.
In practice, that means a shared operational layer that sits across vendors and asset types rather than a patchwork of point solutions. Today, qualification lives in one system, telemetry in another, and settlement in spreadsheets, and that fragmentation is precisely why most VPPs cannot scale. Utilities need common frameworks for visibility, control, measurement, and, critically, settlement, so that a dispatch event can be verified and paid out with the same rigor as any other grid transaction. Settlement is where trust is either built or broken: if customers cannot see that their performance was measured fairly and compensated accurately, participation erodes no matter how good the enrollment experience is.
The Stakes are High, and The Timing is Right
The opportunity is substantial. The United States already has millions of connected devices capable of providing some form of flexibility, and unlocking even a fraction of that potential could help utilities manage peak demand, defer infrastructure upgrades, improve resilience, and lower system costs.
But realizing those benefits will take more than device adoption. It will take the infrastructure that turns distributed resources into reliable, dispatchable capacity. The next chapter of grid modernization will not be defined by how many batteries, EVs, or smart devices are installed. It will be defined by how effectively we coordinate them. That is the challenge utilities face today, and the opportunity that will shape the future of the grid.
About the Author
Michael Grasso is the CEO of Grid Rails, a platform that enables real-time energy management, control, and settlement. He is also Board Advisor of OpenVPP, a decentralized blockchain-based payments and tokenization platform focused on upgrading the global electric utility sector.
Most recently, Michael served as EVP and chief revenue officer at Sunnova Energy International, where he led multi-billion-dollar organizations across residential, commercial, builder, retail, environmental, and grid services/virtual power plant businesses. Prior to his stint at Sunnova, he was the chief marketing officer at Sunrun and TXU Energy.