A recently announced expansion between Google and virtual power plant operator Voltus has reached more than one gigawatt of aggregated distributed energy resources in the PJM electricity market, representing the largest bilateral capacity contract to date. The deal, detailed in a new report from RMI published in October 2026, highlights both the promise and limitations of an emerging market where data centers and other large electricity users directly fund distributed capacity like batteries, smart thermostats, and heat pumps to relieve grid strain. RMI's Deal Lab team engaged developers, financial institutions, data center operators, and policymakers over several months, including a July 2026 convening cohosted with Goldman Sachs Sustainable Finance Group, to map the commercial landscape for flexible distributed energy resources.
The report examines three early "bring your own distributed capacity" transactions: the Google-Voltus procurement spanning 1,170 MW contracted through 2040, Xcel Energy's Capacity*Connect program with up to 200 MW authorized and a $430 million budget in Minnesota, and the SHARE virtual power plant pilot targeting roughly 12 MW in Pacific Gas and Electric's Northern California territory. Google is the sole hyperscaler participant across all three deals, each structured differently—a privately funded utility pilot, a rate-based utility procurement with large-load contribution, and a bilateral portfolio capacity contract, respectively. While residential solar financing has attracted more than $16 billion in asset-backed security issuances rated by Kroll Bond Rating Agency through mid-2025, no grid services revenues have been directly credited in rated securitization cashflows to date. The report notes that in some jurisdictions, payments from defined-payout utility virtual power plant programs could now cover a significant portion of total battery system costs, with annualized values reaching competitive levels compared to system deployment expenses.
According to the RMI analysis, none of the three transactions has yet publicly demonstrated a mechanism translating system-level benefits of distributed energy capacity into project-specific benefits for a sponsor, such as accelerated interconnection or protection from curtailment. The report identifies four potential product structures that could enable replicable deals: bilateral hedges for cost reduction in forward capacity markets, trilateral arrangements with load-serving entities for faster interconnection, compliance purchases in markets with bring-your-own-new-capacity mandates where aggregators sell service reliability, and state-level compliance purchases under regulatory requirements like New Jersey's Data Center Fair Share law enacted in July 2026. The authors write that "to keep scaling, the market will need replicable deal structures that work across jurisdictions, a wider pool of counterparties, and access to project-specific energy procurement budgets."
The report argues that financing structures haven't kept pace with the growing importance of flexibility-based revenue in distributed energy markets. Developers can't reliably borrow against income from grid services to fund resource deployment, which limits their ability to place assets where grid value is highest. This exclusion stems from challenges around merchant-like revenue volatility, binary risks tied to program duration and cancellation, and compounding steep discounts applied by actors along the value chain. Transactions with creditworthy hyperscalers like Google offer one near-term solution by replacing uncertain grid services cashflows with 10-plus-year contracted revenues that support up-front financing, particularly for behind-the-meter commercial and industrial battery installations. Over the medium and long term, however, the sector will need tailored financial products—warehouse facilities for asset deployment, price floors for firming merchant revenue, and securitization for capital recycling—that incorporate flexibility-based value across the full lifecycle of distributed resources.
RMI's Deal Lab plans to explore key open questions in upcoming workshops and public research, including which value transfer mechanisms between aggregated resources and large loads markets can currently facilitate, what generalizable transaction structures best support bilateral distributed capacity procurement, and which financial instruments can most efficiently begin to capitalize flexibility-based value. The report concludes that while recent transactions demonstrate distributed capacity can be contracted at gigawatt scale and over long tenors, what remains to be proven is whether deals can scale beyond a single buyer through replicable structures with clear, well-priced value transfer mechanisms. The emergence of effective transaction and financing models will be critical to realizing the full potential of flexible distributed energy resources in managing near-term data center impacts and developing cost-effective approaches for sustained load growth in coming decades.