Local Governments Can Achieve Texas-Sized Impacts from Distributed Energy Assets and Virtual Power Plants

This briefing by RMI outlines how local governments in Texas can accelerate the deployment of distributed energy resources (DERs) and virtual power plants (VPPs) to enhance grid reliability, reduce costs, and increase resilience against extreme weather.

• Distributed energy resources (DERs) are small-scale energy assets, typically ranging from 1 kW to 10,000 kW, that connect to the electric distribution grid to generate, store, or shift electricity demand. These are categorized into generation resources (such as rooftop solar and combined heat and power systems), storage resources (such as battery energy storage systems), and demand-side resources (such as smart thermostats and electric vehicle chargers).
• Virtual power plants (VPPs), referred to in Texas as aggregate distributed energy resources (ADERs), coordinate multiple DERs to provide grid-level benefits. They allow utilities and grid operators to manage demand surges, mitigate price volatility, and integrate renewable energy more effectively.
• The adoption of DERs and VPPs in Texas is driven by federal legislation like the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL), as well as a surge in electricity demand from energy-intensive industries such as manufacturing and data centers. DERs can be deployed in months, offering a faster alternative to large-scale infrastructure which takes years to site and permit.
• Extreme weather events, specifically Winter Storm Uri in 2021 and Hurricane Beryl in 2024, have highlighted the vulnerability of Texas's centralized grid. DERs increase resilience by being deployed near the load, reducing reliance on power lines and providing power to critical loads during outages.
• Local governments can catalyze DER adoption through several strategies: increasing public knowledge of incentives, updating zoning and land use codes to allow 'by-right' installation of zero-emissions technologies, and streamlining permitting. For example, the use of Solar Automated Permit Processing (SolarAPP) has reduced PV installation costs by approximately 2%–13%.
• Texas has seen significant growth in distributed solar, with net generation from small-scale solar photovoltaics increasing by over 158% between 2020 and 2023. The Public Utility Commission of Texas (PUCT) also launched an ADER pilot project in 2022 to integrate VPPs into the grid.
• Local governments can further support the energy transition by enrolling their own government-owned DER assets into VPPs, engaging with the state legislature, and participating in stakeholder processes with the Electric Reliability Council of Texas (ERCOT) and the PUCT.

APA

RMI (2025). Local Governments Can Achieve Texas-Sized Impacts from Distributed Energy Assets and Virtual Power Plants. https://rmi.org/resources/local-governments-can-achieve-texas-sized-impacts-from-distributed-energy-assets-and-virtual-power-plants/

Chicago

RMI. Local Governments Can Achieve Texas-Sized Impacts from Distributed Energy Assets and Virtual Power Plants. 2025. https://rmi.org/resources/local-governments-can-achieve-texas-sized-impacts-from-distributed-energy-assets-and-virtual-power-plants/.

Wikipedia

{{cite report |author=RMI |title=Local Governments Can Achieve Texas-Sized Impacts from Distributed Energy Assets and Virtual Power Plants |date=18 February 2025 |url=https://rmi.org/resources/local-governments-can-achieve-texas-sized-impacts-from-distributed-energy-assets-and-virtual-power-plants/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025local, author = {{RMI}}, title = {{Local Governments Can Achieve Texas-Sized Impacts from Distributed Energy Assets and Virtual Power Plants}}, institution = {RMI}, year = {2025}, month = feb, url = {https://rmi.org/resources/local-governments-can-achieve-texas-sized-impacts-from-distributed-energy-assets-and-virtual-power-plants/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }