How Kitu Systems Enables VPP Deployment at Proven Scale
Executive Summary
The American electric grid stands at an inflection point. As renewable energy sources
proliferate and extreme weather events stress aging infrastructure, utilities and grid
operators face an urgent challenge: how to maintain reliability while decarbonizing. Virtual
Power Plants (VPPs) have emerged as a critical solution, enabling distributed energy
resources (DERs) to act as cohesive, dispatchable capacity that can replace traditional
peaker plants and enhance grid resilience.
Kitu Systems stands at the forefront of this transformation, providing a software platform
that makes VPPs not just possible, but practical and profitable for all stakeholders. This
white paper explores the VPP landscape, the challenges facing the industry, and how Kitu’s
platform is positioned to accelerate the transition to a flexible, resilient, and sustainable
grid.
Introduction: The Grid Transformation
The American electric grid is at a turning point. Major capacity markets across the country
have seen prices surge to historic levels, reflecting tightening supply and growing peak
demand. In PJM Interconnection’s 2025 capacity auction, prices cleared at the highest
level in the market’s history (St. John, 2025), underscoring the high costs utilities and grid
operators are willing to pay for capacity that is called upon only during extreme demand
periods. Yet this expensive infrastructure sits idle for much of the year while still requiring
maintenance, staffing, and capital recovery. The issue is structural. The grid was designed
for predictable, centralized generation and one-way power flows, a model now collapsing
under three converging pressures.
First, the renewable transition is accelerating faster than grid infrastructure can adapt.
Solar and wind now represent the majority of new generation capacity additions (Ludt,
2025), but their variable output creates ramping requirements the grid was never designed
to handle, stressing conventional generators and requiring expensive fast-ramping
resources on constant standby.
Second, electrification is driving unprecedented load growth. Electric vehicle adoption, for
example, is adding substantial load concentrated during peak hours when the grid is
already stressed. After decades of flat demand, the industry faces sustained growth in
exactly the hours when capacity is most constrained.
Third, climate change is making the grid both more essential and more vulnerable. Extreme
weather drives demand to record levels while simultaneously reducing system capacity
and destroying infrastructure. The grid must become more resilient precisely as the
conditions it must withstand become more severe.
The traditional response, building more power plants, transmission lines, and substations,
cannot solve these problems. New projects face escalating costs, extended timelines, and
construction challenges. More critically, centralized infrastructure cannot provide the
minute-by-minute flexibility that a renewable-heavy grid demands. This is the context in
which Virtual Power Plants have emerged, not as an interesting innovation, but as an
essential solution to an otherwise unsolvable problem. For example, Xcel Energy and Itron
launched their Renewable Battery Connect program specifically to manage peak loads and
maintain reliability amid rising energy demand and growing DER adoption in Colorado. In
just six months, they have onboarded nearly 2,000 batteries, aggregating over 15 MW of
battery capacity that now delivers 5 MW of peak load reduction during grid events. The
program turns what could have been grid complexity into flexible, dispatchable capacity
(Tumilowicz, 2026).
By aggregating and orchestrating millions of batteries, EV chargers, and other distributed
devices, VPPs provide the flexibility, speed, and resilience that centralized infrastructure
cannot deliver. The devices already exist; what’s been missing is the software infrastructure
to coordinate them reliably at scale. The question isn’t whether these resources will be
needed, it’s whether the industry can deploy the infrastructure to coordinate them fast
enough.