Soft Energy Is the New Currency of Global Influence

In the 1970s, the world witnessed an oil crisis that laid bare the vulnerabilities of global energy supplies. As history repeats itself, a new crisis looms on the horizon. This time, the solution lies in embracing "soft energy," an approach that combines renewable energy sources with efficient consumption and supply strategies. Rather than merely increasing power production, soft energy emphasizes maximizing the smart utilization of energy resources.

The United States is set to see a staggering 78% surge in electricity demand between 2023 and 2050, fueled by data centers, manufacturing, electrification, and a deteriorating grid. Constructing new power plants is not a practical solution for the immediate crisis. Instead, soft energy initiatives such as distributed energy sources, or virtual power plants (VPPs), are being rolled out rapidly.

Brian Watts, an officer of energy modernization at Pew Charitable Trusts, explained to Newsweek that distributed energy resources, including rooftop solar panels, batteries, and smart thermostats, are already installed close to homes and businesses. These technologies enable consumers to generate, store, and manage electricity independently.

The global VPPs market is currently valued at approximately $7.4 billion and is projected to experience a compound annual growth rate of 22.6% through 2033, driven by new policies promoting soft energy pathways.

According to Pew research, VPPs have the potential to add 217 gigawatts of capacity between 2024 and 2028, at a fraction of the cost of traditional infrastructure solutions. By leveraging existing resources, VPPs can be deployed in as little as six to twelve months, as opposed to the years required to build new power plants or major grid infrastructure.

Mark Dyson, managing director at the Rocky Mountain Institute, emphasized that VPPs are one of the fastest and most cost-effective ways to augment the capabilities of existing systems.

In June, Sunrun, Tesla, and Renew Home unveiled a plan to deliver over 16.8 gigawatts of flexible capacity, primarily aimed at meeting the demands of AI data centers. Sunrun, already the largest VPP operator in California, partnered with NRG Energy on a Texas VPP in December 2025. VPPs possess the unique ability to adapt to power requirements, discharging batteries, reducing home heating temporarily, or pausing electric vehicle charging to manage demand.

As the demand for electricity and costs continue to rise, VPPs allow central operators to tap into a network of distributed energy resources, alleviating pressure on the main grid during periods of high demand. Pew's analysis revealed that between 2021 and 2025, state legislatures enacted over 400 policies supporting distributed energy resources.

The Federal Energy Regulatory Commission's Order 2222 mandates that grid operators permit batteries, electric vehicles, and smart thermostats to compete directly in wholesale power markets. The U.S. Department of Energy Loan Programs Office is financing VPP infrastructure as part of federal grid-modernization efforts. Notably, industry leaders are also following suit; in March, Google incorporated 1 gigawatt of demand-side measures into long-term utility contracts, enabling its data centers to flexibly adjust power usage and help balance the grid.

Despite these advancements, less than 20% of eligible distributed energy capacity nationwide has been enrolled in such programs as of 2024. As the crises of the 1970s have only intensified, soft energy solutions have become an indispensable component of energy infrastructure, rather than merely an attractive complement.