Electricity systems are entering a new phase of the energy transition in which flexibility, rather than generation capacity, is becoming a binding constraint, as demand rises with electrification, digital infrastructure and expanding space cooling. In this context, the UN Environment Programme (UNEP) says Virtual Power Plants (VPPs) are gaining strategic relevance, and it plans to publish an Implementation Guide on demand-side flexibility and VPPs in 2026.
VPPs aggregate distributed energy resources—such as flexible demand, batteries, rooftop photovoltaic systems and electric vehicle charging infrastructure—into a unified, dispatchable portfolio. UNEP says well-designed aggregation can reduce peak demand and defer distribution upgrades, increase renewable hosting capacity, provide balancing and ancillary services, and strengthen resilience during heat stress and supply disruptions.
UNEP adds that VPP architectures do not require fully liberalised markets from the outset. It says early models in emerging economies can start with utility-led demand response programmes, targeted feeder-level interventions, or resilience services for priority loads, while regulatory and market frameworks mature.
The 2026 guide is intended to help governments and utilities translate flexibility concepts into regulatory pathways, bankable project structures and investable pipelines, building on UNEP’s engagement in decentralised energy systems and distributed infrastructure deployment. UNEP also cites work in China involving rapid energy system assessments across multiple locations, combining GIS-based district energy mapping with pre-feasibility studies for clean local energy solutions, including low-carbon heating and cooling systems.
UNEP says its collaborating centre, the Basel Agency for Sustainable Energy (BASE), is also advancing operational pilots in Latin America, including testing customer aggregation models and quantifying flexibility value streams in Colombia, and assessing aggregation potential among residential and commercial prosumers in Brazil.
UNEP says that as cooling demand, electrification and distributed generation reshape load curves, VPPs offer a structured pathway to mobilise demand-side capacity at scale, alongside renewable expansion.
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