Along the wide and scenic Susquehanna River near Harrisburg, Microsoft is reviving the nuclear power plant Three Mile Island. Infamous for the 1979 partial meltdown of one of its two reactors, it has been idle since 2019. But last year, Microsoft announced a deal with plant owner Constellation Energy to bring the nuclear facility’s remaining reactor back online and provide 835 megawatts of energy to help power its AI ambitions.
In some ways, this atomic handshake looks like the most palatable option for adding new energy onto an electric grid that sorely needs it. As increased demand from data centers and electrification outpaces energy supply, utility bills are on the rise and blackouts are more likely.
PJM Interconnection, a regional grid operator whose territory stretches from Chicago to Philadelphia to North Carolina, is warning of unprecedented electricity scarcity in the years ahead.
In many places across PJM’s 13-state territory, industry and officials are rushing to cover the gap with natural gas. In rural West Virginia, Microsoft is planning to power a 1.4-gigawatt data center by using hundreds of small natural gas-powered generators. Some analysts estimate the opening of the campus will cause the company’s greenhouse gas emissions to rise as much as 44%.
From an environmental perspective, Three Mile Island’s carbon-free footprint looks preferable, but it’s not as clear cut economically. The public could still bear the costs of new infrastructure required to plug the plant back into the grid through increased electricity costs. Nearby residents will also have to grapple with the plant’s considerable impact on local water resources and its demonstrated potential for nuclear meltdown.
Is there a smarter option? Indeed there is, says Michael Zimmerman, director and senior attorney of clean affordable power at the nonprofit Environmental Defense Fund.
Lost in the sea of AI-related announcements by Silicon Valley titans over the past two years, Zimmerman says, was a commitment this June from Google to fund a 100-MW “virtual power plant” within PJM. Unlike the traditional ways of thinking about energy supply and demand — building big new power plants to meet growing use — virtual power plants (VPPs) seek to maximize existing assets. That’s achieved by reducing load when demand is high — in large factories willing to curtail operations, for example, or in homes with smart thermostats that tick up their air conditioners a few degrees — and increasing supply by tapping into energy from thousands of small batteries, rooftop solar panels or electric vehicles. By coordinating all this simultaneously, a VPP can provide the same energy benefit as a physical power plant.
“I think this is a big deal,” Zimmerman says of Google’s announcement. “This is the first time I’m aware of that a large (energy) customer has directly procured a VPP.”
The 20th-century model we’re dealing with now is insufficient to address a 21st-century electricity demand issue.”
— Rob Routh, Pennsylvania policy director, Natural Resources Defense Council
Google’s planned 100-MW VPP will still be just a drop in the bucket for an electric grid that provides power to 67 million Americans, and saw demand reach a record 166,000 MW during this summer’s July 4 heatwave. But advocates say it’s just the beginning of a suite of “smart grid” solutions that can help power the grid while limiting the need to build expensive new infrastructure.
In addition to virtual power plants, several other smart grid solutions can “utilize our existing grid more efficiently,” says Kartik Amarnath, Mid-Atlantic regulatory director for the advocacy group Vote Solar. Those include advanced transmission technologies, which can move more energy over existing wires, as well as improved energy demand forecasting, which can reduce the number of unnecessary new power plants and costly speculation about energy scarcity. Faster connection of solar panels and new regulations for battery storage can also help, Kartik says.
But there’s a catch, and it’s a familiar one: fossil fuel-powered politics. PJM is a large grid, and its operators interface with scores of state agencies, legislatures and utilities across its wide territory. In key areas like Pennsylvania, the natural gas and coal industries hold outsized sway, advocates say, and solutions that focus on efficiency over new generation are bad for their business. Utilities, whose primary job is to maintain local electric grids, are similarly incentivized to support new generation, since they make their money from building new poles and wires to carry electricity to homes and businesses.
This model, once useful to ensure a modern, well-run grid, is now “breaking down,” says Rob Routh, a Pennsylvania policy director for the Natural Resources Defense Council.
“The 20th-century model we’re dealing with now is insufficient to address a 21st-century electricity demand issue,” says Routh.
State Rep. Liz Fiedler, a South Philadelphia Democrat who chairs the House Energy Committee, knows the challenge firsthand. Her committee has passed no fewer than five bills this session to promote smart grid technologies in Pennsylvania. But once the dust settled on state budget negotiations this summer, only one became law: Fiedler’s own HB 2223, which requires utilities to consider using advanced transmission technologies while planning new infrastructure.
“It feels like a no-brainer to me, and feels like a good example of a way in which technology can help us right now,” Fiedler says.
After clearing Fiedler’s committee, it passed through the closely divided House unanimously, a practically unprecedented development in the fraught energy politics of modern-day Pennsylvania. But then it met a more familiar fate: zero action in the Republican-controlled Senate, where leadership has been loath to move any energy-related legislation in recent years.
In the end, it wound up as one of the few prized horses traded each year between Republicans and Democrats during budget negotiations at the Capitol. The rest of the smart grid legislation remains on the auction block, unsold.
Building a smart grid
In 2022, Duquesne Light, a Pittsburgh area utility that provides power to approximately 600,000 customers, piloted an advanced transmission technology called a dynamic line rating system. The project was low profile — a sensor here, a solar panel there — but it allowed the company to more accurately assess the real-time capacity of its lines to carry electricity. Duquesne Light officials told the Pittsburgh Post-Gazette they found the project ultimately allowed them to increase capacity on existing wires by 25%, and that they are now expanding the program to a quarter of their lines.
“How that shows up as a value to a consumer is you get a more affordable product,” Josh Gould, the company’s director of advanced grid solutions, told the paper.
Fiedler says experts have testified before her committee that a similar project implemented by PPL Electric resulted in over $100 million in cost reductions and a 16% increase in grid capacity.
“[HB 2223] is really hardware and software upgrades to our existing transmission infrastructure that will allow us to squeeze more energy out of our existing grid.”
— State Rep. Liz Fiedler
Currently, utilities have to seek approval from the PUC before hiking electric rates to pay for new wires and poles, and Fiedler says that the HB 2223 policies now made law will require them to consider such advanced transmission technologies during planning, while also empowering the PUC to require utilities to implement the plans. It all adds up, Fiedler says, to an effort to ensure companies like PECO first do their due diligence on potential cost-saving technologies.
“This is really hardware and software upgrades to our existing transmission infrastructure that will allow us to squeeze more energy out of our existing grid,” Fiedler adds.
For its part, PECO, the electric provider for Philadelphia and surrounding areas, says it has long embraced technologies like smart meters and reclosers, which can automatically restore or isolate damaged sections of the grid. Such operational improvements aren’t technically advanced transmission technologies, but PECO says it supported House Bill 2223.
Where virtual power plants are working
Virtual power plants have also become a reality, but not in Pennsylvania. In a January 2025 report, the Lawrence Berkeley National Laboratory identified 62 VPPs in operation in California, the most of any state, followed by 16 in Colorado, 15 in Massachusetts, nine in Washington and eight in Texas in New York. In total, 26 states had at least one, including neighboring New Jersey, Maryland and Ohio. But Pennsylvania remains the proverbial hole in the doughnut, and results from elsewhere show what it’s missing.
In summer 2025, solar company Sunrun successfully tested a massive 535-MW virtual power plant in California, which it claimed to be the largest such demonstration in the world. It leaned on about 100,000 households that agreed to chip in electricity from battery storage over a two-hour time period, causing a measurable dip in public demand for power from natural gas power plants, Inside Climate News reported.
Zimmerman says Google’s deal with VPP operator Voltus to establish a 100-MW virtual power plant in PJM is important because it represents a potential paradigm shift in the data center space. Research from Johns Hopkins University shows that if data centers can better manage their energy demand by shifting peak use times, it could save the public as much as $1,000 per household. But data centers want the freedom to operate whenever they please, Zimmerman says.
“Data centers are not going to want to curtail their own loads, but maybe what you can do is get them to pay other people to curtail theirs,” Zimmerman says.
Could virtual power plants have a future in Pennsylvania’s traditional energy marketplace, where consumers could simply sign up with their utility to participate in a program?
Policy changes like those offered under House Bill 2264, which would require utilities to establish VPP programs and compensate homeowners and businesses who participate, would make it possible. Introduced by Harrisburg-area Democratic State Rep. Nathan Davidson, the bill cleared committee and passed through the House by a 107-95 vote in June. But it now sits untouched in the Senate.
John Walliser, a senior vice president of the nonprofit Pennsylvania Environmental Council, hoped that at least some bipartisan support in the House for bills like HB 2264 would also help carry them across the finish line, but that did not come to fruition. Industry opposition could be one reason: in an email, PECO said it supported a “broader, more scalable” approach to piloting VPPs.
Still, Fiedler remains optimistic more could pass in years ahead as energy price pressure continues to bear down on the public, and their legislators.
“I think people back home are having a really hard time right now in many ways, most especially at affording groceries, gas and utility bills,” Fiedler says.
And Fiedler’s recently passed legislation, which made it through the House unanimously, gives reason for advocates to hope.
“I can’t remember the last time that happened on an energy bill, not just in Pennsylvania but anywhere,” Walliser said.
Digging deeper in the toolkit
More policy options to build a smarter grid abound in the Pennsylvania legislature
In July, HB 2223, which requires utilities to consider using advanced transmission technologies while planning new infrastructure, was voted into law. Here is some additional legislation that could build grid efficiency.
House Bill 2380, sponsored by Lancaster County Democratic State Rep. Nikki Rivera, would require utilities to set targets for battery-storage procurement. Once implemented across the state, the batteries could help reduce reliance on fossil fuels to power through periods of peak demand.
“Where having battery storage could really help us is when there is peak demand,” Fielder says. “So on those 100 degree days where everybody has their AC cranked up, or the very cold snaps when everyone has their heat blasting … batteries can help us smooth those peaks in demand.”
Strategically located batteries could also eliminate the need to run new wires to isolated areas of the grid, advocates say. The bill to require utilities to begin using batteries narrowly passed a House Energy Committee vote in June, 14-12, and has yet to come before the full chamber. PECO says it does not support the bill, claiming it would “impose additional costs on Pennsylvania electricity customers without sufficient consideration of market conditions or cost-effectiveness.” The utility added it would like to see a pilot program first.
House Bill 2595, sponsored by Allegheny County Democratic State Rep. John Inglis III, would set deadlines for utilities to approve interconnection of small-scale solar systems onto the grid. For example, a school or factory wishing to install a rooftop solar system would know how long it would take for PECO to approve. As previously reported by Grid, owners of such systems currently can face lag times of months to over a year, endangering their financing.
Finally, HB 2429, a measure introduced by Montgomery County State Rep. Melissa Cerrato, would require utilities to publish capacity maps of their systems, allowing solar and battery companies to assess where their projects can be most quickly brought to market.
