Soft Energy Is the New Currency of Global Influence
The oil crisis of the 1970s highlighted significant vulnerabilities in global energy supplies. Today, a similar predicament prompts a renewed focus on “soft energy,” a concept introduced five decades ago.
Smarter, Not Bigger
“Soft energy” encompasses renewable energy sources paired with efficient consumption strategies. This approach prioritizes smarter use of energy over mere production increases.
The U.S. electricity demand is anticipated to surge by 78 percent from 2023 to 2050 due to burgeoning data centers, electrification, and an aging grid. Constructing new power plants will take years and is not a feasible immediate solution.
Distributed Energy Sources
Soft energy initiatives like distributed energy sources, also known as virtual power plants (VPPs), are being implemented at scale. According to Brian Watts from Pew Charitable Trusts, distributed energy resources such as rooftop solar and smart appliances empower customers to generate and manage their own electricity.
The global VPP market is valued at about $7.4 billion and is expected to grow by 22.6% annually through 2033. VPPs are projected to provide 217 gigawatts of capacity between 2024 and 2028 at a fraction of the cost of traditional infrastructure solutions. They can be deployed much more quickly than traditional power plants, often within 6–12 months.
In June, companies like Sunrun and Tesla announced a framework for delivering over 16.8 gigawatts of flexible capacity to meet growing demands, particularly from AI data centers.
Demand-Side Measures
VPPs are adaptable to shifting power requirements, capable of discharging batteries or adjusting heating and EV charging to alleviate grid stress. These measures enable utility operators to utilize a network of distributed energy resources to manage peaks in electricity demand.
Programs supporting VPPs are gaining traction, with state legislatures enacting over 400 policies to promote such resources from 2021 to 2025. Notably, the Federal Energy Regulatory Commission’s Order 2222 mandates that grid operators allow VPPs to compete in wholesale power markets.
Major corporations are stepping up; in March, Google integrated 1 gigawatt of demand-side measures into its utility contracts.
Despite these advancements, less than 20% of eligible distributed energy capacity was engaged in such programs by 2024.
The energy crisis we experienced in the 1970s has intensified, and soft energy solutions have become integral to our energy infrastructure rather than mere supplements.
