What Virginia's New Demand Response and Energy Storage Laws Mean for Utilities, Cooperatives, Municipalities, and Large Energy Users

As electricity demand continues to grow across the United States, utilities are facing increasing pressure to maintain reliability, support economic development, and modernize aging infrastructure. A recent legislative push in Virginia highlights two solutions that are rapidly gaining traction throughout the utility industry: demand response and battery energy storage.

Virginia lawmakers recently passed legislation requiring Dominion Energy and Appalachian Power to offer demand response programs to customers with electric loads of 25 MW or greater. The state also established a target of procuring more than 21,000 MW of energy storage resources by 2045.

While these laws are specific to Virginia, the underlying trends are impacting utilities, electric cooperatives, municipalities, EPC firms, industrial facilities, and energy developers throughout the Southeast and Mid-Atlantic regions.

Why Utilities Are Focusing on Demand Response

Demand response programs allow large electricity users to reduce or shift energy consumption during periods of peak demand. Instead of building additional generation or transmission infrastructure to meet short-duration peaks, utilities can leverage customer participation to help balance the grid.

For investor-owned utilities, municipal utilities, and electric cooperatives, demand response can help:

• Improve grid reliability during peak demand events

• Reduce strain on transmission and distribution systems

• Delay costly infrastructure upgrades

• Improve operational flexibility

• Support long-term resource planning

As economic development continues to accelerate, many utility territories are experiencing increased demand from manufacturing facilities, industrial operations, and large data centers. Demand response programs provide an additional tool for managing these growing loads while maintaining service reliability.

The Growing Role of Battery Energy Storage

The Virginia legislation also reflects a nationwide trend toward greater adoption of battery energy storage systems (BESS).

According to the Solar Energy Industries Association (SEIA), nearly 10 GWh of battery energy storage was installed across the United States during the first quarter of 2026, representing a 32% increase compared to the same period in 2025.

Battery energy storage is increasingly being evaluated as a solution for:

• Peak shaving and load management

• Grid resiliency and reliability

• Renewable energy integration

• Demand response participation

• Emergency backup power applications

• Transmission and distribution support

  
  

Unlike traditional backup generation, battery systems can provide fast-response support to grid operators while helping facilities manage electricity costs and operational risk.

What This Means for Utilities and Energy Providers

For electric utilities, cooperatives, and municipalities, demand response and energy storage are becoming critical components of modern grid planning.

Utilities are increasingly evaluating how distributed energy resources can complement traditional infrastructure investments while supporting reliability and customer growth.

Organizations involved in:

• Electric transmission

• Distribution system operations

• Substation modernization

• Grid reliability initiatives

• Distributed energy resource integration

• Microgrid development

are all likely to see continued investment and policy support for demand flexibility and energy storage technologies.

Implications for Industrial and Commercial Energy Users

Large industrial facilities, manufacturing operations, data centers, and commercial campuses may see expanded opportunities to participate in utility-sponsored demand response programs.

Potential benefits include:

• Lower electricity costs

• Reduced peak demand charges

• Enhanced energy resiliency

• Improved sustainability performance

• Additional revenue opportunities through grid participation programs

As utilities continue to develop new demand-side management programs, energy users with flexible operations or onsite energy assets may find additional opportunities to support grid reliability while improving operational efficiency.

Looking Ahead

The utility industry is entering a period of unprecedented load growth driven by electrification, advanced manufacturing, artificial intelligence, data center expansion, and population growth. As a result, utilities are exploring every available tool to maintain reliability while meeting future demand.

Virginia's recent legislation serves as another indication that demand response and energy storage will play increasingly important roles in utility planning across the Southeast and beyond.

For utilities, cooperatives, municipalities, EPC contractors, developers, and industrial customers, understanding these evolving technologies and regulatory developments will be critical to navigating the future of energy infrastructure.

At NexGen Utility Sales, we work closely with investor-owned utilities, municipal utilities, electric cooperatives, EPC firms, developers, and industrial customers to identify innovative solutions that support grid reliability, operational efficiency, and long-term infrastructure planning.

Whether the conversation centers around grid modernization, substation reliability, distributed energy resources, or emerging energy technologies, our team remains committed to helping customers stay informed and prepared for the challenges ahead.

Sources

• Utility Dive. "Know the Hurdles to Using Generators for Demand Response Participation." June 11, 2026.

• Solar Energy Industries Association (SEIA). U.S. Energy Storage Market Data.

• Virginia General Assembly. Demand Response and Energy Storage Legislation (2026).