Soft energy is the new currency of global influence
The oil crisis of the 1970s exposed the fragility of global energy supplies. Today, we are facing a similar crisis, and those on the front lines are returning to the same thesis that was proposed 50 years ago: soft energy.
Smarter, not bigger
“Soft energy” refers to renewable energy sources combined with efficient consumption and supply strategies. The premise looks beyond producing more power, and focuses on using energy smarter.
The U.S. electricity demand is projected to rise 78 percent between 2023 and 2050, driven by data centers, manufacturing and electrification, and intensified by an aging grid. Building new power plants will take years and is not a viable option for the immediate crisis.
Distributed energy sources
Soft energy initiatives such as distributed energy sources, also known as virtual power plants (VPPs), are now being rolled out at scale.
“Distributed energy resources are ready-to-go technologies, such as rooftop solar, batteries, and smart thermostats, already installed close to homes or businesses, that allow customers to generate, store and manage electricity themselves.” Brian Watts, officer of energy modernization at Pew Charitable Trusts, told Newsweek.
The global VPPs market is worth roughly $7.4 billion and is projected to grow at a 22.6% annual rate through 2033, supported by new policy pushing for more soft energy pathways. Pew research estimates that VPPs could add 217 gigawatts of capacity from 2024-2028 at 40 to 60 percent of the cost of traditional infrastructure solutions.
“Because VPPs can make use of resources that are already in place, they can often be deployed in 6–12 months rather than the years required to build a new power plant or major grid infrastructure,” Mark Dyson, managing director at the Rocky Mountain Institute, told Newsweek. “This makes them one of the fastest and most affordable ways to get more out of the systems we already have.”
In June, Sunrun, Tesla and Renew Home announced a framework to deliver over 16.8 gigawatts of flexible capacity aimed at meeting AI data center demand. Sunrun already operates the largest VPP in California and also partnered with NRG Energy on a Texas VPP in December 2025.
Demand-side measures
VPPs can also adapt to power requirements. If the grid needs less or more supply, VPPs can discharge a battery, reduce home heating temporarily, or pause an EV charge to ease demand.
“As demand for electricity and costs continue to rise, these programs allow central operators to tap into a network of distributed energy resources to help alleviate pressure on the main grid in times of high demand,” Watts said. “These initiatives are gaining momentum across the country: Pew’s analysis found that between 2021 and 2025, state legislatures passed more than 400 policies advancing distributed energy resources.”
One such initiative is the Federal Energy Regulatory Commission’s Order 2222, which already requires grid operators to let batteries, EVs and smart thermostats compete directly in wholesale power markets. The U.S. Department of Energy Loan Programs Office is also financing VPP infrastructure as part of federal grid-modernization efforts.
Industry giants are following. In March, Google integrated 1 gigawatt of demand-side measures into long-term utility contracts, enabling its data centers to flex power use and help balance the grid.
Even so, less than 20 percent of eligible distributed energy capacity nationwide was enrolled in such programs as of 2024.
The crisis we faced in the 1970s has only grown, and soft energy solutions now represent an essential component of energy infrastructure, not just an attractive complement.
