Measuring the Carbon Impact of Virtual Power Plants

As part of Leap’s mission to decarbonize the world’s electric grids, we set out to answer a simple question: How much carbon emissions do our virtual power plants (VPPs) actually help avoid? 

Leap estimates that our VPP network enabled the avoidance of more than 335,000 metric tons CO₂ between 2022 and 2025, approximately the equivalent of over 100,000 gasoline-powered passenger vehicles driven for one year (per the Project Drawdown’s Carbon in Context calculator). 

Getting to this answer, probably unsurprisingly, wasn’t so simple. Leap works with 100+ partners, many with large portfolios of distributed energy resources (DERs). Accurately measuring the avoided emissions across all these assets requires a number of assumptions about how local grids operate, how DERs are dispatched, and how renewable energy is integrated. 

To capture the full picture, we built a framework that breaks down avoided emissions into two categories: 

1. Direct avoided emissions

Direct avoided emissions are the most intuitive and measurable. They occur when a VPP dispatches instead of a fossil fuel power plant. During a demand response event, DERs reduce, shift, or export electricity consumption to support the grid. If that event hadn’t occurred, the grid operator would have called on a marginal power plant, often a natural gas "peaker plant", to supply that energy.

Direct avoided emissions measure the difference between those two outcomes.

In our model, we estimate this based on:

• The amount of energy delivered during VPP dispatch events (MWh)

• The emissions rate of the marginal generation that would have otherwise been used

We use a standardized ratio to estimate annual energy delivered per MW of enrolled capacity. Based on dispatch frequency, we assume approximately 20 MWh delivered per MW of capacity per year. This approach allows us to apply a consistent methodology across our historical portfolio.

2. Indirect avoided emissions

While direct emissions are the most tangible, they represent only part of the story. VPPs also play a critical role in enabling more renewable energy on the grid. Wind and solar generation are inherently variable, as they depend on when the wind blows and the sun shines. 

Flexible demand helps balance that variability, making it easier to integrate additional renewable capacity. We refer to flexible demand’s broader system impact as indirect avoided emissions.

Our analysis builds on our partner EnergyHub’s indirect emissions model to estimate this impact by:

• Assuming each MW of VPP capacity enables 0.5 MW of additional renewable capacity

• Applying a capacity factor of 0.3 to reflect real-world generation patterns

• Converting that enabled capacity into annual energy (using 8,760 hours per year)

• Applying an average grid emissions rate to estimate the fossil generation displaced

This results in an effective contribution of 0.15 MW of firm renewable capacity per MW of VPP. While this approach relies on more assumptions, it reflects an important reality: beyond reducing emissions during dispatch events, VPPs help reshape the grid by making higher levels of renewable penetration possible. In our analysis, indirect avoided emissions account for the vast majority of total impact.

Assumptions and limitations

Like any avoided emissions calculation, this framework is based on a set of simplifying assumptions. These include:

• A consistent relationship between enrolled capacity and energy delivered

• Static grid emissions rates over time

• Average capacity factors for renewable generation

• A modeled relationship between VPP capacity and renewable enablement

• No lag between VPP capacity coming onto the grid and a renewable asset being built

These assumptions are designed to provide a consistent and transparent way to estimate impact across markets over time.

Grid emissions rates introduce uncertainty. Power systems have generally become cleaner over time, while rising demand from electrification and data centers introduces new dynamics. Our approach holds emissions rates constant to maintain consistency, while recognizing that real-world outcomes will evolve with the grid. We will continue refining it as better data and industry standards emerge.

Expanding impact through DER growth

Although the impact is currently beyond the scope of our avoided emissions framework, it’s important to note that VPPs also contribute to emissions reduction by accelerating the deployment of distributed energy resources themselves.

Participation in grid services creates new revenue streams for DER companies, which in turn supports investment in new projects, customer acquisition, and product development, ultimately expanding the overall footprint of flexible, electrified assets on the grid.

As more DERs come online, the system gains additional flexibility, enabling more renewable integration and reducing reliance on fossil generation. This creates a compounding effect where each increment of VPP capacity increases total emissions impact over time. The long-term decarbonization of the grid depends on enabling cleaner resources to come online and operate reliably, and flexible demand is a key enabler of that transition.

At Leap, we’ll continue to refine our methodology, incorporate new data, and work with partners across the industry to better measure the role VPPs play in building a cleaner energy future. As VPPs grow in scale and frequency of dispatch, their contribution to emissions reduction will expand alongside their role in maintaining grid reliability and affordability.