The Grid of the Future Isn't Built—It's Connected

By Aaron Cohen

What if your neighbor’s Tesla, your rooftop solar panels, and the office building down the street could all join forces to act like one giant power plant? That’s the promise of the Virtual Power Plant (VPP), a technology that’s turning thousands of small energy sources into a single, flexible grid solution.

This summer has been one of the hottest on record. Intense heatwaves have swept across Europe and other parts of the Northern Hemisphere, causing hundreds of heat-related deaths, fueling wildfires, and straining power grids. According to global energy think tank Ember, the 2025 heatwave increased daily power demand by up to 14%, triggering a two- to threefold surge  in average daily power prices. But disruptive heatwaves burden more than just everyday energy consumers, they also strain energy producers. As high temperatures reduce the efficiency of thermal power plants and energy transmission lines, they constrain supply just as demand surges.

This poses a fundamental challenge to electric companies: as extreme heat becomes more common, how can technological innovation help mitigate the energy burden? 

At Axis Innovation, we see a surge of startups tackling exactly this problem. One of the most promising answers we’ve identified is the VPP. 

A VPP is a network of distributed, decentralized energy sources such as home batteries, rooftop solar, and even home appliances. When combined, these sources operate as a single power plant. The aggregated energy is used to support the electrical grid during critical times of high demand. By pooling energy resources, a VPP can shift power to where it’s needed most. 

The benefits are shared on both sides: utilities reduce strain on the grid and avoid costly infrastructure upgrades, while consumers enjoy lower bills and can even earn compensation for their participation.

Fortunately, corporations don’t have to start from scratch, as there is a fast-growing wave of startups building VPP technology today. VPP startups such as Powernaut and Connect X are pioneering new models for decentralized grid management. Others are already achieving funding traction: NRN (National Renewable Network) have achieved notable funding milestones, raising $17 million in a Series A round just this month.

The momentum is clear. Partnerships between VPP startups and major utilities are moving from pilots to global rollouts. Autogrid’s collaboration with Japan’s ENERES Co. created what may be the world’s largest VPP, and the company continues to expand partnerships with utilities such as Puget Sound Energy in the U.S. For energy producers and grid operators facing extreme heat and rising demand, these cases provide a blueprint for action.

Axis Innovation is at the center of this shift. With 35+ open innovation projects, 20+ investment deals, and 50+ POCs and commercial agreements delivered, we’ve shown how to turn pilots into real impact. Global leaders like EDP, Centrica, and Ford have already trusted us to connect them with breakthrough startups.

Now, we’re working with the next wave of corporations tackling climate, energy, and industrial challenges: helping them move faster, smarter, and with measurable results.

If you’re ready to explore how startups can help you solve your toughest challenges, reach out to us here to learn more at talia@axisinnovation.com.