Virtual Power Plants: How to Join and Whether It’s Worth It
Virtual power plants let utilities control home devices like thermostats and EV chargers to cut peak demand. Here’s how to sign up and decide if the perks outweigh the flexibility trade-off.
As of 2023, more than 500 VPP programs were operating in the US alone, and an estimated 4 million households with smart thermostats had enrolled. The approach is still new, says Severin Borenstein, faculty director of UC Berkeley’s Energy Institute at Haas and a board member of the California Independent System Operator. If a program is poorly implemented, a utility may mispredict when participants plan to use electricity and pay them for not using energy they weren’t planning to use anyway, potentially raising bills for nonparticipants. Still, Borenstein says that if done well, VPPs can help utilities avoid expensive grid upgrades or emergency conservation measures.
Seth Frader-Thompson, CEO of EnergyHub, which helps utilities run VPP programs, says a smart thermostat program might offer an initial bonus of $50 to $150 plus about $25 to $50 per year, while home batteries and EV devices could yield hundreds or thousands of dollars in annual savings. Though the power throttled in any single home is small, Frader-Thompson says that at the scale of hundreds of thousands or millions of homes, it is equivalent to “firing up a power plant.”
To join a VPP, start by checking whether your utility has a program and whether it supports your devices, advises the report. The phrase “virtual power plant” may not appear on the utility’s website; search instead for terms like “demand response,” “peak rewards,” “connected solutions,” or “managed charging.” Many people learn about programs through device manufacturers, such as smart thermostat or EV apps, and enrollment may be as simple as clicking through an app or filling out a utility form. Eligibility can be specific: smart thermostat programs may require approved Wi-Fi models, EV programs may depend on your automaker, charger, and utility territory, and battery programs may hinge on the battery brand, inverter, and installer.
VPP programs are not evenly distributed. Most are in places with lots of flexible devices, stressed grids, supportive utilities, or strong state policies, especially California, Texas, New England, and parts of the mid-Atlantic region. Before signing up, consider how much flexibility you can afford—whether you are willing to let a company adjust your devices, even if only a few times a week.
Most consumer VPPs today do not actively send energy from your EV or home battery to the grid, but battery-to-grid programs are rising and may offer larger future savings. Experts advise weighing the incentives against the loss of control and the risk of program glitches, but the potential benefits for both consumers and the grid are significant.