GoKawiilA virtual power plant, or VPP, is a collection of household devices (such as smart thermostats, electric-vehicle chargers, home batteries, and solar panels) that a utility can control. Usually that means commanding the devices to draw less electricity during peak hours. For example, the utility might adjust your thermostat or delay or slow EV charging when electricity demand is high.
In exchange, the utility offers VPP participants a discount on their energy bills and, in some cases, a signing bonus. Seth Frader-Thompson, CEO and cofounder of EnergyHub, a software company that helps utility companies run VPP programs, says a smart thermostat program may offer an initial bonus of roughly $50 to $150, plus about $25 to $50 per year, while home battery and EV devices could yield hundreds or thousands of dollars in annual savings.
The amount of power the utility might throttle in any one home is small. But it adds up, Frader-Thompson says. “When you put it together at the scale of hundreds of thousands, or millions, it has a pretty profound impact,” he says, equivalent to “firing up a power plant.”
As of 2023, there were already more than 500 VPP programs operating in the US alone, and the number has only grown since, especially with big players like Google starting to invest in this technology to help power their data centers. An estimated 4 million households with smart thermostats were enrolled in a VPP program as of last year.
But the approach is still new, and some programs may still have some kinks to work out, says Severin Borenstein, faculty director of UC Berkeley’s Energy Institute at Haas and member of the board of governors of the California Independent System Operator, which manages most of the state’s electric grid. If a program is not implemented well, he says, a utility may incorrectly predict when VPP participants plan to use more electricity and pay them for not using energy they weren’t planning to use anyway, potentially increasing energy bills for nonparticipants. Still, Borenstein says, “if we do it well, I think it can really be a benefit,” one that could help utilities avoid an expensive grid upgrade or emergency measures to conserve power.
Most consumer VPPs today are less dramatic than the name suggests and don’t actively send energy from your EV or home battery to the grid. But battery-to-grid programs are on the rise—and potentially offer even larger savings for consumers in the future.
So how do you actually sign up for a VPP? And how do you know if it’s worth it?
1. Check whether your utility company has a program and, if so, whether it actually supports your devices.
The types and brands of home devices supported vary from program to program. Your utility’s website is the obvious place to look to see if yours qualifies, but it’s important to note that you may not actually see the phrase “virtual power plant” anywhere. You may have better luck searching for your utility’s name plus terms like “demand response,” “peak rewards,” “connected solutions,” “battery storage,” “smart thermostat rewards,” “managed charging,” or “bring your own device.”
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