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Your thermostat may not look like a power plant. Neither does your electric vehicle, home battery, or HVAC system. But utility and energy companies increasingly want to treat them like one.
A 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.”
But don’t stop with the utility, Frader-Thompson says: “The way most people actually learn about this and sign up is through the manufacturer of the device they have.” In other words, the offer may show up through your smart thermostat app, EV app, or battery app, or in an email from the company that made the device.
Once you find a program, the instructions for enrollment may be as simple as clicking through an app, filling out a utility form, or confirming your account and device information through a third-party enrollment page. EV drivers may be able to see the terms and payment in their automaker app and enroll “with a click of a button,” says Joseph Vellone, CEO of the EV-focused VPP company ChargeScape.
Eligibility can get annoyingly specific. A smart thermostat program could require an approved Wi-Fi thermostat; an EV program may depend on your automaker, charger, utility territory, or rate plan; a battery program may depend on the battery brand, inverter, or installer and whether your system can communicate with the utility.
These programs are also not evenly distributed across the country. Most programs are established in places with lots of flexible devices, stressed grids, supportive utilities, or strong state policies—especially California, Texas, New England, and increasingly parts of the mid-Atlantic region.
2. Ask yourself how much flexibility you can afford.
Before you sign up for a VPP, you’ll want to determine whether you’re willing to let a company adjust a device in your home—even if it typically happens only a few times a week.
For some people, this may be an easy decision: If your EV sits plugged in all night but only needs two hours to charge, shifting when that charging happens may be almost invisible. A home battery program could be lucrative if you understand how often the battery will be used, how much backup power you can keep, and whether extra cycling affects your equipment.
Other households, however, “do not have the flexibility to engage in one of these programs,” says Sanya Carley, a professor at the University of Pennsylvania and faculty director of the Climate Center for Energy Policy. She says that people who work night shifts, have caregiving responsibilities or health needs, or are already aggressively limiting their energy use to save money may have less room to allow a utility to adjust heating, cooling, or charging rates during peak hours for grid demand.
3. Review the opt-out rules and read the fine print.
VPP programs generally give participants the ability to override temporary changes made by the utility. This right to “opt out” is what makes them workable for many customers. Can you skip a day of the program on your thermostat if you’re planning to have guests over? Can you tell your car to charge immediately before a long road trip? Can you keep a battery reserve for outages? Utilities are typically motivated to make the opt-out process as simple as possible, with few rules and restrictions.
It could also be worth investigating where your data might be going. EV and battery programs may need to collect data about things like charging status and schedule, or how much power a device is drawing, while smart thermostat data may reveal patterns about when people are home, sleeping, or using appliances.The Electronic Frontier Foundation, a nonprofit focused on digital rights, has warned that this data could be used to infer private routines inside a home; depending on the program, that information may not only move through a utility but get distributed to device manufacturers, software platforms, or third parties involved in running the program.
ChargeScape and Energy Hub say the data used for these programs is limited and functional. EV data is focused on “the physics and the energy of the asset itself,” Vellone says. Frader-Thompson explains,“It doesn’t really matter what any one customer is doing. It matters what the average customer is doing.”
4. Decide whether the offer is worth it for you.
The amount of compensation for signing up for a VPP can vary widely. The payment also may not come as a regular check. It might be a signup bonus, a gift card, a monthly bill credit, a discounted thermostat, free or cheaper EV charging, an annual performance payment, or additional “export credits” for energy sent back to the grid.
The most expensive devices, namely EVs and home batteries, are often what yield the greatest savings, which adds a barrier to entry for those who cannot afford these products in the first place. A smart thermostat program can be a low-stakes way to start.
You might have a variety of reasons for wanting to sign up, including supporting the overall health of the grid or avoiding the construction of a new power plant in your community. “There are not that many things that you can do that directly contribute to decarbonizing the electric supply, or to improving affordability, or to improving reliability, and this is just a clearly effective way to do that,” Frader-Thompson says. “And you get paid for it.”
In short, the best VPP program is not necessarily the one that pays the most. It’s the one that clearly tells you what it can control, how much money you’ll get, how easily you can say no—and how well it supports a community’s energy goals. Your home probably won’t feel like a power plant. But if your thermostat, car, or battery can bend a little when the grid needs it, your home can act like a small piece of one.
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