The quiet rise of virtual power plants
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 — smart thermostats, EV chargers, home batteries, solar panels — that a utility can remotely command to draw less electricity during peak hours. In exchange, participants receive bill discounts, signup bonuses, or other perks.
The scale of this shift is easy to miss. As of 2023, there were already more than 500 VPP programs operating in the US alone, according to reporting from MIT Technology Review. An estimated 4 million households with smart thermostats were enrolled in a VPP program as of last year, and the number has only grown since. Big technology companies are also entering the space: Google has started investing in VPP technology to help power its data centers.
At the individual household level, the amount of power a utility can throttle is small. But aggregated across hundreds of thousands or millions of homes, the impact becomes meaningful. Seth Frader-Thompson, CEO and cofounder of EnergyHub, a software company that helps utilities run VPP programs, describes the combined effect as equivalent to "firing up a power plant." That is the core promise: distributed flexibility, orchestrated like centralized generation, without the emissions or the construction cost.
What's actually in it for consumers
The compensation structure varies widely by program and device type. According to Frader-Thompson, a smart thermostat program may offer an initial bonus of roughly $50 to $150, plus about $25 to $50 per year. Home battery and EV programs are potentially far more lucrative, yielding hundreds or thousands of dollars in annual savings. The payment often does not arrive as a simple check; it may come as a signup bonus, gift card, monthly bill credit, discounted thermostat, free or cheaper EV charging, annual performance payment, or export credits for energy sent back to the grid.
Eligibility, however, 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 on whether your system can communicate with the utility at all. Finding the program is not always obvious either. Utility websites frequently avoid the phrase "virtual power plant" altogether; consumers are more likely to encounter terms like "demand response," "peak rewards," "connected solutions," "managed charging," or "bring your own device."
Frader-Thompson notes that the most common path to enrollment is not the utility's website but the device manufacturer's app. Smart thermostat apps, EV apps, and battery apps increasingly surface VPP offers directly, sometimes with a one-click enrollment flow. Joseph Vellone, CEO of the EV-focused VPP company ChargeScape, says EV drivers may be able to see the terms and payment in their automaker app and enroll "with a click of a button." But the geographic distribution remains uneven: the most mature programs are concentrated in California, Texas, New England, and parts of the mid-Atlantic region, where stressed grids, supportive utilities, and strong state policies align.
The flexibility gap and who gets left out
Before signing up, consumers must decide how much control they are willing to cede to a utility — even if adjustments typically happen only a few times per week. For some households, the trade-off is nearly invisible. If your EV sits plugged in all night but only needs two hours to charge, shifting when that charging occurs is a minor inconvenience. A home battery program can be attractive if you understand how often the battery will be cycled and what level of backup power you can reserve.
But not everyone has that margin. Sanya Carley, a professor at the University of Pennsylvania and faculty director of the Climate Center for Energy Policy, points out that households with night-shift workers, caregiving responsibilities, health needs, or tight energy budgets may have little room to allow a utility to adjust heating, cooling, or charging during peak hours. "Do not have the flexibility to engage in one of these programs," she says, describing a real segment of the population for whom even occasional interruptions are not acceptable.
There is also a question of equity in who reaps the benefits. The most expensive devices — EVs and home batteries — often generate the largest savings, which adds a barrier to entry for households that cannot afford these products in the first place. Smart thermostat programs are a lower-stakes entry point, but they offer correspondingly modest rewards. Severin Borenstein, faculty director of UC Berkeley’s Energy Institute at Haas and a board member of the California Independent System Operator, warns that a poorly implemented program can also create hidden costs for nonparticipants. If a utility miscalculates when VPP participants would have used electricity anyway, it may pay them for reductions that would have occurred without any intervention — costs that can be passed on to other ratepayers.
Data privacy questions linger
VPP participation also means sharing information about your energy use. EV and battery programs may collect data about charging status, charging schedules, and power draw. Smart thermostat data can reveal patterns about when people are at home, asleep, or using major 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, the information may move not only to the utility but also to device manufacturers, software platforms, and third-party vendors that operate the program.
The companies involved insist the data is limited and functional. Vellone says ChargeScape's EV data is focused on "the physics and the energy of the asset itself." Frader-Thompson similarly explains that EnergyHub does not care what any individual customer is doing: "It doesn’t really matter what any one customer is doing. It matters what the average customer is doing." Still, as VPP enrollment grows, the granularity of household consumption data will be an increasingly sensitive issue. Consumers should read the fine print about who receives their data and whether they can opt out of specific sharing arrangements.
The good news is that most VPP programs give participants the ability to override temporary changes. This "opt-out" right is what makes the programs workable for many customers: you can skip a day on your thermostat before hosting guests, ask your car to charge immediately before a road trip, or maintain a battery reserve for outages. Utilities are generally motivated to keep the opt-out process simple, since participation is voluntary at the household level.
What to watch next
Most consumer VPPs today are less dramatic than the name suggests. They typically reduce demand rather than actively push stored energy back to the grid. But battery-to-grid programs are on the rise and may offer larger savings as the technology matures. If implemented well, VPPs could help utilities avoid expensive grid upgrades and emergency conservation measures — benefits that ultimately accrue to all ratepayers, not just participants.
Borenstein remains cautiously optimistic: "If we do it well, I think it can really be a benefit." The qualifier matters. For VPPs to scale fairly, utilities and device makers will need to address three problems simultaneously: making enrollment discoverable, ensuring voluntary participation is genuinely informed, and protecting household energy data from misuse.
For tech professionals, the growth of VPPs signals something broader: the home is becoming an active node in the energy network, and software platforms are becoming as important as the hardware they orchestrate. Companies like EnergyHub and ChargeScape are already positioning themselves as the middleware of the grid. The next two years will likely determine whether virtual power plants remain a niche program for early adopters or become a standard feature of every connected home — and whether the flexibility they harvest is shared equitably, or only by those who can afford the most expensive devices.
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