US virtual power plants reach 4 million smart-thermostat homes

An electric vehicle can sit plugged in overnight while its owner sleeps, needing only two hours of charging. A utility may use that spare timing flexibility instead of asking the driver to consume less: that is the everyday version of a virtual power plant, or VPP, and an estimated 4 million US households with smart thermostats were enrolled last year.

The devices are ordinary. Smart thermostats, EV chargers, home batteries and solar panels become a coordinated resource when a utility can adjust them during peak demand. Seth Frader-Thompson, cofounder and CEO of EnergyHub, says the reduction from one home is small, but at the scale of hundreds of thousands or millions it can be equivalent to “firing up a power plant.” MIT Technology Review counted more than 500 VPP programs operating in the US as of 2023.

For households, the exchange is control for compensation. A smart-thermostat program may offer an initial bonus of roughly $50 to $150, followed by about $25 to $50 per year. EV and home-battery programs could yield hundreds or thousands of dollars in annual savings, although the exact offer depends on the utility, device and program. Enrollment may appear in a thermostat, EV or battery app rather than under the words “virtual power plant.”

The fit is personal. Someone whose EV stays connected all night may barely notice a shifted charging window, while a household with night-shift work, caregiving responsibilities or health needs may have less room for changes to heating, cooling or charging. Battery owners also need to understand how often the battery will be used, how much backup power remains available and whether extra cycling affects the equipment. The opt-out terms and payments need to be read closely.

So what changes in practice? A participating home can earn money while helping a utility manage demand without relying only on new grid upgrades or emergency conservation measures. The benefit is not guaranteed: Severin Borenstein of UC Berkeley says poor implementation could misjudge when participants would have used electricity and potentially increase costs for nonparticipants. Most consumer VPPs still manage demand rather than send power from an EV or battery to the grid, though battery-to-grid programs are on the rise.