A virtual power plant, or VPP, is a network of home batteries that work together to support the grid. When demand spikes and the grid is under strain, participating batteries each send back a small amount of stored power. Spread across thousands of homes, that adds up to a power plant's output, without building one. Homeowners who take part are compensated for the energy their batteries contribute.
How a virtual power plant works
On a normal day, your home battery does its usual job. It stores the solar your panels produce, powers your home in the evening, and, if it's a Backup Battery, keeps your home running during outages.
A few times a year, usually on hot afternoons and evenings when demand runs highest, the grid needs extra help. During those peak events, the VPP signals participating batteries to discharge a little of their stored energy to the grid for a few hours. When the event ends, your battery goes back to normal and recharges from your panels.
The batteries aren't physically connected to one another. They coordinate through software, which is what makes the power plant "virtual."
Why the grid needs them
California's grid faces its biggest challenge in the late afternoon and evening. Statewide solar production drops as the sun sets, while household demand climbs as people get home. Utilities have traditionally met that peak with peaker plants, which are expensive to build and run only a handful of hours a year.
A VPP meets some of that demand with batteries that already exist in people's homes. That's less new infrastructure to build, and the power comes from stored solar instead of fossil fuels. As California's electricity demand keeps growing, which we cover in why California's electricity demand is climbing, resources like this become more valuable.
How homeowners take part
In PG&E territory, your battery manufacturer typically handles VPP participation for home batteries. Tesla and Enphase both run programs, and enrollment usually happens right in the battery's app. You may also hear the program referred to as ELRP, PG&E's Emergency Load Reduction Program, one way these events are organized.
Programs and eligibility depend on your utility, your battery, and what's open at the time. We don't enroll customers in VPP programs ourselves, but we're glad to answer questions about how participation would work with your system.
What a typical event looks like
Say a heat wave pushes statewide demand to its limit on a September afternoon. Your battery app shows a notice that an event is scheduled for that evening. Through the day, your panels charge the battery as usual. When the event starts, the battery sends part of its stored energy to the grid for a few hours instead of to your home, stopping when it reaches the backup reserve you set. Your home keeps running normally the whole time, drawing on the grid or the battery depending on your settings. When the event ends, the battery goes back to its everyday routine and recharges from your panels the next morning. Later, your compensation reflects the energy you delivered.
You stay in control
Participation is voluntary, and it doesn't take over your battery.
- Your home comes first. You set a backup reserve, and that charge stays in the battery for your own use during events.
- You can usually opt out. Most programs let you skip an individual event if you'd rather keep your full charge that day.
- Events are limited. They happen during periods of grid strain, not every day.
That's a different arrangement from the older demand-response rate plans some homeowners disliked, which changed how you were billed and asked you to cut usage. A VPP asks your battery to contribute stored energy, and you're compensated for what it delivers.
What homeowners get out of it
Compensation varies by program and is usually based on how much energy your battery delivers during events. For many owners, it's a modest bonus on top of the everyday savings their battery already provides.
Some homeowners also simply like being part of it. When the grid is strained, their batteries are helping keep it stable using power their own roofs produced.
VPPs and the PG&E battery rebate
Enrolling in a VPP is also required for PG&E's Permanent Battery Storage Rebate, a program aimed at a specific group of customers. Our post on PG&E's Permanent Battery Storage Rebate explains who qualifies and how it works.
Is a VPP right for you?
If you already have a battery, check your battery app to see which programs are available for your system. If you're considering a battery, VPP participation is one more way it can be useful, though we'd treat it as a bonus rather than the main reason to buy one. A battery's core value is covering your expensive evening hours with stored solar and, with a Backup Battery, keeping your home running during an outage. Our post on how battery storage powers your evenings and outages covers those everyday benefits.
We design and install battery storage across Marin, Sonoma, and Napa, and we've done it since 1984. We're 100% employee-owned, licensed as a General Contractor (B) and Electrical Contractor (C-10), and one of the first companies in California to obtain the state's C-46 solar license.
Curious how a battery would fit your home? Contact SolarCraft or call Sonoma/Napa 707.778.0568 or Marin 415.382.7717.
