MIT Technology Review is reporting that virtual power plants, or VPPs, are increasingly being used by utility and energy companies to manage electricity demand by treating household devices like smart thermostats, electric vehicles and home batteries as components of the power grid. It said VPPs allow utilities to control these devices, typically by adjusting thermostats or delaying EV charging during peak hours, in exchange for discounts on energy bills or signing bonuses for participants. Seth Frader-Thompson, CEO and cofounder of EnergyHub, said smart thermostat programs might offer an initial bonus of $50 to $150, plus $25 to $50 annually, while home battery and EV devices could yield hundreds or thousands of dollars in annual savings. The publication noted that while the power throttled in any one home is small, the collective impact of hundreds of thousands or millions of devices can be profound, equivalent to "firing up a power plant." As of 2023, more than 500 VPP programs were operating in the U.S., with Google also investing in this technology for its data centers. Severin Borenstein, faculty director of UC Berkeley’s Energy Institute at Haas, cautioned that if not implemented well, programs could incorrectly predict energy use, potentially increasing bills for nonparticipants. However, he added that if done well, VPPs could help utilities avoid expensive grid upgrades. MIT Technology Review advised consumers interested in VPPs to check if their utility company offers a program, often under terms like "demand response" or "smart thermostat rewards," or to look for offers through device manufacturers. It recommended assessing personal flexibility to allow device adjustments, reviewing opt-out rules, and understanding data privacy implications. The Electronic Frontier Foundation has warned that data from smart devices could infer private routines, though companies like ChargeScape and EnergyHub stated data use is limited and functional. Compensation varies, including signup bonuses, bill credits or discounted devices, with EVs and home batteries often yielding the greatest savings. The publication concluded that VPPs offer a way to contribute to decarbonizing the electric supply, improving affordability and reliability.
Full Article: How to sign up for a virtual power plant—and decide whether you should