Virtual Power Plants Bolstering Grid, Making Dollars for Home Battery Owners

February 10, 2023

Virtual power plants helped California withstand high grid demands during last summer’s heat wave. The contribution was small, f or now, but is rapidly scaling.
Above, pretty good report on how the same idea is being studied in Texas.


A virtual power plant (VPP) consists of distributed energy storage systems – like Tesla Powerwalls – used in concert to provide grid services and avoid the use of polluting and expensive peaker power plants.

In 2021, Tesla launched a VPP pilot program in California, where Powerwall owners would join voluntarily without compensation to let the VPP pull power from their battery packs when the grid needed it. It helped Tesla prove the usefulness of such a system.

Following the pilot program, Tesla and PG&E (the electric utility covering Northern California) launched the first official virtual power plant through the Tesla app with compensation in June.

This new version of the Virtual Power Plant actually compensates Powerwall owners $2 per kWh that they contribute to the grid during emergency load reduction events. Homeowners are expected to get between $10 and $60 per event.

Shortly after, Tesla’s California VPP expanded to Southern California Edison (SCE) to now cover most of the state, and the VPP had its first event, and it was extremely successful.

Tesla has now sent the payments for 2022 to Powerwall owners participating in the VPP, and they are reporting up to $575 in revenue (via reader Mahkus who has been documenting his use on Youtube)

E&E News:

As Texas faces questions about the reliability of its electricity grid and the state hits a demand record even before the peak days of summer, Tesla Inc. is pitching a novel solution: a virtual power plant made up of its customers’ home solar panels and batteries.

The electric vehicle manufacturer recently asked the Electric Reliability Council of Texas (ERCOT), the state’s main grid operator, to adopt rules that would allow its home storage customers to participate in the market as soon as possible. If successful, Tesla would start operating virtual power plants (VPPs) before the end of this year, using its customers as a grid resource and, in turn, allowing customers to sell electricity back to the grid.

But the rules sought by Tesla could do more than just provide a new source of reliable power in a time of need. They could “change, or augment, the paradigm of how we’ve viewed the electricity market,” said Joshua Rhodes, a research associate with the Webber Energy Group at the University of Texas, Austin. Any VPP experiment is being closely watched as U.S. utilities and grid operators prepare for a system with fewer traditional power plants.

Experts say Tesla’s proposal in Texas could be of particular interest given the unique market conditions and reliability challenges there. As electric cars and home storage units proliferate, there’s increasing attention on whether those distributed energy resources (DERs) could be used in consort with each other, acting as a large, dispersed source of power on the grid to meet peak demand.

Dan Power, an analyst with Guidehouse Insights, said that there are significant policy questions and educational issues, but that virtual power plants could “start to cement themselves as not just viable, but essential services to the grid as it’s changing.”

Tesla allowed customers in California to join a VPP model last summer and operates the model in areas of Australia, which has faced reliability issues and price spikes similar to those in Texas. Green Mountain Power in Vermont has also run a well-regarded VPP pilot.

Tesla also recently held a pilot with 64 homes in North Texas that it says lays the groundwork for a permanent program that could see solar systems and batteries supplement or even replace fossil fuel plants deployed to meet peak demand.

report from Guidehouse Insights commissioned by distributed energy software firm AutoGrid found that ERCOT could replace its fleet of oil and natural gas peaker plants with distributed resources and VPPs, especially in the winter, when the natural gas infrastructure may be unreliable.

With an estimated 32,924 megawatts of distributed energy resources expected to come online between 2020 and 2030, the report found that VPPs would offer a more resilient, flexible and cleaner alternative to peaker plants. That’s especially important in Texas, as the ERCOT grid can only draw limited amounts of power from other regions.

“Tesla’s request represents an opportunity to take advantage of these resources that are already connected to the grid, but are siloed and only providing backup power to a single household,” Power said. “It’s a big step, and ERCOT is going to have to decide how they’re going to treat energy storage going forward. The adoption rate is only going to increase.”


Green Mountain Power (GMP), a Vermont electric utility, has quietly built a fleet of 4,000 Tesla Powerwalls, and it is saving them a lot of money.

GMP has been one of Tesla’s best partners when it comes to deploying Powerwalls, Tesla’s home battery pack, in a decentralized way with electric utilities. The relatively small electric utility operating in Vermont was one of the earliest adopters of Tesla Powerwall.

It has been leading the deployment of Tesla Powerwalls with 2,000 units as of 2018, and in 2020, it signed a deal to get up to 1,000 more Powerwalls from Tesla per year. As of last year, GMP said that it had more than 3,000 Powerwalls installed in homes on its network.

The electric utility offers strong incentives to either deploy Powewalls at customer’s homes or onboard existing Powerwalls in its grid program where GMP is allowed to use some power capacity of a customer’s batteries in exchange for credits on their electricity bill.

In 2020 alone, GMP disclosed that it saved over $3 million from its use of Tesla Powerwalls.

Now the company confirmed that it has deployed over 4,000 Tesla Powerwalls at customers’ homes across the state. GMP CECO Mari McClure said to local news WCAX:

The program has been running for a few years and McClure says they’re finding success. There are more than 4,000 Powerwalls in Vermont homes.

McClure also said that the fleet of home batteries saved more than $3 million again in 2021 and it is likely to be much more than that this year since it saved them nearly $1.5 million in one week this summer during a heat wave.

This is significant for a relatively small electric utility that serves approximately 270,000 residential and business customers in Vermont.

Tesla has recently been building its own virtual power plant (VPP) with Powerwall owners in California in partnership with much larger electric utilities, like PG&E and SCE, which both have millions of customers. Yet, during the VPP’s first discharge event last week, they had less than 3,000 Powerwall owners participating.

Therefore, Green Mountain Power’s Tesla Powerwall fleet is extremely impressive for its size.

But McClure said that they need to go faster, and more people have to get onboard. They are working with other electric utilities to deploy similar technology; GMP is also deploying new microgrids.


One Response to “Virtual Power Plants Bolstering Grid, Making Dollars for Home Battery Owners”

  1. gmrmt Says:

    I wonder what percentage of households participating would be the maximum that the grid could practically make use of. Better get in early.

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