Hurricanes, wildfires, and triple-digit heat domes are stressing America’s energy grid like never before, with millions experiencing rolling blackouts and brownouts as they struggle to keep their collective cool. As rooftop solar and home batteries show up in more and more places, however, we’re building something bigger than a backup: a virtual power plant that can keep things running when the grid can’t.
Imagine a network of hundreds, or even thousands of interconnected batteries, all networked together and coordinated with advanced distribution software to operate like a single store of energy, able to move energy from one battery to another, instantly, as soon as it’s needed, in a way that’s hardly noticeable to the people involved.
Got that in your head? Good. That distributed energy resource (DER) you’re imagining now is called a “virtual power plant,” or VPP.
Virtual power plants are a win-win solution that flips our traditional energy model on its head—instead of utilities spending billions on new infrastructure and passing those costs to ratepayers, VPPs allow homeowners to step in to help the grid keep electricity prices stable and prevent grid blackouts. It essentially turns neighborhoods into their own power plants, so we’re not forced to purchase expensive power from facilities miles away. This keeps money in our pockets and our grid more stable, which feels like common sense in a world where our electricity demand and prices keep climbing.
Kristina Zagame
Sr. Researcher, ENERGYSAGE
And, as more Americans bring solar power and home battery backup systems online, they’re building a new kind of fast, distributed, grid support — one that’s already sitting in people’s garages and basements.
“We’ve been piloting the way in which we should do this for 30 years,” explains Jigar Shah, former Director of the Loan Programs Office in the US Department of Energy said on the Plugged In podcast earlier this week. “The utility says, ‘We need to be able to upgrade the distribution grid so that you can do whatever you want. You can turn every single thing on in your house at the same time, and we have to be able to serve you.’ That bargain is getting way too expensive. We can’t keep upgrading the distribution grid … What (the utilities) need to do is to figure out how to help work with customers to say, ‘Hey, we need you to opt into load flexibility, in a way that isn’t noticeable to you, and that requires cultural change.”
The good news is that that “cultural change” is already happening.
We’ve got the juice
At last year’s Solar & Energy Storage Summit in San Francisco, Wood McKenzie delivered an in-depth assessment of the current state of the US distributed solar-plus-storage market and showed that the attachment rate (the number of people adding a battery to their home solar system) had quadrupled since Q1 2020, growing from 6% in Q1 2020 to 25% in Q1 2024. That number has continued to climb, driven in large part by the Tesla Powerwall, which is being produced at the staggering rate of nearly 700,000 units per year. That same report forecasts 10 GW of residential storage capacity will be installed between by 2028, with the residential segment constituting about 80% of all DERs.
Those Powerwall installations are paying off, too — and not just for the utilities who are able the leverage the distributed energy resource/VPP aspect, but for their owners, too. And I mean “pay off” in the most literal sense, with Tesla having paid out $9.9 million to Powerwall customers in 2024 alone.
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.
This new version of the Tesla 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.
Later, we reported that Tesla’s California VPP expanded to Southern California Edison (SCE) to now cover most of the state.
Last year, Tesla’s California VPPs reached over 100 MW in capacity, and the company also started building significant VPPs in Texas.
Fred Lambert
Editor in Chief, ELECTREK
The growth of battery backup power isn’t just about emergency prepping or lowering your own energy costs, in other words. It’s about avoiding the multi-billion-dollar cost of constantly expanding and reinforcing the existing grid by optimizing the system we already have.
And, by shifting demand loads away from peak demand periods and creating a store of clean solar and wind energy that would otherwise be curtailed (read: wasted), VPPs also help utilities decarbonize by reducing the need for “peaker plants” that run on fossil fuels.
With smart policies, the right incentives, and willing utility partners, each new home battery can eventually become a tiny piece of a decentralized, more affordable, and more reliable grid — one that can flex, adapt, and support itself in real time.
Too bad we (probably) won’t have those for much longer.
Original content from Electrek.
Read More: It’s time to start recommending some Tesla Powerwall alternatives
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