On Sept. 9, 2026, more than 140,000 home batteries across California discharged simultaneously during peak demand, supplying over 580 megawatts of electricity to the grid without requiring construction of traditional power plants. This demonstration highlighted virtual power plants as an emerging solution to grid capacity challenges.
A virtual power plant (VPP) is a network of distributed energy resources, including home batteries, smart thermostats, electric vehicle chargers, rooftop solar installations, and flexible commercial equipment, coordinated by software to function as a single power plant. Unlike conventional power plants that operate from a single location, VPPs aggregate thousands of small resources already present on the grid, which can be dispatched by grid operators when needed. The U.S. Department of Energy defines VPPs as aggregations of distributed energy resources that provide grid services equivalent to traditional power plants.
VPPs operate through three coordinated layers. Typically, when demand is expected to spike during evening hours on hot days, an aggregator receives advance notice and prepares enrolled homes by precooling and ensuring batteries are fully charged with solar energy. When demand peaks, batteries discharge, thermostats reduce cooling, and water heaters and vehicle chargers pause temporarily. Participants receive compensation through bill credits, per-event payments, upfront incentives, or improved tariffs, often without noticing operational changes.
Common VPP components include home and business batteries that discharge during peak periods, smart thermostats that adjust heating and cooling demand, electric water heaters that shift usage to off-peak hours, electric vehicles and chargers that delay charging cycles, rooftop solar systems, and commercial or industrial equipment that can reduce consumption when requested. VPPs generally fall into two categories: those primarily reducing demand, such as thermostat programs, and those adding supply through battery fleets or pooled generators, with newer systems increasingly performing both functions.
The technology addresses growing grid pressure from AI data centers, electric vehicles, and heat pump adoption, while offering faster capacity solutions than traditional power plant construction. Grid operators benefit from VPPs’ ability to respond within seconds to grid signals, providing greater flexibility than conventional demand response programs that have existed for decades.
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