You don't have to own a big power plant to make a difference to the grid on a hot day. Thanks to virtual power plants, your own home appliances can contribute to keeping the lights on across your community.
The best part is, you might even get paid for it.
If you have a smart thermostat, there's a good chance you can participate in a VPP. By doing so, you'll allow the VPP to reduce your energy usage slightly when it matters most, reducing stress on the grid and freeing up supply during peak times. Here's what to know about leveraging your smart thermostat to lower your electricity bill and even earn cash or other rewards for participating.
Designed to support the electric grid, a virtual power plant brings together a bunch of different appliances or devices, like home batteries, to provide power or reduce the load on the electrical system during moments when it could get out of balance. For the consumer, there's usually a perk, often in the form of cash or bill credits.
"A virtual power plant is a way for households to shift their energy usage during times when the grid is strained and energy prices are really high," said Ben Brown, CEO of virtual power plant Renew Home. "People are able to earn rewards and earn money by saving energy when it's really expensive to produce it."
VPPs function by aggregating electricity from different sources, which could include larger facilities like solar and wind farms. They can also pull from much smaller energy sources that are connected to the grid, like the solar panels on your roof, your home battery, EV chargers and smart thermostats. By shifting energy demand, VPPs keep utilities from needing to build additional "peaker plants," or power plants that only run during occasional peak usage and typically burn fossil fuels.
In some cases, a VPP pulls energy generated from those residential sources and feeds it to your utility. In other cases, as with smart thermostats, VPPs support the grid by reducing the amount of electricity being used.
How your smart thermostat can help the grid
VPPs can use a lot of different devices, like smart water heaters or home batteries, but the smart thermostat is a uniquely powerful tool.
"Smart thermostats are maybe the most effective source of virtual power plant services on the consumer level," said Andrew Meyer, CEO of home energy savings platform Arbor. "They're widely adopted -- over 20% of US households have a smart thermostat -- and they can be automatically responsive, as opposed to texting you and telling you to turn things off."
Because HVAC systems are one of the biggest users of power in the average household, automatically bumping your smart thermostat up a degree or two in summer or down in winter, typically for a short period of only an hour or so, can add up to significant savings, Meyer said.
"Your thermostat may only move a degree or two, but the real work happens when that is happening in concert with hundreds, thousands, or even millions of other homes," Brown says.
In turn, participating households cut their energy bills by using a little less electricity while remaining comfortable. Savings are even bigger if your energy plan includestime-of-use rates during periods of peak usage. You can also earn savings from the VPP in exchange for that shift in power demand. If you've been thinking about upgrading to a smart thermostat, you may be able to take advantage of Inflation Reduction Act incentives like rebates as well as coupons or other incentives from your utility.
How to enroll in a virtual power plant (and get paid)
Whether you can participate in a VPP depends on both your smart thermostat and your utility. Meyer suggested reaching out to your local utility for more information. Some smart thermostat companies like Google Nest and Ecobee offer integrations with VPPs.
"Typically, VPP participation just takes a few clicks on the thermostat or app, and users can override events for any reason, ensuring that you retain ultimate control over your home's climate," Brown said.
The benefits of joining a VPP vary by plan, utility, and location. In exchange for giving up a little control of your smart thermostat, you can expect to see lower electric bills thanks to those automatic reductions in energy use. Depending on your agreement, you can also see rewards in the form of credits on your electricity bill, gift cards, or cash payments.
For Brown, VPPs solve the problem of everyday changes that can be difficult or time-consuming to implement by making those shifts in energy demand automatic.
"It's hard to make behavioral changes all by yourself," he said. "Virtual power plants are giving consumers opportunities to take advantage of reduced energy costs while making it easy for them."