What kind of virtual power plant would you choose?

Hello, everybody! Welcome back to California Wire. This week, I’m going to be talking about virtual power plants again — but not the ones set up by utilities and tech giants or run by solar-battery vendors like Sunrun and Tesla. Instead, I want to dive into a pretty radical new concept: letting participating households design VPPs themselves. 

On Wednesday, the Agile Electrification Project, led by the Design Lab at the University of California, San Diego, launched a new phase of research on a potentially groundbreaking project meant to do just that. 

Over the next 12 months, some 200 volunteer households that have solar panels, home battery systems, electric vehicles, heat pumps, smart thermostats, and other connected devices by various manufacturers will work with researchers to develop the ground rules for a set of hypothetical VPP programs. 

Their decisions — about how much electricity they’re willing to share, under what conditions, and in exchange for what incentives — could serve as a data gold mine for policymakers, utilities, and companies trying to build VPPs for the millions of Californians who might be interested in them, but aren’t participating in the handful of options currently available. 

So says Andrew Krause, CEO of Northern Pacific Power Systems, a California-based solar, battery, and home electrification contractor and co-lead of the Agile Electrification project. ​“What would happen if we put customers in a simulated environment, tweaked the rules, and found compelling, sophisticated program designs that give people agency to achieve their desired outcomes?” he asked. His hope is that ​“homeowners will self-organize around the right programs if they have a sense of control.” 

Today, VPPs are run by utilities or companies that can afford to enlist customers and offer them special deals to participate. This can yield impressive results, as demonstrated by Sunrun and Tesla’s increasingly large-scale VPP dispatches over the past two years. 

But most of the state’s more than 2 million homes with rooftop solar, and a significant chunk of its 2.5 gigawatts of residential batteries, were bought with loans or cash and installed by local and regional contractors. Those systems are VPP-capable, Krause said, but ​“nobody’s representing them right now to do things they are capable of doing if they’re given the right conditions.” 

To discover what these households want out of a VPP, Agile Electrification will send surveys to the participants in what it calls its Living Laboratory. Some questions will deal with standard VPP issues, like how often people are willing to have their air conditioning turned down during heat waves, or how much battery power they want to keep in reserve in case of a possible blackout. 

But they’ll also explore what motivates households to share their energy, said Thomas Familia, a former utility energy analyst and postdoctoral research scholar at Arizona State University working on the project. Some may want to maximize their financial benefits. Some may want to use more clean energy. And others may want to help neighbors who need to run lifesaving medical equipment. 

“We want to make it clear there’s a personal relationship between the VPP and the household itself,” he said. 

Those surveys will guide the Agile Electrification team in developing a range of hypothetical VPP programs. Balto Energy, a San Diego–based startup with software that tracks and analyzes home energy usage, will collect and share the data on how each home’s virtual participation in those programs would alter their hour-to-hour electricity usage profiles. 

How can utilities and grid planners make use of this collective VPP feedback? That’s where the testing facility DERConnect comes in. The UCSD-backed lab uses advanced grid-simulation software and hardware to extrapolate how Living Laboratory households’ shifts in energy use would impact the state’s real-world grid. ​“We pipe those responses back to DERConnect, and they simulate the impact on the grid,” Krause said. 

My take

Krause believes that ​“solar-led electrification” can help Californians offset high and rising utility electric rates and make it affordable to switch to electric vehicles and home heating and appliances. But he also worries that rich people may use solar and batteries to ​“defect” from the grid entirely, leaving the rest of us stuck paying for increasingly costly utility infrastructure. 

Virtual power plants could help prevent that, but to do so, they need to rapidly and dramatically scale up. Utilities and heavyweights like Sunrun and Tesla will continue to play vital roles in bringing VPPs to their full potential. But plenty of critics question whether households in these programs are being paid their fair share for the energy flexibility they’re providing. We need ideas like the Living Laboratory to open the floodgates of participation — and to give us all a stake in the outcome. 

What else I’m watching

Speaking of Sunrun and Tesla, both companies are major players in the Demand Side Grid Support program, one of the biggest VPPs in the country. And the hot weather hitting California this fall has given those batteries a chance to shine.

According to data released by Sunrun last week, the two companies hit a collective 745 megawatts of capacity on Oct. 6, up from previous records of 669 MW on Oct. 5 and 580 MW on Sept. 9. Some of those customers are enrolled in a separate emergency program, but we know from past events that the lion’s share of solar-charged battery customers are signed up via the DSGS program. 

Unfortunately, big cuts to state funding for DSGS will make it hard to retain customers, so that support may not be available if similar heat-driven grid conditions occur in the 2027 season. Perhaps California’s next governor will realize this and work with state lawmakers to revive the program. 

PG&E’s latest fire-prevention power outages

Last week, Northern California utility Pacific Gas & Electric conducted a series of ​“public safety power shutoffs” affecting tens of thousands of customers from the San Francisco Bay Area and the Central Coast to the Central Valley and Sierra Nevada. 

Its post-PSPS investigation found multiple spots where the grid suffered ​“weather-related damage” that could have sparked wildfires if it had remained energized. Still, people weren’t happy about having their power cut off. 

PG&E has made major improvements since its earliest botched PSPS events, both in warning people in advance and cutting power more surgically. It has even torn out a few high-risk power lines and given the handful of customers at the end of them solar, batteries, and generators instead. 

This isn’t just a California problem. Utilities in Arizona, Colorado, Hawaii, Idaho, Nevada, and Oregon are being forced to cut grid power in the face of rising wildfire risks. Some energy experts say distributed solar and batteries could play a bigger role in how utilities manage wildfire risk. But that’s a topic for another day. 

Why solar and electrification go better together

The Living Laboratory isn’t the Agile Electrification team’s first rodeo. In 2024, they enlisted about 60 homes in Sonoma County to share data on their fossil gas and electricity usage. The goal was to model how much money households could save over time by electrifying, installing rooftop solar, or doing both. 

The chart below shows the results of that research measured in terms of net present value (i.e., the future returns on a household’s investments over 20 years). The bottom line? Electrifying a home and relying on grid power alone doesn’t offer nearly as high a return on that investment as installing rooftop solar does. But installing solar and going all-electric together offer the biggest bang for the buck. 

One more thing

My mom and dad came to visit last weekend. Lily the corgi loves spending time at their home in Lake Arrowhead, which is as close to doggie heaven as one can imagine. But there’s nothing like getting to hang out with her grandpa in her own backyard.