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How VPPs make money
Who pays for a virtual power plant — and how much reaches you
A kilowatt of flexibility can be worth $10 or $300 a year. The difference is who buys it, how often they call on it, and how many hands it passes through on the way to you.
VPP Economics has no affiliation with, sponsorship from, or endorsement by any utility, aggregator, platform, or device maker named here.
The short answer
- A VPP sells flexibility, not electricity. The biggest payments are for capacity — promising to be available when the grid peaks — priced per kilowatt (kW) per year.
- A kilowatt is worth $10 to about $300 a year depending on who buys it: a wholesale market, a utility avoiding a wires upgrade, or a state program meeting a policy goal.
- You rarely get it all. The utility or market pays an aggregator or device maker, which keeps a share. In utility programs the household is usually paid directly; in market programs the split is set by private contract.
- Whether it’s worth it depends on how many kilowatts your device can deliver, how often it’s called, and what it costs you in comfort, battery wear, or backup reserve.
Four buyers of flexibility
Every VPP payment traces back to one of four buyers. A wholesale market or grid operator such as PJM or ISO New England pays for capacity and energy. PJM’s 2028/29 capacity auction cleared at its cap of $325 per megawatt-day, about $119 per kW-year, with demand response making up about 5% of cleared supply (Dow Jones). A utility pays to avoid buying peak power or upgrading local wires. A state program pays to meet reliability or clean-energy goals, as California’s Demand Side Grid Support (DSGS) program does. And sometimes a retail electricity provider pays, as in Texas, where companies use home batteries to avoid buying power during price spikes.
The Department of Energy’s VPP report puts it simply: a VPP is “an aggregation of distributed energy resources” that can “balance electricity demand and supply” and provide utility-scale grid services (DOE Liftoff). The point is that the grid pays for what a gas peaking plant would otherwise provide — for a fraction of the hours.
What one kilowatt of flexibility earns per year
Selected published rates, converted to dollars per kW per year where needed. Thermostat range is implied from program payments divided by typical load reduction.
Swipe to see the full chart →
Where the money flows
Money moves from the buyer of flexibility, through the company that operates the fleet, to the device owner. Each hand-off can take a cut. The aggregator’s share is the least visible number in the VPP economy.
Who pays whom in a typical VPP
Utility programs usually pay the customer directly; market programs pay the aggregator, which shares by contract.
Swipe to see the full chart →
Five ways programs pay you
Per kW of capacity
Paid on the average kilowatts your device delivers across events. Rewards bigger batteries and reliable performance.
Per kWh delivered
Paid for each kilowatt-hour (kWh) exported or avoided during events — PG&E’s emergency program pays $2/kWh.
Flat per device
A sign-up bonus plus a yearly check. Common for thermostats and water heaters.
Time-of-use savings
No check, but you charge or heat when power is cheap. Often worth more than the program itself.
Free or cheap hardware
A company owns the battery in your garage and keeps the grid revenue in exchange for a supply contract.
So does it make sense?
For a device you already own, almost any program pays something for very little effort — thermostats and water heaters especially. For a battery bought partly for VPP income, the answer depends heavily on your state: the same 13.5 kWh battery can earn about $1,800 or more than $11,000 over 10 years. Before enrolling, check four things: how many events a year, whether you can opt out, how much backup reserve you keep, and whether the payment is guaranteed or depends on program funding.
VPP Earnings Calculator
Enter your ZIP and battery size to compare every program in your state, then add other devices.
Method and caveats
Per-kW-year figures are published program rates; seasonal rates are counted once a year. PJM is converted at 365 days. The thermostat range comes from Heatpump Economics’ 14-program study. Market prices are volatile; capacity prices in particular move a lot between auctions. Checked October 1, 2026.