Austin Energy residential VPP economics

Austin Energy is a public power utility owned by the City of Austin. It owns power plants, buys and sells in ERCOT’s wholesale market, runs the wires and sends the bill. Austin is a non-opt-in entity (NOIE): unlike Houston or Dallas, its customers cannot shop for a retail electric provider. That makes Austin Energy the only door into flexibility programs for most of its customers, including the doors ERCOT opens.

Austin Energy’s demand response reached a confirmed 55 MW in fiscal 2025, 71% of its 78 MW goal for 2027, on the way to 270 MW by 2035 (Austin Energy). Most of it runs on one platform: EnergyHub manages the thermostat, EV and battery programs (EnergyHub).

Every deep dive on this site has one feature that changes how its economics read. For Austin Energy it is the relationship with ERCOT. A home in Houston can sign up with a retail provider that sells its battery into ERCOT. A home in Austin cannot, so the real questions are whether Austin Energy’s programs and ERCOT’s are complementary, and whether their money can be combined.

ERCOT shares the cost of the Texas transmission grid by each utility’s load during the four 15-minute summer peaks, one each in June through September, known as 4CP. In 2025 that cost was about $68.55 per kW-year (ERCOT). Austin Energy runs its demand response season around those peaks (Austin Energy Potential Assessment). Households never see 4CP: Austin Energy recovers transmission through a flat Regulatory Charge of 1.799¢ per kWh (City of Austin). Power Partner is how a household gets a share of a value it would otherwise not see.

The battery pilot pays about what a kilowatt saves in transmission cost alone, before any energy-price value. The thermostat program pays about half. The heat pump water heater, the most flexible load in the case-study home, earns nothing, because the only water heater program is for multifamily buildings (Austin Energy).

Braiding means combining separate funding streams for one project while keeping each one’s rules intact. In Austin it works in some places and not in others.

ERCOT’s home-battery pilot, Aggregate Distributed Energy Resources (ADER), grew from 8 MW in June 2025 to about 171 MW of discharge capability by September 2026, almost all through retail providers (Modo Energy). NOIE load zones are eligible, but the NOIE has to coordinate registration and supply the meter data (ERCOT), which makes it a gatekeeper (Energy Central). The PUCT has asked for more co-op and municipal participation (Utility Dive). Austin Energy has chosen to build its own programs instead, and that is the honest answer to braiding: Austin Energy collects ERCOT’s value, then passes some of it to customers.

Stacking needs care, depending on M&V methodology. Power Partner measures device output or event baselines; an ERCOT program would measure the same kilowatts at the same meter.

If the PUCT moves to 12 monthly peaks, the value of a flexible kilowatt in Austin spreads across the year. That would favor batteries, which can respond any day, over summer-only thermostat programs, and it fits Austin Energy’s winter test and year-round plans.

Power Partner Thermostat raised its pay in March 2026: enrollment went from $50 to $75 per thermostat and the annual credit from $25 to $30 (Austin Energy). Power Partner EV enrolls through the charger or the car: ChargePoint, Emporia, GM or Tesla (Austin Energy). The home charger rebate is now 50% of cost up to $500 and requires Power Partner EV (Austin Energy). It used to be larger (EV Charger Lab), and the federal charger credit expired June 30, 2026 (ChargePro Texas).

Take one hypothetical single-family home in ZIP 78704 with three common devices: a Google Nest thermostat, a ChargePoint Home Flex Level 2 charger for a Tesla Model Y, and a 50-gallon Rheem ProTerra heat pump water heater. We ran it through our Residential VPP Calculator, which applies each program’s published terms and eligibility rules.

The calculator puts the home’s flexible power at about 1.1 kW at the summer peak, almost all from the thermostat, and its pay at about $42 per kW-year. The rebates are worth about three times the ten years of VPP pay. That is the Austin pattern: generous one-time efficiency money, modest ongoing flexibility pay.

Two details matter. The EV earns little because Power Partner EV pays a one-time $25 after the first year, with no ongoing credit. The heat pump water heater is the biggest missed opportunity. It can shift several kilowatt-hours a day, and Austin Energy ran about 21,500 water heater timers from 2009 to 2016, but today’s Smart Home Rewards program covers only multifamily buildings, where the property owner enrolls and tenants get the credits (Austin Energy). Austin Energy did 103 heat pump water heater rebates in fiscal 2024 and is testing 12 Wi-Fi units with Habitat for Humanity.

The thermostat pays for itself through Austin Energy alone. The charger and water heater rest on their rebates and on what they save: a heat pump water heater uses far less electricity than an electric tank, and off-peak charging lowers fuel cost. Neither saving is a VPP payment.

Austin Energy’s optional time-of-use power supply adjustment is 2.543¢ per kWh off peak and 8.02¢ on peak, against a standard 3.912¢ (City of Austin). For an EV that charges off peak anyway, the saving is about 1.4¢ per kWh, or roughly $50 a year at 3,500 kWh of home charging. Austin’s low power supply cost leaves little room for rate-based savings, which puts more of the job on program pay.

Austin Energy now has two battery paths. Power Partner Battery, launched in March 2026, pays $500 for systems with permission to operate on or after February 18, 2025, plus $75 per kW delivered each year. Austin Energy’s own example is a 13.5 kWh Powerwall with a 20% reserve over 2.5-hour events: about 4.3 kW, or about $324 a year. It can call up to 40 events a year, any day (Austin Energy). By August 2026 it had 121 customers, 212 batteries and 1.6 MW (Austin Energy).

The second path is Base Power, which is headquartered in Austin. In competitive Texas, Base pairs its battery with its own electricity plan. In Austin Energy territory, Austin Energy stays the provider and contracts with Base for up to 40 MW of home batteries that it can dispatch, expected by mid-to-late 2027 (Austin Energy; plan update). The household pays $695 to install and $19 a month and gets a 39.2 kWh battery for whole-home backup. It receives no program pay and no change to its Austin Energy bill, because the battery sits in front of the meter (Base Power). See our hosted battery money trail for how that model is paid.

The owned battery is a backup purchase that the pilot offsets by about a fifth over ten years. Base turns the same decision into a small subscription with three times the stored energy, and Austin Energy keeps the grid value. For Austin Energy, Base is effectively a distributed peaker it does not have to own.

Why the Base line shows no bill savings. Elsewhere in Texas, Base is also a retail electric provider, and it markets its plans as about 13.8% cheaper on average than market rates (Base Power energy plans). Base is known to pass part of the value its batteries earn in the market back to customers as lower electricity prices. That is not guaranteed and is hard to model. In Austin Energy territory, Base does not sell electricity: Austin Energy remains the provider at the same rates, and Base says members see zero impact to their electricity bill (Base Power, how it works in Austin). ERCOT also has no capacity market, so any value Base shares with Austin homes would come through its contract with Austin Energy, whose pricing is not published. The chart therefore counts no bill savings for Base in Austin.

Public power utilities set their own program terms, so pay varies widely even between neighbors. The closest peer is CPS Energy in San Antonio, also city-owned, also a NOIE inside ERCOT. SMUD in Sacramento and LADWP in Los Angeles are the largest public power utilities outside Texas.

Austin sits in the middle on thermostats and well below SMUD on batteries. San Antonio pays more for EV charging, $30 plus $10 a month through WeaveGrid (CPS Energy), against Austin’s one-time payments. Austin stands out in two ways the bars don’t show: it pays batteries per kilowatt delivered rather than per event, and it is the only one of the four with a hosted-battery partnership.

Austin Energy’s 2035 goal is to grow demand response about fivefold, to 270 MW (Austin Energy). In May 2026 the City Council approved a plan that adds 299 MW of wind, 100 MW of local battery storage and 400 MW of gas peakers (Austin Energy). The cheapest megawatts in that plan may be the ones already in homes.

The future of VPPs at scale will depend on multiple assets working in unison at any given site: thermostat, water heater, EV and battery, dispatched together and measured as one resource. Austin has the pieces on one platform but pays them as separate programs, and it leaves the single-family water heater out. Three changes would move it from demand response toward an orchestrated VPP: a single-family water heater program, ongoing EV pay, and whole-home enrollment that pays by the kilowatt across devices.

Related: the Austin Energy C&I deep dive, the Dominion Energy Virginia residential deep dive for a state-mandated VPP pilot, and the Duke Energy Carolinas residential deep dive for another utility that is the only buyer. To run other equipment, use the Residential VPP Calculator.