Measurement & verification

Measurement and verification: how VPP performance gets proven and paid

Every VPP payment rests on an estimate of something that didn’t happen: the power a home would have used without the event. Here is how grid operators and utilities measure it.

VPP Economics has no affiliation with, sponsorship from, or endorsement by any utility, aggregator, platform, or device maker named here.

The short answer

  • Every VPP payment rests on a baseline — an estimate of what a home would have used if the event never happened. The reduction is the baseline minus what the meter or device actually recorded (U.S. Department of Energy).
  • Grid operators build baselines differently. PJM uses the highest 4 of the last 5 weekdays; NYISO the highest 5 of 10; ISO New England and CAISO average 10 days, with different adjustments (PJM, NYISO study, ISO-NE, CAISO).
  • Homes are measured differently from factories. Residential programs often use control groups, measured average values — Texas uses 1.40 kW per smart thermostat — or data from the device itself (Texas PUC).
  • So the same event can pay differently depending on the rule. Calculator estimates, including ours, are a starting point; settlement is what counts.

How a baseline turns into a payment

Illustrative day for one home with a smart thermostat and a 5–8 p.m. event.

Swipe to see the full chart →

0 kW1 kW2 kW3 kWMidnight6 a.m.Noon6 p.m.MidnightEVENTADJUSTMENTWINDOWReductionyou’re paid forPre-coolingSnapbackBaseline: what the home would have usedActual metered load
Illustration, not measured data. The adjustment window shifts the baseline to match the event day’s conditions; pre-cooling inside that window can distort it.

Six ways performance is measured

North American Energy Standards Board (NAESB) standards, adopted by FERC for wholesale demand response, name the main methods; the U.S. Department of Energy’s guide adds randomized control groups (DOE, NAESB).

Most common

Baseline from interval meter

Uses the site’s own past interval-meter data (sometimes with weather) to estimate what it would have used. The standard for metered homes and businesses; NAESB calls it Baseline Type I.

For short events

Meter before / meter after

Compares usage just before an event with usage during it. Works for fast, short dispatches; ERCOT’s aggregated-DER pilot uses it for some resources.

For fleets

Statistical sampling

Estimates a whole fleet from a metered sample when not every home has interval data (Baseline Type II). ERCOT’s pilot does not allow it.

For batteries

Metering device output

Pays for what the device itself delivers, measured at the device. Originally written for backup generators; it fits batteries well.

For firm loads

Maximum base load

Pays a site for staying below a pre-agreed level during an event, regardless of what it would have used.

For residential programs

Control group

Leaves a random set of enrolled homes out of each event and compares the two groups. CAISO requires at least 150 customers in the control group.

How each grid operator picks baseline days

Which recent days set the baseline

Each square is a recent non-event weekday the rule looks at; filled squares are the days it uses.

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PJMEconomic demand responseHighest 4 of the 5 most recent weekdays (45-day window)Adjusted to the event day’s usage in the hours before the eventNYISOEnergy marketHighest 5 of the last 10 non-event weekdaysWeather adjustment from a 2-hour window 4 hours before; capped at ±20%ISO-NEDemand response assetsAverage of the 10 most recent weekdays, excluding event daysShifted by the gap in the three 5-minute intervals before dispatch; no capCAISOStandard (10-in-10)Average of the last 10 non-event weekdays (45-day window)Scaled 80%–120% by same-day usageCAISOResidential (5-in-10)Highest 5 recent weekdays by event-period usageScaled 71%–140%; control groups also allowedTexas utilitiesThermostat programsHighest 3 of the 5 most recent weekdaysDay-of adjustment from the 2 hours before notice
Sources: PJM Manual 11; NYISO meter data study; ISO New England; CAISO demand response manual; Texas PUC. Weekend and holiday rules differ.

Choosing the highest days, as PJM, NYISO, and CAISO’s residential rule do, gives a higher baseline and more credit for the same behavior than a straight average. Texas’s ERCOT runs its own pilot for aggregated home batteries and devices: premises need 15-minute interval data, the aggregator sends telemetry every two seconds, device-level data must be available on request, and statistical sampling isn’t allowed (ERCOT).

What devices actually deliver

Measured load reduction per device during events

Average kW cut per device in utility evaluations and lab testing.

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0.0 kW0.4 kW0.8 kW1.2 kW1.6 kWSmart thermostat, Texas utilitiesstatewide deemed value1.40 kWecobee thermostatCenterPoint Indiana, 20241.10 kWGoogle Nest thermostatCenterPoint Indiana, 20240.93 kWOther thermostatsCenterPoint Indiana, 20240.82 kWHeat pump water heaterlab test, evening peakup to 0.54 kWAC load-control switchCenterPoint Indiana, 20240.22 kWWater heater switch (resistance)CenterPoint, 3–5 p.m.0.12 kW
Sources: Texas PUC (Texas utilities); CenterPoint Energy 2024 evaluation (Indiana); Florida Solar Energy Center (heat pump water heater, 57 gallons a day, evening peak).

Two things stand out. Smart thermostats deliver several times more than the old air-conditioner switches they replace, and results vary by brand and climate: the same type of thermostat cut 1.40 kW in Texas but about 0.9 kW in Indiana. CenterPoint measured its thermostats from runtime data supplied by the thermostat platform and converted it to kWh — a device-level method rather than a meter baseline (CenterPoint Energy).

Where estimates and settlements part ways

Watch for

Pre-cooling

Running the AC harder before an event raises the usage that same-day adjustments look at. For El Paso Electric’s program, Texas set the adjustment window to the two hours starting three hours before the event for this reason (Texas PUC).

Watch for

Snapback

Devices catch up after an event. Baselines that only measure the event window miss the extra load afterward, which matters for the utility even if it doesn’t change the customer’s pay.

Watch for

Offline and opted-out devices

Texas evaluations count a thermostat only if it took part in at least half of an event; offline devices and those that drop out sooner are excluded (Texas PUC).

Watch for

Batteries already cycling

A battery that discharges every evening for time-of-use savings already lowers the meter baseline, so a meter-based event shows less “reduction.” Device-output metering avoids this.

Watch for

Adjustment caps

Caps such as ±20% stop a strange morning from distorting the baseline but can under-credit real changes on unusually hot days.

Watch for

Small loads, noisy meters

A 1 kW change is hard to see in one home’s meter data, which is why residential programs lean on control groups, deemed values, and device telemetry.

How VPP Economics will use M&V

Estimates are useful for deciding whether to join. Verification is what decides the check. We plan to bring the grid operators’ own rules into the calculator so you can test an estimate against real data.

Today

Estimates

The Residential VPP Calculator estimates pay from published program terms, with flexible-power defaults taken from the measured results on this page.

Next

Verify mode

Upload interval data from the utility (Green Button) or a device export, pick the grid operator’s baseline rule, and see measured kW per event next to the estimate.

Later

Program view

For program managers: compare deemed and measured performance across a fleet, and the share of enrolled devices that actually respond.

Method and caveats

This page summarizes measurement and verification for nonexperts and isn’t a substitute for a program’s tariff or settlement manual. Baseline rules shown are weekday rules; weekend, holiday, and product-specific rules differ. Checked October 1, 2026.

Measured results come from specific programs, climates, and years and won’t match every home. The roadmap describes planned features, not ones available today.

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