---
title: Virtual Power Plants Could Halve Expected Increases in US Power Bills, Brattle Estimates
description: Brattle estimates pooling home thermostats, EV chargers and batteries into virtual power plants would cut a projected $98 five-year bill rise by $56.
author: Darie Nani (Editor-in-Chief)
date: 2026-10-15T13:31:01.855Z
updated: 2026-10-15T13:31:01.889Z
canonical: https://www.sovereignmagazine.com/article/what-is-a-virtual-power-plant
image: https://cdn.nanimediahouse.com/pexels-a-man-connects-an-electric-car-to-a-charging-station-in-a-mo-34800930.jpg
categories: Green Tech
content_type: News
region: United States
publication: Sovereign Magazine
schema_type: Article
---

Pooling the smart thermostats, electric-vehicle chargers and home batteries already in American homes into virtual power plants could cut the expected rise in household electricity bills over the next five years by more than half. [A virtual power plant](https://www.sovereignmagazine.com/article/cloover-virtual-power-plant-feed-in-tariffs) is a network of household devices that a utility can turn down or draw on when demand peaks. The estimate comes from [a report the economics consultancy The Brattle Group published on Oct. 13](https://www.brattle.com/the-affordability-advantage/).

Brattle projects that without these programs, the average household's annual electricity bill will be $98 higher in five years, in inflation-adjusted terms. A virtual power plant at a typical utility would take $56 off that increase, or 57%. Households that enroll their devices would save $91 of the $98, almost wiping out their increase, Brattle estimates. Households that do not take part would still save $34 a year, because system costs shared by every customer fall.

Brattle's Ryan Hledik and Kailin Graham wrote the report for Everyday Electric, the company formerly called Renew Home. Its chief executive, Ben Brown, founded it in 2024 with a team from Google Nest and Google AI Labs. Everyday Electric says it operates the largest residential virtual power plant in the US and has more than 6 million homes enrolled in its programs.

## Bills Rise 1% a Year Faster Than Inflation in Brattle's Base Case

To reach the $98 figure, Brattle assumed retail bills keep growing 1% a year faster than inflation, close to the recent pace: residential rates rose 1.2% a year in inflation-adjusted terms from 2020 to 2025, and 1.1% in the single year to June 2026. In the decade before that, they grew just below inflation. The Energy Information Administration [forecasts an average US residential price of 18.2 cents per kilowatt-hour in 2026](https://www.eia.gov/outlooks/steo/report/elec_coal_renew.php), up from 17.3 cents in 2025 and 16.5 cents in 2024.

Brattle says the cost of new natural gas capacity has roughly doubled in four years, because of supply-chain constraints and unexpectedly rapid growth in demand. [Data centers account for part of that demand](https://www.sovereignmagazine.com/article/georgia-openai-data-center-power-bill-savings). The EIA's 2026 planning assumptions put simple-cycle gas turbines about 40% more expensive and combined-cycle plants about 20% more expensive, citing tight markets for turbine materials and labor.

## A Utility With One Million Homes Would Pay Households About $23 Million a Year

Brattle modeled a Midwestern utility with one million residential customers and a summer peak of 7,000 megawatts, similar in size to Ameren Missouri or Duke Energy Indiana. It assumed 37% of homes enroll a smart thermostat, 6% let the utility manage when their electric vehicle charges, and 0.5% put a home battery into the program. Within five years that comes to 301 MW, about 4% of the utility's peak demand.

At that size, Brattle estimates, the utility avoids $65 million a year in generating capacity, energy and distribution upgrade costs. Of that, $56 million reaches customers, through lower costs spread across all bills and direct payments to the households taking part. The authors write that "the utility would pay participating VPP households roughly $23 million per year instead of writing checks to power developers."

## Brattle Assumes Device Makers Will Enroll Their Own Customers

Hledik, a Brattle principal, said the firm's analysis shows "there is a significant amount of untapped flexible capacity already sitting in customers' homes." Brattle's enrollment figures assume that joining is easy and that device makers sign customers up through features already built into their products. They draw on Everyday Electric's finding that four times as many customers switch on energy-shifting features built into their devices as join traditional demand response programs, which ask for more noticeable changes at home.

Staff at Sunrun and Tesla advised the authors on that approach. Both companies automatically enrolled their battery customers in a Puerto Rico program, which grew from 12,000 participants in December 2024, when customers had to opt in, to 82,500 in May 2026. When first told they had been enrolled, only 7% of Sunrun's new customers opted out.

## Residential Capacity Could Triple to 35 GW if Every Utility Matched the Top 10%

Residential demand response, which pays or credits households for cutting use at peak times, supplies about 1.1% of utility peak demand on average today, roughly 10 gigawatts nationwide. The top 10% of utilities get about 4%. If every utility reached that level, Brattle estimates, residential capacity would rise to 35 GW. Extrapolating from its utility model, the extra 25 GW would be worth $4 billion to $7 billion a year to US households: $1.8 billion to $5.5 billion in lower costs for all ratepayers and about $1.9 billion paid directly to participants.

National demand response capability doubled from 30 GW to 60 GW between 2006 and 2011, the authors note, mainly after the Federal Energy Regulatory Commission opened wholesale power markets to it.

## Brattle Says Many Utilities Have No Financial Reason to Choose Virtual Power Plants

Many utilities have no direct financial incentive to develop residential virtual power plants rather than invest in conventional infrastructure, Hledik and Graham write. Restrictive tariff language also stops many customers who could provide capacity from enrolling or being paid. Reaching 301 MW in five years assumes that utilities rewrite their tariffs to allow device makers to sign up their own customers.

## Households Still Avoid Over 40% of the Increase Under Brattle's Conservative Assumptions

Across 10 years of historical weather and load, the enrolled households in Brattle's simulation cut peak demand by 228 MW on average. That is a capacity credit of 76%, meaning about three-quarters of the 301 MW could be counted on at the peak. In individual years it ranged from 53% to 100%, and Brattle calls the capacity "planning grade." Under conservative adoption and enrollment assumptions, the average household avoids more than 40% of its bill increase. In the most extreme downside case the authors tested, it avoids nearly a quarter. If high gas turbine costs persist, they write, the savings could almost completely offset rate growth.

## FAQ

**Q: What does a virtual power plant do?**
It trims or shifts household electricity use when the grid is most strained, so a utility needs less generating capacity. Virtual power plants of all kinds reached 33 GW across North America by early 2025, the Energy Department reported, and it said that deploying 80 to 160 GW by 2030, enough to serve 10% to 20% of peak load, could support rapid load growth while reducing overall grid costs.

**Q: How do virtual power plants make money?**
The utility pays households for the capacity their devices provide, and covers those payments out of the generation, energy and grid costs it no longer has to pay. Brattle assumes yearly performance payments of $50 per kilowatt for a smart thermostat, $150 for managed EV charging and $200 for a home battery, a weighted average of $75 per kilowatt.

**Q: How much does a VPP cost?**
Brattle puts the cost of running the program at its model utility at $9 million a year, against $65 million a year in avoided costs. The authors put the total value at more than seven times the cost of enabling it.

**Q: What are the downsides of a virtual power plant for a household?**
Households give up some control at peak times: the program changes the thermostat setting, delays EV charging or draws on the home battery. Customers can override, though fewer than 4% override temperature changes during events in Everyday Electric's program, the report says. The bill relief also lasts only if the program keeps growing: to hold it in later years, the authors write, the program would have to scale beyond the size they modeled.