45 terms
Virtual power plant glossary
The words you'll run into when reading about VPPs, home batteries and the grid, in plain English.
- ADER (Aggregated Distributed Energy Resource)
- ERCOT's pilot program that lets aggregations of home batteries and other small resources take part in the Texas wholesale market. It was approved in 2022 at 80 MW and expanded in 2025 and 2026. Source
- Aggregator
- A company that signs up many homes or businesses and bundles their devices into one resource it can offer to a utility or grid market. In a VPP, the aggregator usually runs the software and handles payments. Source
- Ancillary services
- Behind-the-scenes services that keep the grid stable and reliable, such as frequency regulation, spinning and non-spinning reserves, and voltage support. Source
- Backup reserve
- The share of a home battery's charge held back for outages. VPP programs typically discharge only the energy above this reserve, and many let the homeowner set the level.
- Behind-the-meter
- Equipment on the customer's side of the utility meter, such as a home battery or rooftop solar, as opposed to grid-scale equipment owned by a utility.
- Bidirectional charging
- EV charging that lets energy flow both ways: into the car's battery and back out to a home, device or the grid. Source
- BYOD (bring your own device)
- A program design where customers who already own an eligible battery, thermostat or EV charger enroll it in a utility or VPP program, usually for an enrollment bonus or per-event payments, instead of getting new equipment.
- CAISO
- The California Independent System Operator, which manages most of California's high-voltage grid and runs its wholesale energy markets. Source
- Capacity
- The maximum amount of power a resource can deliver at one time, measured in kW or MW. Capacity programs pay resources to be available when needed, even if they are rarely called.
- Demand response
- Programs that pay or reward customers for temporarily using less electricity, or shifting when they use it, at times the grid is strained. Source
- DERMS (DER management system)
- Utility software for monitoring and controlling many distributed energy resources, one by one or as a group. Source
- Distributed energy resource (DER)
- A small energy resource located at or near where power is used. Examples include rooftop solar, home batteries, EVs and their chargers, and controllable appliances. FERC's definition includes storage, distributed generation, demand response, energy efficiency, thermal storage and EVs. Source
- DSGS (Demand Side Grid Support)
- A California Energy Commission program, created in 2022, that pays customers and aggregators for reducing their net load during grid emergencies, including by discharging batteries. Source
- EFL (Electricity Facts Label)
- A standard Texas disclosure, similar to a nutrition label, that shows an electricity plan's prices and contract terms so plans can be compared. Source
- ELRP (Emergency Load Reduction Program)
- A California utility program that pays participants to cut load or discharge batteries during grid emergencies. It has been used for Powerwall VPPs. Source
- ERCOT
- The Electric Reliability Council of Texas, which manages the grid serving more than 27 million Texas customers, about 90% of the state's electric load. It is overseen by the Public Utility Commission of Texas and the Texas Legislature. Source
- FCAS (Frequency Control Ancillary Services)
- Australia's term for the services that keep grid frequency stable. Home-battery VPPs were trialed and proven in this market. Source
- FERC Order 2222
- A 2020 federal rule that requires regional grid operators to let aggregations of distributed energy resources, like VPPs, take part in wholesale electricity markets. Source
- Frequency regulation
- Very fast, second-to-second adjustments that keep the grid's frequency at its target (60 Hz in North America) as supply and demand change. Batteries are well suited to it because they respond almost instantly. Source
- Grid-following inverter
- The more common type of inverter, which follows the voltage and frequency already set by the grid and cannot run on its own without it. Source
- Grid-forming inverter
- An inverter that can set the grid's voltage and frequency on its own, so it can run without a conventional power plant, for example in island mode or a 100% inverter-based system. Source
- Inverter
- The device that converts the direct current (DC) from solar panels or batteries into the alternating current (AC) used by a home and the grid. It also controls how the system interacts with the grid.
- Islanding
- When a home or microgrid disconnects from the main grid and runs on its own power, for example a battery keeping the lights on during an outage. Source
- ISO / RTO
- An Independent System Operator or Regional Transmission Organization: a nonprofit that runs a region's high-voltage grid and wholesale electricity markets independently of the companies that buy and sell power. Source
- ISO-NE
- ISO New England, the nonprofit grid and market operator for Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Source
- kW (kilowatt)
- A measure of power, meaning how fast energy is being used or delivered at a given moment. 1 kW equals 1,000 watts. Source
- kWh (kilowatt-hour)
- A measure of energy, meaning how much was used or stored over time. Using 1 kW for one hour equals 1 kWh. Bills are priced per kWh, and battery size is usually given in kWh. Source
- Load shed / rotating outages
- Planned, temporary power cuts that a grid operator orders when supply can't meet demand, to protect the rest of the system from a wider blackout. Source
- Load shifting
- Moving electricity use from expensive or strained hours to cheaper or calmer ones. Examples include pre-cooling a house, charging an EV overnight, or charging a battery midday and using it in the evening.
- Microgrid
- A group of connected loads and energy resources within clear boundaries that acts as one controllable unit. It can run connected to the grid or in island mode. Source
- NEM 3.0 (Net Billing Tariff)
- California's rules for new solar customers since April 15, 2023. Exported power is credited at a rate based on its value to the grid instead of the full retail rate, which makes storing solar in a battery more valuable. Source
- Net metering
- A billing arrangement that credits you for electricity your solar system sends to the grid, reducing the amount of grid power you're billed for. Source
- Peak demand
- The highest amount of electricity used during a given period, such as a hot summer afternoon. Grids must be built to handle the peak. Source
- Peak shaving
- Lowering a home's or grid's highest demand by covering part of it with stored energy or by temporarily cutting use.
- PJM
- PJM Interconnection, the regional transmission organization that coordinates wholesale electricity across all or parts of 13 states and the District of Columbia. Source
- PPA (power purchase agreement)
- A contract where a developer installs, owns and operates a system on your home, and you buy the electricity it produces at a set price per kWh. Source
- Resource adequacy
- Having enough power resources available to meet expected peak demand plus a safety margin. VPPs can count toward resource adequacy in some markets. Source
- Retail electric provider (REP)
- In Texas's competitive areas, the company you choose to buy electricity from. It sets your plan and price and sends your bill. Source
- Solar lease
- A contract where a company installs and owns a solar system on your home and you pay fixed, scheduled payments to use it. Source
- TDU / TDSP
- Transmission and Distribution Utility (or Service Provider): in Texas, the regulated company that owns the poles and wires in your area and reads your meter, such as Oncor or CenterPoint. You can't choose it; it's set by where you live. Source
- Time-of-use (TOU) rate
- An electricity rate where the price per kWh depends on the time of day, usually higher in the late afternoon and evening peak. Source
- V2G (vehicle-to-grid)
- An EV that can both draw power from the grid and send power back to it, allowing it to take part in a VPP. Source
- V2H (vehicle-to-home)
- An EV that can power a home through the home's electrical panel, for example during an outage. Source
- Virtual power plant (VPP)
- A network of many small energy resources, such as home batteries, smart thermostats, EV chargers and solar, that software coordinates so they can act like a single power plant. A VPP can supply power or cut demand when the grid needs it. Source
- Wholesale electricity market
- The market where generators, utilities, retailers and aggregators buy and sell power in bulk, usually run by an ISO/RTO. Homeowners don't trade in it directly, but VPPs can earn money there on their behalf. Source
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