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1997 to today

The history of virtual power plants

From a 1997 book about "virtual utilities" to record-setting dispatches of home batteries in 2026, here's how the idea grew around the world.

  1. 1997

    Global

    "The Virtual Utility" is published

    Shimon Awerbuch and Alistair Preston edit "The Virtual Utility: Accounting, Technology & Competitive Aspects of the Emerging Industry" (Springer). It is widely cited as an early statement of the idea that a utility could be built from networked, coordinated resources rather than one big plant.

  2. 2005

    Europe · Oct 1, 2005

    EU FENIX project begins

    The EU-funded FENIX project (Oct 2005 - Sept 2009), coordinated by Spain's Iberdrola Distribucion, set out to aggregate distributed energy resources into "Large Scale Virtual Power Plants." Its field tests covered home combined heat and power units and larger resources such as wind farms.

  3. 2009

    Germany

    Next Kraftwerke founded in Cologne

    Next Kraftwerke, which calls itself "a power plant operator without any power plants," was founded in Cologne. It grew into one of Europe's largest VPPs by bundling renewable plants and flexible power users to trade power and stabilize the grid.

  4. 2009

    Denmark · Feb 25, 2009

    EDISON project brings electric cars into the VPP idea

    IBM joined Denmark's EDISON consortium (with DONG Energy, DTU, Siemens, Ostkraft, Eurisco and the Danish Energy Association) to test smart EV charging on the wind-heavy island of Bornholm. Researchers described aggregating an EV fleet into an "EV-VPP" that could deliver and absorb balancing power.

  5. 2015

    Germany · Nov 25, 2015

    sonnenCommunity launches

    Battery maker sonnen launched sonnenCommunity, a network that lets members with solar and home batteries share surplus power with each other. Software balances supply and demand across the community in real time.

  6. 2015

    United States (Vermont)

    Green Mountain Power offers Tesla Powerwall

    Green Mountain Power announced it would offer the Tesla Powerwall home battery, reported as the first U.S. utility to offer home batteries to customers. Options included a lease with shared utility access, with no upfront cost.

  7. 2016

    Australia (South Australia) · Aug 5, 2016

    AGL virtual power plant announced

    ARENA committed up to A$5 million toward AGL's A$20 million project to network 1,000 home and business batteries in Adelaide into a 5 MW / 7 MWh virtual power plant. ARENA compared the result to adding a 5 MW power station.

  8. 2016

    Japan · Sep 12, 2016

    METI-subsidized VPP demonstrations begin

    Companies announced they had been selected for Japan's Fiscal 2016 METI subsidy for virtual power plant construction and demonstration. One project, led by Kansai Electric Power, linked batteries at seven sites in different prefectures to act as a single power plant.

  9. 2017

    United States (Vermont)

    Green Mountain Power scales up its Powerwall program

    In 2017 GMP committed to put up to 2,000 Powerwalls in customers' homes, offering backup power for $15 a month or $1,500 one time. In return, the utility could draw on the batteries at peak times. By late December over 100 homes had them, with about 1,200 more on a waiting list.

  10. 2017

    Australia (South Australia) · Dec 1, 2017

    Hornsdale big battery switches on

    Tesla's 100 MW / 129 MWh Hornsdale battery went live, the world's largest lithium-ion battery at the time. It is a single grid-scale battery, not a VPP, but it set the stage for Tesla's home-battery VPP in South Australia.

  11. 2018

    Australia (South Australia) · Feb 4, 2018

    South Australia Virtual Power Plant plan unveiled

    South Australia and Tesla announced a plan to put solar panels and Powerwall batteries on up to 50,000 homes, starting with public housing, and run them as a virtual power plant. A trial on 100 Housing Trust homes was already underway.

  12. 2018

    Germany · Dec 5, 2018

    Home batteries qualify for Germany's primary balancing market

    sonnen received prequalification from transmission operator TenneT to supply primary balancing power from networked home batteries. sonnen said it was the first time a nationwide network of household batteries had done this in Germany.

  13. 2019

    Australia · Mar 29, 2019

    AEMO VPP Demonstrations begin

    Grid operator AEMO began trialing how VPPs could provide frequency control services (FCAS) and other grid services. The trial ran until 31 January 2022 with ARENA funding.

  14. 2020

    United States (California) · Aug 14, 2020

    California rotating outages

    During a West-wide heat wave, CAISO declared a Stage 3 emergency and ordered rotating outages on Aug 14 and 15, affecting about 492,000 and 321,000 customers. A joint root-cause analysis found that planning targets had not kept pace with early-evening demand.

  15. 2020

    Australia (South Australia) · Aug 25, 2020

    Tesla VPP expands to 3,000 public-housing homes

    An ARENA-backed phase of the Tesla Virtual Power Plant began, putting solar and Powerwall systems on 3,000 Housing SA homes. The systems took part in AEMO's VPP demonstration and provided grid stability services.

  16. 2020

    United States · Sep 17, 2020

    FERC Order No. 2222

    The Federal Energy Regulatory Commission ordered regional grid operators (RTOs/ISOs) to let aggregations of distributed energy resources compete in wholesale electricity markets. Covered resources include batteries, rooftop generation, demand response, EVs and their chargers.

  17. 2021

    United States (Texas) · Feb 15, 2021

    Winter Storm Uri

    As Winter Storm Uri froze Texas, ERCOT lost up to 52.3 GW of generation and ordered 20 GW of load shed. Outages peaked Feb 15-16, and load shedding lasted until early Feb 18.

  18. 2021

    Germany / Europe · Feb 25, 2021

    Shell agrees to buy Next Kraftwerke

    Shell announced it would acquire VPP operator Next Kraftwerke on Feb 25, 2021, and completed the deal on July 30, 2021. By April 2022 Next Kraftwerke reported 10,000 MW of aggregated capacity across more than 13,000 units.

  19. 2022

    Japan

    Japan creates an aggregator business category

    Starting April 2022, a "specified wholesale supply" business that aggregates power from plants or batteries had to file with Japan's METI minister. This gave aggregators a formal status under the Electricity Business Act.

  20. 2022

    United States (California) · Jun 30, 2022

    California creates the Demand Side Grid Support program

    Assembly Bill 205 created DSGS, which pays customers and aggregators for reducing net load during grid emergencies, including by discharging batteries. The Energy Commission adopted guidelines on Aug 10, 2022.

  21. 2022

    United States (California) · Jul 7, 2022

    PG&E and Tesla launch a Powerwall VPP

    PG&E invited about 25,000 Powerwall owners to join a virtual power plant through its Emergency Load Reduction Program pilot. Members were paid $2 for each extra kWh their battery discharged during an event.

  22. 2022

    United States (California) · Sep 6, 2022

    California sets an all-time demand record

    During an extreme heat wave, CAISO demand hit a record 52,061 MW without rolling blackouts. Demand response was dispatched from 4 to 9 pm, and an emergency text alert asked residents to cut use.

  23. 2022

    United States (Texas) · Nov 3, 2022

    Texas approves the ERCOT ADER pilot

    The Public Utility Commission of Texas unanimously approved a pilot that lets aggregated distributed energy resources sell into ERCOT's wholesale market. The first phase was capped at 80 MW.

  24. 2022

    United Kingdom · Nov 15, 2022

    Demand Flexibility Service and Octopus Saving Sessions

    In Octopus Energy's first Saving Session, run under National Grid ESO's new Demand Flexibility Service, more than 200,000 households cut demand by 108 MW for an hour. Over winter 2022/23 the service held 22 events with 1.6 million participating homes and businesses, saving 3,300 MWh.

  25. 2023

    United States (Texas)

    Texas passes SB 1699

    The 2023 law says companies that aggregate distributed energy resources don't have to register as power generation companies, and it authorizes the PUC to set rules for them. It also directs the PUC to set residential demand-reduction goals in the ERCOT region.

  26. 2023

    United States (Texas)

    First VPPs qualify in ERCOT

    In August 2023, the American Public Power Association reported that two aggregations of Tesla Powerwalls (one in CenterPoint's Houston area and one in Oncor's Dallas area) had qualified under the ADER pilot. It was the first time VPPs supplied power to the ERCOT grid this way.

  27. 2023

    Puerto Rico

    Puerto Rico's first VPP launches

    LUMA Energy's Customer Battery Energy Sharing program began in fall 2023, paying solar-plus-battery owners to share stored power during shortfalls. In summer 2025, the program helped cover a nearly 50 MW generation shortfall and prevent outages.

  28. 2023

    United States · Sep 12, 2023

    DOE releases its VPP Liftoff report

    The U.S. Department of Energy estimated current VPP capacity at 30-60 GW. It found that tripling to 80-160 GW by 2030 could save about $10 billion a year in grid costs.

  29. 2024

    South Korea · Jun 14, 2024

    Korea's Distributed Energy Act takes effect

    South Korea's distributed energy special act came into force, pushing the country toward more local generation. Large new buildings and developments must now install on-site energy, and big power users must assess their grid impact.

  30. 2025

    United Kingdom

    Demand Flexibility Service grows

    In winter 2024/25, nearly 2 million households and businesses were registered for the Demand Flexibility Service. Across 44 events they reduced or shifted 3,917.7 MWh at a total cost of about GBP 1.2 million.

  31. 2025

    United States · Jan 22, 2025

    DOE publishes its VPP Liftoff 2025 update

    DOE reported that VPP adoption had grown since 2023 but still needed to speed up. It kept the goal of 80-160 GW, or 10-20% of peak load.

  32. 2025

    United States (Texas) · Jun 24, 2025

    ERCOT doubles the ADER pilot

    ERCOT's board approved Phase 3 of the ADER pilot, raising participation limits to 160 MW for energy and 80 MW for ancillary services. It also added a new way for aggregated customer sites to take part.

  33. 2025

    Australia · Jul 1, 2025

    Cheaper Home Batteries Program starts

    Australia's federal program began cutting about 30% off the upfront cost of eligible home batteries, backed by A$2.3 billion at launch. The discount is set to shrink gradually until 2030.

  34. 2025

    United States (California) · Jul 29, 2025

    100,000-battery VPP test delivers 535 MW

    Sunrun and Tesla dispatched more than 100,000 home batteries through California's DSGS program, averaging 535 MW from 7 to 9 pm. A Brattle Group analysis found steady output with no performance drop-off during the event.

  35. 2025

    United States (Texas) · Oct 24, 2025

    ERCOT raises the ADER limit to 200 MW

    ERCOT raised the pilot's energy limit to 200 MW, with 100 MW each for two reserve services.

  36. 2026

    United States (Texas) · Mar 2, 2026

    ERCOT raises the ADER limit to 500 MW

    ERCOT raised the pilot's registered capacity limit to 500 MW. As of August 17, 2026, 249 MW had qualified.

  37. 2026

    United States (California) · Sep 9, 2026

    Record 580 MW home-battery dispatch

    California home batteries in a Tesla-Sunrun VPP sent more than 580 MW to the grid during a heat wave. Energy-Storage.news called it the largest VPP dispatch event on record, with about 110,000 Powerwalls plus over 30,000 other batteries taking part.

Around the world

How other countries do it

Germany

Germany is home to some of the oldest and largest commercial VPPs. Operators connect thousands of wind, solar, biogas, CHP and battery units, plus flexible industrial loads, through remote-control boxes. They trade the pooled output on power exchanges and sell balancing services to the transmission system operators. Home batteries joined this market when sonnen's networked batteries qualified to provide primary balancing power.

  • Next Kraftwerke was founded in Cologne in 2009 and describes itself as a power plant operator without any power plants. Source
  • In April 2022 Next Kraftwerke reported 10,000 MW of aggregated capacity from more than 13,000 units in eight European countries, trading on exchanges such as EPEX and EEX. Source
  • Shell completed its acquisition of Next Kraftwerke on July 30, 2021. Source
  • In December 2018 TenneT prequalified sonnen's networked home batteries to provide primary balancing power in blocks starting at 1 MW. Source

United Kingdom

In Great Britain, VPPs mostly reach households through their energy supplier. During the Demand Flexibility Service run by the grid operator (now NESO), suppliers such as Octopus Energy pay customers to use less power at peak times. Participation has grown each winter, and in-merit participation now lets providers earn from DFS and other markets at once.

  • In winter 2022/23 the Demand Flexibility Service ran 22 events, with 1.6 million homes and businesses taking part and 3,300 MWh saved. Source
  • In Octopus Energy's first Saving Session (15 Nov 2022), more than 200,000 households cut demand by 108 MW for one hour. Source
  • In winter 2024/25 nearly 2 million households and businesses were registered, and 44 events reduced or shifted 3,917.7 MWh. Source

Australia

Australia, especially South Australia, has very high rooftop-solar adoption and was an early testbed for home-battery VPPs. Retailers and Tesla networked home batteries, and the national market operator AEMO tested whether these fleets could reliably provide frequency control services. Since July 2025, a federal discount has made home batteries cheaper to buy.

  • AGL's Adelaide VPP was planned as 1,000 batteries totaling 5 MW / 7 MWh, with up to A$5 million from ARENA. Source
  • South Australia and Tesla announced a plan in February 2018 for solar and Powerwalls on up to 50,000 homes. Source
  • In AEMO's VPP trial, VPPs grew to 3% of the contingency FCAS market by April 2021, across 8 portfolios with more than 7,150 consumers. Source
  • The Cheaper Home Batteries Program, starting 1 July 2025, cuts about 30% off eligible home battery costs. Source

Japan

Japan's VPP work has been led by government-funded demonstrations from the trade ministry (METI) since 2016. The legal groundwork followed: a balancing market, a capacity market, and a formal aggregator business category under the Electricity Business Act.

  • METI's Fiscal 2016 subsidy funded VPP construction and demonstration projects; one Kansai Electric-led project linked batteries at seven sites to act as a single power plant. Source
  • Japan introduced a capacity market in 2020 and a balancing market in 2021, and from April 2022 aggregators (specified wholesale suppliers) must file with METI. Source
  • Enel X Japan obtained a Specified Wholesale Supplier (Aggregator) license on June 27, 2022. Source
  • METI's FY2023 demonstration project continued to fund VPPs built from batteries and EVs, including EV and recycled-battery VPPs. Source

South Korea

South Korea's market is still dominated by the state utility KEPCO, so VPPs there mostly bundle small solar and wind plants for brokerage rather than home batteries. Startups and large firms act as aggregators, and a 2024 law pushes toward more distributed generation.

  • A small-scale electricity aggregator programme was introduced in December 2018, and Haezoom became the first registered aggregator in 2019, managing more than 2,800 PV plants by May 2019. Source
  • The Distributed Energy Act came into force on 14 June 2024. Source
  • In June 2024 telecom carrier LG Uplus entered renewable power brokerage with VPP services that combine solar and wind plants nationwide. Source

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