Resources > Distributed Power Plants: A better grid, now!

Distributed Power Plants: A better grid, now!

Factsheet

August 15, 2025

Distributed Power Plants and why they work

Your solar panels lower your energy bills and give you financial freedom from future rate hikes. If you have battery storage, you get peace of mind even if the power grid goes down. But your solar-and-battery system can do so much more! It can sync with other systems to provide a meaningful amount of electricity when our grid needs it most. It’s called a Distributed Power Plant (DPP) –– also known as a Virtual Power Plant (VPP).

A DPP is a network of solar and battery systems that are responsive to the energy grid. DPPs are made up of Distributed Energy Resources (DERs). DERs in work together to feed power back to the grid during times of peak use or an energy emergency. In the face of the increasing cost of power and a more electrified world, DPPs mean a better grid now!

To understand how they work, let’s look at how a traditional power grid operates. Utilities must make sure the supply of electricity is always greater than the demand. They meet these demands with large, centralized plants powered by gas, oil, coal, hydro, or nuclear. When that is not enough, energy companies outsource to peaker plants that are only turned on during peak demand events.

DPPs help lower energy costs for everyone by reducing the need to use or even build expensive peaker plants. This is because the Distributed Energy Resources that make up DPPs are already connected to the grid. So a DPP program can start operating in months and not years.

How to join a Distributed Power Plant program

When a program is available in your area, you can sign up to connect your solar-powered batteries to computer software. We call these systems aggregators because they bundle many systems, like yours, to create a DPP.

Programs are sometimes managed by the company that makes your battery or the company that leases your solar and storage system. You might also sign up to join directly through your utility.

By participating, you agree to have your batteries partially discharged to the grid at needed times. In exchange, you receive compensation for the energy you share and you always keep some power in your battery.

For more information on programs near you, jump here for examples of DPP programs around the country.

How much can we save with DPPs?

According to a 2023 study by the Brattle Group, a DPP costs roughly 40–60% less than alternative options to provide power. An estimated 60 GW of DPP deployment would save ratepayers $15–$35 billion over the next decade. 60 GW is enough energy to provide power to 7.5 million homes. It would provide more than $20 billion in other societal benefits including reduced pollution and a more reliable energy service.

A 2024 study projects that DPPs could save California consumers more than a half-billion dollars per year. DPPs could supply more than 15% of peak demand (5x the existing capability) by 2035. In the summer of 2023, Sunrun’s Peak Power Rewards distributed power plant program delivered up to 32 MW megawatts of power during evening peak hours. This was thanks to the participation of 8,500 customers and their batteries.

The U.S. Department of Energy’s “Virtual Liftoff” report estimates that tripling the current scale of DPPs by 2030 could save ratepayers more than $10 billion in annual grid costs.

Sun is your DPP champion

While individual savings and revenue will always be dependent on program terms, device eligibility, and local energy rates, leading DPP programs can offer up to $1,500 a year in revenue for adding your battery to their network.

This is why Solar United Neighbors has developed a tested model to make DPPs successful in your state. With our model policy and legislation, SUN is working across the country to standardize scalable DPP programs. Our policy ensures:

Upfront incentives for enrollment
Fair compensation for participation
Prioritizes consumer protection
Includes many different technologies and devices

With the federal solar tax credit ending after 2025, DPP programs represent a crucial opportunity for solar battery owners to get the most out of their systems. But there is still a lot of work to do!

While some states have DPP programs, many do not. It is a complex process to get a DPP connected to the grid. It takes advocacy to ensure participants are fairly compensated. SUN wants to guarantee everyone to have a voice in the process — not just monopoly utilities.

Take action

If you are a rooftop solar owner with a battery (or thinking of connecting a battery), we want to help you. See if your state and utility territory offers a DPP program in the DPPs near you section below.

If a DPP program isn’t available where you live, you can start by contacting your state legislators. Tell them that you want DPPs to be an option in your state.

Resources

DPP model policy

DPP model legislation

DPP Model Policy & Model Legislation overview

Webinar recording explaining our Model Policy & Tariff

Here's a blueprint for building VPPs in every state

DPPs: Virginia's crucial step to energy independence

DPPs near you

Arizona
The Arizona Corporation Commission approved Arizona Public Service Co.’s (APS) Storage Rewards program in March 2025. The program compensates customers for providing battery storage to help the utility meet peak demand needs during hot summer months. Customers participating in the Storage Rewards Program will be compensated with an annual $110 per available Kilowatt. It is based on the seasonal average capacity of energy exported to the electric grid from their battery system. The utility would typically only use the additional generation when market rates would otherwise be much higher than the $110/kW rate. In other words, the program saves money for all customers.

California
The California Energy Commission (CEC) Demand Side Grid Support (DSGS) Program is part of California’s Strategic Reliability Reserve. It is a suite of programs to alleviate limited energy supplies on the grid caused by heatwaves and wildfires.

DSGS offers incentives to electric customers that can help balance energy demands and backup generation to support the state’s electrical grid during extreme events from May to October. This lowers the risk of rotating power outages. The DSGS Program is open to eligible DSGS providers and participants. It has four incentive structure options to choose from.

Customers of Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison can also participate in the California Public Utility Commission’s Emergency Load Reduction Program. This program offers incentives to customers to use less electricity when demand for power is high. (See here for an evaluation of the state of grid services/demand response efforts in California.)

Colorado
Xcel Energy’s BatteryConnect Program provides incentives for customers who install energy storage systems, enabling the utility to tap into stored energy during peak hours,helping to stabilize the grid and reduce strain during high-demand periods.

Connecticut
Connecticut’s Energy Storage Solutions Program encourages residential and commercial customers to install energy storage systems by offering upfront incentives and performance-based payments for providing power to the grid during high-demand periods.

Massachusetts
National Grid’s Connected Solutions Program, which operates in Massachusetts and other New England states, compensates customers for allowing their home batteries to contribute stored energy to the grid during times of peak demand, helping to lower overall grid strain while also providing financial incentives to participants. Participants average around $1,500 in annual incentives for connecting their home batteries to the system.

Puerto Rico
LUMA’s Customer Battery Energy Sharing (CBES) program compensates customers for the energy they provide to reduce peak demand needs of the utility. The utility offers compensation of $1.25/kWh. A portion of this is shared with the third-party aggregator company that handles enrollment and payment for customers. The program recently expanded to include approximately 60,000 customers, making it one of the largest DPP programs in the country.

Rhode Island
National Grid’s Connected Solutions Program, available in Rhode Island and other New England states, compensates customers for allowing their home batteries to contribute stored energy to the grid during times of peak demand, helping to lower overall grid strain while also providing financial incentives to participants.

Texas
ERCOT launched a pilot project in October 2022 allowing Texas DER owners to join aggregation agreements and receive compensation for the energy and grid services they provide. This pilot was developed by a working group in less than a year, and it will likely be expanded beyond the current cap of 80 MW for future phases.

Renters in certain buildings in Houston, Texas can subscribe to the “Project TexFlex” solar-plus-storage DPP. This program uses SolarEdge batteries to provide low-cost clean energy and grid services during periods of peak demand. Onsite solar will send power to the grid in near real-time, and local utilities will have access to stored power during periods of high demand.

Subscribed customers reduce their energy costs by participating in demand response events through the programs, during which stored power is discharged to the grid. In addition, Tesla also has a demonstration project in ERCOT, using a fleet of Powerwalls to provide grid support. Other programs may be available depending on where you live in Texas.

Utah
Rocky Mountain Power’s WattSmart Battery Program offers incentives to homeowners who install batteries paired with solar power, allowing the utility to draw stored energy to support the grid during peak demand. Participants receive upfront payments and annual bill credits based on their battery’s power output.

Vermont
Green Mountain Power’s (GWP) “Bring Your Own Device” (BYOD) program offers customers up-front payments to offset the cost of purchasing their own battery storage system from any installer.

In 2020, state regulators converted GMP’s BYOD pilot into a permanent incentive program. It is available to five hundred customers per year with projects of up to 5 MW of capacity.
The BYOD program offers a per-kWh payment. Participants receive:

$850 per kW for storage enrolled for a three-hour discharge
$950 per kW for four-hour discharge
Additional $100 per kW for storage deployed in areas of high congestion.

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