News > Virtual Power Plants: A tool to lower Pennsylvania electric bills

Virtual Power Plants: A tool to lower Pennsylvania electric bills

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August 17, 2026

There’s a lot happening behind your light switch. You may not think about it when you flip it on, but that electricity likely traveled through a system of poles and wires to brighten your room. That system is massive. It’s also aging and expensive. It doesn’t have to be. Recently, Pennsylvania’s utility regulators announced plans to develop a new set of rules to enable a more reliable and less expensive way to power Pennsylvania homes and businesses.

That’s where virtual power plants (VPPs) come in.

How virtual power plants can lower energy costs

A virtual power plant (VPP) links together thousands of small, customer-owned devices: home batteries, smart thermostats, electric water heaters, rooftop solar paired with storage, and EV chargers; that way, they can act as a coordinated resource when the grid is stressed. No single device is a “power plant.” But when many participate, the combined impact can be substantial. VPPs can lower demand when it is high and also supply additional electricity when it is needed most. This makes electric service more reliable and less expensive.

When the grid is strained — for example, during a heat wave, a cold snap, or after a storm — utilities have limited ways to respond. They can buy very expensive power from “peaker” plants that sit idle most of the year. Or they can make rushed investments in poles, wires, and transformers sized for a handful of peak hours. VPPs offer another option: use resources already sitting in Pennsylvanians’ homes and businesses.

VPP program participants can take part in a number of ways. They could let the VPP program briefly adjust a thermostat by a degree, shift water-heater timing, or discharge a home battery during a peak event. This gives the grid breathing room right when it needs it. Participants get compensated, and because those peak hours are when electricity is most expensive, savings can flow back to all customers through lower system costs. 

This isn’t theoretical. VPP programs are operating around the country today. The U.S. Department of Energy calls VPPs among the fastest-to-deploy tools to strengthen reliability and resilience. Scaling them nationally to 80–160 gigawatts by 2030 could help meet rising demand while reducing costs.

Pennsylvania lawmakers can enable Virtual Power Plants

Pennsylvania’s legislature is also working on bringing VPPs to the Commonwealth. A bill sponsored by Rep. Nate Davidson, introduced as House Bill 2264 and commonly discussed as a “virtual power plant” bill, would require electric utilities to establish VPP programs. It would create a way for customers to enroll devices and be compensated for helping the grid. In return, the establishment of a VPP in the state would save customers more than $480 million per year. Click here to contact your legislator about this bill.

These savings come from lowering the need to deploy “peaker” resources and emergency purchases that are expensive. The costs show up on our electric bills rates. VPPs can reduce the need for high-cost peak resources and, by smoothing demand spikes, can delay some distribution upgrades that are driving bills upward.

House Bill 2264 puts customers first in three key ways: 

1. Participation would be voluntary, with simple enrollment and opt-out options.
2. The bill would empower Pennsylvania’s utility regulators to create transparent rules about when and how devices can be called. 
3. And the bill would allow Pennsylvania to design programs so all communities can participate, not just households that can easily afford new technology.

Pennsylvania lawmakers hear a lot of “either-or” arguments about energy: either build more generation or accept unreliability; either protect customers or modernize the grid. Virtual power plants break that false choice. They are a practical way to make the grid more reliable and more affordable.