Virtual Power Plants Aggregation: The Future of Energy in 2025

A decade ago, grid operators relied on a handful of large power plants to ramp up and down. In 2025, tens of thousands of home batteries, EV chargers, smart thermostats and commercial loads are quietly doing the same job-coordinated through software as a Virtual Power Plant (VPP). The global VPP market is estimated at $6.28B in 2025 and forecast to exceed $13.56B by 2030 (about 27.63% CAGR). Across the US, Europe and Australia, VPPs already provide several GW of flexible capacity, replacing or delaying gas peaker plants and paying households $100-$600 per year for their flexibility. At Energy Solutions, we've reviewed leading VPP programs and their economics. This guide explains how VPPs work, what services they sell into wholesale markets, and how the business model compares to traditional peakers.

VPP Basics: What They Are & How They Work

A Virtual Power Plant is a network of distributed energy resources (DERs) - like home batteries, rooftop PV, EV chargers, and HVAC loads - coordinated via software to act like a single flexible power plant.

• Monitoring: Each device is connected via internet or cellular and reports state (charge, power, availability).
• Forecasting: Software predicts aggregated flexibility for the next minutes to days.
• Dispatch: During events, the VPP slightly adjusts thousands of devices to meet a target profile.
• Settlement: The VPP receives payments from grid operators and shares a portion with participants.

Resources in a VPP: Batteries, EVs & Flexible Loads

Different DERs contribute different types of flexibility:

Grid Services & Revenue Streams

VPPs earn revenue by providing services that grid operators previously bought from conventional plants:

• Capacity: Firm kW available during system peaks.
• Frequency regulation: Fast up/down adjustments to keep frequency near 50/60 Hz.
• Operating reserves: Spinning and non-spinning reserves.
• Voltage support: Reactive power and local voltage control (in some regions).

VPP vs Peaker Plant Economics

Comparing a 100 MW gas peaker plant with a 100 MW/200 MWh VPP built from home batteries:

While VPPs may have similar or slightly higher upfront cost per kW, recent market analyses suggest operating a VPP can be ~40% lower cost than running traditional peaking resources and ~60% lower cost than relying on large centralized battery systems in comparable flexibility use cases. The reason is structural: a mixed-asset fleet (home batteries + solar + flexible loads + EVs) reduces the need for single-purpose storage capacity, and V2G integration can improve supply-demand balancing and lower the effective cost of storage during peak events.

Sources (copyable):
https://virtual-peaker.com/blog/the-high-costs-of-fossil-fuels-the-case-for-virtual-power-plants/
https://cpowerenergy.com/virtual-power-plants/

Participant Earnings: What Households Actually Make

Typical earnings for a home battery enrolled in a VPP (10-15 kWh, 3-5 kW export):

Case Study: 100 MW VPP vs 100 MW Peaker Plant

To compare business cases, consider a grid operator choosing between a new 100 MW gas peaker and a 100 MW / 200 MWh residential VPP assembled from 20,000 home batteries (average 5 kW export, 10 kWh each).

In many markets, the VPP shows a lower 10-year net cost once fuel and carbon exposure are priced in, while also delivering resilience and bill savings to participating customers.

Global Perspective: Leading VPP Markets

VPP adoption is uneven but growing fast across a handful of pioneering regions.

Common ingredients in leading VPP markets: high retail tariffs, strong rooftop solar penetration, and clear market rules that let aggregators compete alongside traditional generators.

Devil's Advocate: Limits & Risks of VPPs

Despite the hype, VPPs are not a magic bullet. Several structural challenges still limit their scale and profitability.

• Regulatory friction: In many markets, aggregators face complex rules or must work through utilities, slowing deployment.
• Customer engagement: Recruiting and retaining thousands of participants is costly and time-consuming.
• Cybersecurity & data privacy: Large fleets of internet-connected devices expand the grid's attack surface.
• Measurement & verification: Proving delivered flexibility for settlement remains non-trivial.
• Equity concerns: Early VPP benefits may skew toward higher-income households who can afford batteries and EVs.

Successful VPP operators design programs that minimize customer hassle, automate participation, and clearly share value while staying inside regulatory guardrails.

Outlook to 2030: Scale & Revenue

Looking ahead, most forecasts see VPPs scaling from a few GW today to tens of GW by 2030.

• Global capacity: 30-60 GW of aggregated DERs providing capacity and ancillary services.
• Household earnings: Typical battery owners earning $250-$600/year from stacked VPP programs in mature markets.
• Aggregator business models: Shift from single-utility pilots to multi-market portfolios active across ISOs.
• Regulatory evolution: More markets will explicitly recognize aggregators as market participants.
• Integration with EVs: Bidirectional charging could add another 100+ GWh of flexible capacity globally.

By 2030, the most advanced power systems will treat behind-the-meter flexibility as a core resource, with VPPs competing directly against new fossil peakers and centralized storage projects.