Guides · Checked October 13, 2026

How Virtual Power Plant (VPP) Programs Pay

The five payment models behind battery VPP programs, how event kW is measured, what limits it, and how program pay compares with the grid value of capacity.

Battery Economics has no affiliation with, sponsorship from, or endorsement by any manufacturer, installer, utility, aggregator, or program administrator named here.

Short answer

  • Most virtual power plant (VPP) programs pay for kW, not kWh. The usual unit is the battery’s average output during called events, paid per kW per season or year: $50 to $300 per kW-year in the programs we track.
  • Five payment models are common: per kW of measured performance, an upfront per-kW incentive, a flat monthly bill credit, a per-kWh event rate, and wholesale revenue shared by an aggregator.
  • Event length caps the kW. A 13.5 kWh battery holding a 20% backup reserve can average about 3.6 kW over a 3-hour event, even if its inverter is rated for 11.5 kW.
  • Grid value is a separate number. PJM’s 2027/28 capacity auction cleared at $333.44 per MW-day, about $122 per kW-year (PJM 2027/28 capacity auction report). That is a reference for what grid flexibility is worth, not what a participant is paid.
$50–$300Per kW-year in tracked performance programs
$122PJM capacity price per kW-year, 2027/28
3.6 kWMax average output, 13.5 kWh battery, 3-hour event, 20% reserve
7,299 MWDemand response cleared in PJM’s 2027/28 auction

What a program is buying

A utility or grid operator enrolls batteries for one main reason. It needs capacity it can call on during the few hundred hours a year when demand peaks, and customer batteries can supply that grid flexibility more cheaply than a new power plant. The program pays for the kW a battery reliably delivers when called, measured against a baseline. Stored energy matters only because it sets how long that kW can last.

Two program types are often grouped together. Demand response calls a battery for a limited number of peak events, typically on summer afternoons. An orchestrated VPP dispatches batteries as a fleet, often through an aggregator such as the battery manufacturer or installer, and can stack several grid services (ACEEE; Lawrence Berkeley National Laboratory). Either way, the dispatch decision is almost always made by the utility or the aggregator, not the battery owner.

The five payment models

Per kW performance

Pay for measured kW

The most common model. Mass Save pays $275 per kW of average event contribution each summer, with the rate locked for 5 years (Mass Save). Con Edison pays $100 per kW of average seasonal performance for 2026 (Con Edison), and APS pays $110 per kW-year (APS).

Upfront per kW

Pay once for a commitment

Green Mountain Power pays $850 per kW for a 3-hour commitment or $950 for 4 hours, up to 10 kW, in exchange for the utility’s right to dispatch the battery for years (Green Mountain Power).

Monthly credit

Flat bill credit

Duke Energy’s battery control option in the Carolinas pays a monthly credit of up to $59 for one battery (Enphase). Pay does not rise with performance above the requirement.

Per kWh

Pay for energy discharged

Portland General Electric’s Smart Battery pilot pays $1.70 per kWh discharged during Peak Time Events (Portland General Electric). Income depends on how many events are called.

Through an aggregator

Shared wholesale value

California’s Demand Side Grid Support (DSGS) Option 3 pays $62.10–$82.80 per kW-year to the aggregator, which passes a share to participants (DSGS Guidelines, 5th ed.). Texas’ ERCOT pilot shares wholesale revenue with no fixed rate (ERCOT ADER pilot).

Hybrid

Upfront plus performance

Connecticut pays an enrollment incentive of $30 per kWh, then $300 per kW-year for 10 years (Energy Storage Solutions). Illinois law sets a VPP pay floor of $10 per kW of average dispatch alongside a $300 per kWh rebate (Citizens Utility Board).

First-year gross pay for the same battery under each model

13.5 kWh battery, 4.5 kW average event contribution

Swipe to see the full chart →

$0k$1k$2k$3k$4kUpfront per kW · Vermont GMP (3-hour)$3,825 oncePer kW-year · Connecticut ESS$1,350 a yearPer kW-summer · Massachusetts$1,238 a yearPer kW-year · Arizona APS$495 a yearPer kW-season · Con Edison$450 a yearMonthly credit · Duke (max)$708 a yearPer kWh · Portland General$170 a year*One-time upfrontPer kW performanceCredit or energy based
Battery Economics calculation from the program terms linked above. 4.5 kW is what a 13.5 kWh battery can sustain for a 3-hour event with no reserve. *Portland assumes 100 kWh discharged in events in a year, which is an illustrative assumption. Green Mountain Power is a one-time payment; the others recur. All figures are gross, before any aggregator share.

How the kW is measured

Per-kW programs rarely pay on the battery’s nameplate. They pay on average output during events, such as the average kW from the start to the end of each event, averaged across the season. Measurement uses device telemetry, the customer meter or both, compared with a baseline of what the battery or home would otherwise have done. Missed or partial events lower the average. That is why enrolled kW, reserve settings and event length matter more than the headline rate.

How event length limits average kW

13.5 kWh battery holding a 20% backup reserve (10.8 kWh available)

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11.5 kW inverter (Powerwall 3)5 kW inverter (Powerwall 2)0 kW3 kW6 kW9 kW12 kW1-hour event10.8 kW5.0 kW2-hour event5.4 kW5.0 kW3-hour event3.6 kW3.6 kW4-hour event2.7 kW2.7 kW
Battery Economics calculation. Output is the lower of available kWh divided by event hours and the inverter’s continuous rating (Tesla Powerwall 3 datasheet; Tesla Powerwall 2 datasheet). Longer events favor more kWh; short events favor a bigger inverter.

Program pay vs. grid value

Capacity auctions show what grid flexibility is worth on the wholesale side. PJM’s 2027/28 auction cleared at its $333.44 per MW-day cap, about $121,705 per MW-year, and PJM estimated about $529.80 per MW-day without the cap (PJM 2027/28 capacity auction report; Enel North America on the PJM auction). The 2028/29 auction cleared at its $325 cap (PJM 2028/29 capacity auction). Cleared demand response rose to 7,299 MW (Enel North America on the PJM auction).

Program pay per kW-year vs. a wholesale capacity reference

Published terms; grid-value references in blue

Swipe to see the full chart →

$0$100$200$300Reference · PJM capacity, uncapped simulation$194 (simulated)Reference · PJM capacity 2027/28 (at cap)$122Reference · PJM capacity 2028/29 (at cap)$119CT · Energy Storage Solutions (standard)$300MD · BGE DRIVE pilot (standalone)$300MA · ConnectedSolutions$275NJ · GSESP Block 1$200CO · Holy Cross Power+ FLEX$127.20LA · Entergy New Orleans$125AZ · TEP Energy Storage Rewards$120AZ · APS Storage Rewards$110AZ · SRP Battery Partner$110NY · Con Edison BYOB (2026)$100CA · DSGS Option 3 (3-hour)$74.52NY · Upstate BYOB$50IL · CRGA VPP floor$10Open programNot yet open or closingGrid value reference
Sources: program rates from the CESA VPP table and each administrator (see the State-by-State Coverage page); PJM references converted from $/MW-day (UCAP) at 365 days. A battery’s accredited capacity is lower than its nameplate, so the reference is not a like-for-like price for one battery.

Some state programs pay more than the PJM reference and others well below it. The gap does not by itself show over- or underpayment. Programs may also value distribution-grid relief, avoided transmission costs or policy goals that a capacity auction does not price, and lower rates can reflect aggregator costs, measurement risk or a pilot budget.

What reduces the check

  • Aggregator share: where a program pays an aggregator, the participant receives a negotiated share.
  • Caps and waitlists: budget or MW caps can close enrollment; see Enrollment Windows & Caps.
  • Backup reserve: a higher reserve keeps more energy for outages but lowers event kW.
  • Stacking rules: some programs bar combining incentives; see How Programs Stack.
  • Early exit: upfront programs can require repayment if the battery leaves early.

Method and sources

Rates are published program terms checked October 13, 2026. Wholesale references convert PJM’s $/MW-day (UCAP) clearing prices to $/kW-year at 365 days.

Event kW limits assume a constant discharge over the event, a 13.5 kWh battery and a 20% backup reserve. All payments are gross program payments, not net profit.

Related

Figures are published specifications, prices and program terms checked October 13, 2026. Modeled results are illustrations, not quotes or engineering designs. Program payments are gross, not net profit. Confirm with a licensed installer and the program administrator before buying or enrolling. ← All Guides