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.
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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.
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
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).
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).
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.
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.
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).
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 →
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)
Swipe to see the full chart →
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 →
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.
- Mass Save
- Con Edison
- APS
- Green Mountain Power
- Enphase
- Portland General Electric
- DSGS Guidelines, 5th ed.
- ERCOT ADER pilot
- Energy Storage Solutions
- Citizens Utility Board
- CESA VPP table
- PJM 2027/28 capacity auction report
- PJM 2028/29 capacity auction
- Enel North America on the PJM auction
- ACEEE
- Lawrence Berkeley National Laboratory
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