Adam-Glick

Virtual Power Plants Are Scaling in Texas — What That Means for Homes and Businesses
By Adam Glick, Solar Sherpa, NATiVE Solar

The Pressure on the Texas Grid Is Real

Dear readers, as you know, our grid is still a mess -even if we managed to keep the lights on during that deep freeze a couple of weeks ago.  But this isn't going to be a doomy/gloomy entry this week.  There's really good news for businesses and home owners with grid-attached solar+battery systems.

But we will start here for context:

"The reality is, we're not going to be able to keep up."
— Bill Hetherington, CEO, Bandera Electric Cooperative
(The Texas Tribune, Feb. 18, 2025)

This man is pointing to pretty stark reality around the growing pressure being placed on the Texas grid by population growth, industrial expansion, AI/data center load, and yeah -weather volatility.  All this when combined means we now are dealing with energy scarcity in the state.  

But here's the thing – there is PLENTY of untapped energy that never gets access and distributed over the wires during extreme grid stress. Texas residences and businesses have installed massive amounts of grid-connected battery storage which would be virtually connected over a large area to help smooth brown-outs and help prevent blackout situations.

Up to now, there this hasn't really been done due to a lack of coordination.  But that coordination is what a Virtual Power Plant (VPP) actually provides -and there's a ton of new program offerings popping up over the state!

What Changed: Texas Built the Market Pathway

For years, VPP participation in Texas moved slowly because wholesale market participation for aggregated "behind-the-meter" battery storage assets did not formally exist. There was no regulatory or business plan to make it happen.

(*Behind-the-meter (BTM) refers to energy equipment installed on a customer's side of the electric meter -like solar panels or batteries- that serves on-site loads first rather than supplying the broader grid.)

That changed with ERCOT's ADER pilot in 2023.

"An Aggregate Distributed Energy Resource (ADER) is a collection of distribution-level premises aggregated to respond to ERCOT dispatch instructions."
— ERCOT ADER Pilot Overview (ercot.com)

This is corporate gobblegygook for "We have a plan to allow grid-connected residential and commercial battery storage system owners to participate in the wholesale Texas energy market and help smooth out grid stress at the same time."

The folks that actually run the grid – the electric coops and utility companies mostly jumped on-board:

"We're actually empowering the member so they can participate in the wholesale market directly."
— Bill Hetherington, CEO, Bandera Electric Cooperative
(Cooperative.com, 2024)

Now in 2026, there is (finally, after a slow start) an explosion of options for residential batteries and commercial storage systems to now be aggregated and dispatched into ERCOT's wholesale market under formal rules.

Basically, battery system owners get paid higher returns to discharge some of their stored battery energy into the grid when it's needed most.  The idea is wrapped up in what is known as: Virtual Power Plants – aka "VPP"s. 

Major Energy Companies Are Committing New Programs and Gigawatts in Combined, Otherwise Untapped Power

A new VPP initiative announced in December of '25 is planned to add 1 Gigawatt of otherwise untapped battery capacity to the grid -the equivalent of 200,000 homes.

"This partnership is a major step in achieving our goal of creating a 1 GW virtual power plant by 2035″…"We're unlocking a new source of dispatchable, flexible energy…"
— Brad Bentley, EVP, NRG Consumer
(Sunrun Investor Relations Press Release, Dec. 16, 2025)

SunRun is a huge national solar provider who already has over 100,000 residential solar customers across the country signed up as VPP participants. Their announcement to offer VPP participation to a large swath of Texas consumers seems like a solid win.

"As rapid population growth and weather events create new challenges… VPPs can deliver a reliable, flexible and dispatchable energy resource."
— Ben Brown, CEO, Renew Home
(NRG / Renew Home Press Release, Nov. 7, 2024)

That's just one example. There are several other -some of which we've covered here in the past including :

 Residential: Why Homeowners Are Re-Engaging

Over the past few years, Texas solar "buy-back" (solar energy export) rates have weakened. In most areas, the credit you receive for exporting excess solar power no longer matches what you pay to consume electricity. In plain terms: utilities often buy low and sell high. As Regan George, CEO of Solrite Energy, put it:

"Homeowners are looking for a new buyback program… but they're not finding it in the market."
— Regan George
(Latitude Media, Feb. 11, 2026)

With all the new VPP options popping up around the state, residential batteries aren't just sitting on the wall for outage backup and peak usage triage -they can potentially be coordinated and dispatched as part of a larger grid resource.

Meanwhile, Texas grid-scale battery capacity has grown from a few hundred megawatts in 2020 to roughly 14 gigawatts by 2025 (Texas Comptroller, 2024; Modo Energy, 2025), signaling that storage is now a serious part of the state's energy strategy.

For homeowners, batteries are shifting from backup devices to multi-purpose energy assets which layer resilience, bill management, market participation, and grid stabilization into one system.

Commercial & Industrial: Where the Real Capacity Lives

Residential VPPs scale through participation. Commercial VPPs scale through power.

As Nick Chaset of Octopus Energy told The Texas Tribune:

"We want to show that you don't need as many… big backup power plants, because these distributed energy resources are reliable…"
— Nick Chaset, EVP North America, Octopus Energy
(The Texas Tribune, Feb. 18, 2025)

For commercial operators, "behind-the-meter" storage is already a financial tool. It reduces peak demand charges, improves resilience, and limits exposure to volatility. That's the foundation.

Aggregation programs and VPP participation may add upside, but the primary case is still demand management and operational control. All this said, in practical terms, a single 500 kW commercial battery can provide more dispatchable flexibility during grid stress than dozens of residential systems combined. And businesses will probably look favorably on the profit/loss side of the equation, as well.

Notes on Commercial VPP Participation

  • ADER is the primary vehicle for true commercial VPPs  -it allows businesses with batteries, flexible loads, or behind-the-meter systems to aggregate with others in ERCOT's wholesale market.

  • Most named programs (Tesla, Sunrun/NRG, sonnen/SOLRITE) are marketed toward residential participation but can also enroll commercial battery assets (e.g., Powerwalls on small businesses, commercial storage) if they meet eligibility and aggregation criteria.

  • Utility or co-op pilots like Base/GVEC and future Austin Energy offerings may provide additional C&I-friendly enrollment paths without the third-party retail REP requirement.

Conclusion: Grid-attached Battery Capacity is Growing -And now VPP Coordination is a Real Thing

Texas didn't suddenly discover batteries.

Over the past five years, grid-attached battery capacity in ERCOT has grown from a few hundred megawatts to roughly 14 gigawatts operational (Texas Comptroller, 2024; Modo Energy, 2025). The battery hardware is here. At scale.

Through ERCOT's ADER framework -and the 3rd-party VPP offerings acress the state- "virtual" distributed batteries can now be aggregated and dispatched into wholesale markets as loads demand extra margins of safety to prevent brown/black-out scenarios. As ERCOT defines it, an Aggregate Distributed Energy Resource is "a collection of distribution-level premises aggregated to respond to ERCOT dispatch instructions." More legal language meaning this : "An Aggregate Distributed Energy Resource (ADER) is a group of homes or businesses with batteries or other energy equipment that are connected together and controlled as one unit so they can respond when ERCOT asks for power."

So here's the thing -If you already have backup batteries for your residence or business -or if you're planning to add a solr+battery system- then you're going to want to look into VPP participation if you want to maximize the return on your investment.  :)