Last year, the amount of U.S. home battery capacity enlisted in virtual power plants grew by 153 percent. Unlike a net metering system, which sends unused energy from rooftop solar panels directly into the grid in return for an energy credit, a VPP requires a storage system and software that tells the battery to send energy to the grid when it needs more power, like on a hot summer day.

Compensation for tapping a homeowner’s battery is paid by either a local utility or a VPP program, of which there are now more than 500 in the U.S. and thousands in Europe. This rapid expansion of home batteries and advanced software that aggregates thousands of decentralized energy sources is “transforming not only the way electricity is generated, but also how it is traded, delivered, and consumed,” concludes a 2022 International Energy Agency report.

These assets, the report said, “can provide valuable services to the grid when incentivized with appropriate technologies, policies, and regulations.” Currently, fewer than 10 percent of Australian homeowners who have solar arrays have signed contracts with energy providers. But experts believe the model has immense potential to expand, thanks to a global “battery revolution” that has, in a matter of years, seen battery prices plummet and their storage capacity shoot up even as their size has shrunk. Today, a 10 kilowatt-hour unit — which can simultaneously run a few household appliances and some lighting and electronics for 24 hours — can snugly fit under a staircase or into a garage corner.

Between 2010 and 2020, battery density increased by more than 700 percent, and between 2010 and 2023, the price of lithium-ion batteries plunged from about $1,400 per kilowatt-hour to less than $140 per kilowatt-hour — one of the fastest cost declines of any energy technology in history. Climate experts hope that grids can be cheaply and effectively balanced by hundreds of thousands of batteries distributed across cities, suburbs, and rural areas — some in electric vehicles, others on the walls of garages or cellars, and some in utility-scale storage parks, which still provide the lion’s share of solar-energy storage everywhere in the world. Ideally, aggregating the capacity of decentralized batteries — whether they are charged by solar panels or directly through the grid during off-peak hours — will replace dirty gas peaker plants.

Large battery projects, says a May report from the energy think tank Ember, “are increasingly cost-competitive and faster to build than new gas power plants.” And their carbon footprint is about 87 percent smaller than an average-size gas peaker. Home batteries offer similar advantages. When home battery systems are programmed to charge during times of high renewable output and discharge during peak grid demand, studies show they can reduce average household emissions by 2.2 to 6.4 percent.

Last year, the amount of U.S. home battery capacity enlisted in virtual power plants grew by 153 percent. Programs in Puerto Rico and California that paid homeowners for their stored energy were a “key driver of the growth,” according to policy and research analyst Madeline Turner of San Diego-based Ohm Analytics.