A virtual power plant (VPP) is a network of many small energy devices in homes and businesses, such as smart thermostats, batteries, solar systems, electric vehicle chargers and water heaters, coordinated to act like one power plant. When electricity demand peaks, the network briefly reduces or shifts power use, or supplies stored power. That helps the grid without building a new plant. In Canada, you can take part through programs run by utilities and grid operators.
How a virtual power plant works
Enrol a device. You sign up a compatible device, such as a smart thermostat, through a program.
Peak events are called. On a hot summer afternoon or a cold winter morning, the program operator signals a short “event”.
Devices respond automatically. Your thermostat might adjust by a degree or two, a battery might discharge, or a water heater might pause.
You get rewarded. Programs typically offer sign-up incentives, bill credits or yearly payments. You can usually override an event if you need to.
Added up across thousands of homes, these small changes become a significant grid resource. This is a form of demand response; Ontario’s grid operator explains how it is used on its demand response page.
Virtual power plant examples in Canada
Ontario: Peak Perks
Save on Energy’s Peak Perks program, delivered by Ontario’s Independent Electricity System Operator (IESO), is a large residential example. Eligible homes and small businesses with central air conditioning and a smart thermostat allow brief, limited thermostat adjustments during summer peak periods in exchange for incentives. Check the program page for current eligibility and rewards.
Quebec: winter peak programs
Quebec’s electricity demand peaks on cold winter mornings and evenings. Hydro-Québec has offered rate options that reward customers for cutting use during winter peak events. Its Winter Credit Option closed to new enrolment on March 31, 2026, so check Hydro-Québec’s current rate options, such as dynamic pricing.
Elsewhere in Canada
Other utilities are testing ways to use home batteries, electric vehicle chargers and smart devices to support the grid. Natural Resources Canada has funded smart grid work on integrating flexible resources such as these. Ask your utility which programs are open in your area.
Benefits for your household
Incentives or bill credits for taking part
Little effort: events are automatic and usually short
More value from equipment you already own, such as a smart thermostat or battery
A lower-carbon grid: less need for fossil-fuelled “peaker” plants during demand spikes
Benefits for the grid
Reduces peak demand, which drives much of the cost of building grid capacity
Adds flexibility to balance variable sources like wind and solar
Can be expanded quickly, because the devices are already in homes
What do you need to join a virtual power plant?
Requirements depend on the program. Common eligible devices include:
a smart thermostat controlling central air conditioning or a heat pump. See our guide to smart thermostats in Canada.
a home battery, often paired with solar
a connected electric vehicle charger or water heater
If you have solar panels, a battery lets you store daytime power and potentially take part in programs that use stored energy. Learn more in our guides to what kWp means and the solar interconnection process in Canada.
What to check before you enrol
How many events a year, at what times, and how long they last
How much your temperature or device settings will change
Whether you can opt out of individual events
The rewards, and how and when they’re paid
How your data is used and protected
The bottom line
A virtual power plant turns everyday devices in thousands of homes into a flexible grid resource. You’re paid a little for helping at peak times. In Ontario, Peak Perks is the main residential option; elsewhere, ask your utility what’s available and check the terms before you enrol.
Frequently asked questions
What is a virtual power plant in simple terms?
It’s many small devices in homes and businesses, such as thermostats, batteries and water heaters, coordinated to reduce or supply power at peak times, like a single power plant would.
Will a virtual power plant make my home uncomfortable?
Programs are designed for small, short adjustments. For example, Ontario’s Peak Perks adjusts smart thermostats briefly during summer peaks, and participants can usually override an event.
Do I need solar panels to join a virtual power plant?
No. Many programs only need a smart thermostat. Solar with a battery can open up more options where programs support them.
