Getting paid to flex your heat pump: demand response today, virtual power plants next

What a VPP asks of your heat pump

Heating and cooling are the largest flexible loads in most homes, which is why the smart thermostat has been the workhorse of residential demand response for more than a decade. When the grid is tight, usually a hot weekday afternoon, the utility or its partner sends a signal to thousands of enrolled thermostats. Each one raises the cooling setpoint a few degrees, the heat pump slows or pauses, and together the homes shed tens or hundreds of megawatts, the output of a small power plant.

The rules are similar almost everywhere. Massachusetts calls about 15 events a summer, each two to three hours between 3 and 8 p.m., raises the thermostat no more than 4°F, and pre-cools the house first (Mass Save). Arizona Public Service caps it at 20 events a summer (APS). You can override any event from the thermostat or app, although many programs pay only if you take part in most of them.

A heat pump changes the picture in one important way: it also heats. Programs in Oregon, Washington, the Carolinas, and Missouri call winter events, typically on cold mornings, which furnace and boiler homes can’t join (PGE, PSE, Ameren).

Winter events are harder on comfort. A house loses heat faster on a cold morning than it gains heat on a hot afternoon, and when the event ends the heat pump has to catch up. If it can’t catch up fast enough, many systems switch on backup electric strip heat, which can draw several times the heat pump’s power and erase the grid benefit. A 2026 study for the American Council for an Energy-Efficient Economy (ACEEE) recommends shorter one- to two-hour winter events with offsets near 2°F in cold climates (ACEEE). Duke Energy takes a different approach: a switch that holds the strip heat itself off for up to four hours on winter mornings (Duke Energy).

Demand response or virtual power plant? Why the labels blur

Utilities use the two terms loosely, and the overlap is real: the U.S. Department of Energy counts peak-event programs as the most basic kind of VPP (DOE). But the two sit at opposite ends of a spectrum, and where a program falls decides what it can do and what it can pay.

Demand response (DR) is the older idea. The National Renewable Energy Laboratory defines it as programs in which utilities “directly (or indirectly) control” customer devices to change when power is used (NREL). In practice, that means a signal to thousands of thermostats or a radio switch on a water heater, on a few peak days a year, with the savings estimated afterward by comparing each home with a baseline.

An orchestrated VPP behaves more like a power plant. Software coordinates batteries, heat pumps, water heaters, and EV chargers as one resource; it is dispatched “potentially multiple times per day” for normal grid operations, not just emergencies (DOE); and each device reports what it actually did. Lawrence Berkeley National Laboratory describes a path from DR to aggregated VPPs, which respond with hours or days of notice, to orchestrated VPPs that take real-time control within seconds (LBNL). RMI notes that modern VPPs are “highly automated” and can sell several grid services, not only peak capacity (RMI).

Measured against that spectrum, nearly every program in this article is demand response, even the ones branded as VPPs. That is not a criticism; thermostat DR is cheap, proven, and easy to join. But it explains the small checks. A utility pays for what it can count on, and a signal sent a dozen times a year and verified with a statistical baseline is worth less than a device it can dispatch, watch, and bill like a generator.

Where the heat pump itself is the asset

We looked for programs that dispatch the heat pump directly rather than through a third-party thermostat. They exist, but most are pilots, and several are closer to classic load control than to an orchestrated VPP.

The missing piece has been the equipment. Most heat pumps can only be reached through a thermostat that turns them on or off. Variable-speed heat pumps built to the AHRI 1380 standard can be told to run at 70% or 40% of their power instead (ACEEE), which makes the heat pump itself something a VPP can count on. As those units spread, expect more programs like SHARE and fewer that only nudge a thermostat.

One heat pump, 14 thermostat programs

Because thermostat demand response is what most heat pump owners can actually join today, the rest of this article prices it. To compare programs, we add each one’s sign-up credit to 10 years of yearly payments at today’s rates for a single thermostat on a ducted heat pump. We also include three programs that pay for a connected water heater, the other big flexible load in an all-electric home.

The range is narrow compared with batteries. Most programs pay $250 to $575 over 10 years. The top figure, $955, is a Google Nest offer for Los Angeles Department of Water and Power (LADWP) customers that pays up to $90 a season for high participation (Renew Home). Duke Energy’s electric-heat offer in the Carolinas is the richest utility-branded program, and Portland General Electric (PGE) pays $25 for each summer and each winter season you take part (PGE).

Two patterns stand out. First, the sign-up credit is often most of the money. Xcel Energy pays $100 up front, then $25 a year (Xcel Energy); Con Edison pays $85 and nothing more until year three (Meltek). Second, nearly every program returns more than a basic smart thermostat costs. Many utilities also discount the thermostat itself when you enroll, so joining often costs nothing out of pocket.

Water heaters can be worth more than thermostats. Southern California Edison (SCE) pays $100 to enroll a connected heat pump or electric water heater, plus $5 to $10 a month, year-round (SCE). A water heater can heat a tank early and coast through the peak without anyone noticing, which a thermostat can’t fully do. Water heater programs also sit further along the spectrum: PG&E’s WatterSaver shifts heating every day rather than on a few event days (WatterSaver), and in Hawaii, grid-interactive water heaters sell grid services to the utility under a contract (Shifted Energy). We compare water heater programs in detail in Heat Pump Water Heaters as a Virtual Power Plant Asset.

The price per kilowatt tells the real story

Divide what a program pays each year by the power a home actually sheds, and thermostat programs look very different from battery programs. Salt River Project measured an average of 1.1 kW per home across 28,500 homes in its 2025 tests, and about 1.3 kW in its standard program (Canary Media). On that basis, Massachusetts pays a thermostat about $18 per kW a year. The same state pays a home battery $275 per kW (Battery Economics).

Why the gap? A battery delivers a precise, measured amount of power for the whole event, with no effect on the house. A thermostat’s savings fade as the house warms, vary with the weather and the building, and partly come back afterward as “snapback.” One Brattle Group analysis assumes 40% of the reduced load returns within a few hours, and counts about 1 kW of reduction per home in summer but only 0.5 kW in winter (Brattle Group). Utilities pay for what they can count on.

For a homeowner, the takeaway is practical. The thermostat check is a small bonus for a device you probably want anyway, not a reason to buy a heat pump. The economics of the heat pump itself, its installed cost, efficiency, and your electric and gas rates, matter far more. For that, see our heat pump vs. HVAC calculator and Energy Savings vs. Money Savings.

Where the bigger savings may be: everyday shifting

Event programs pay for a few hours a year. On a time-of-use (TOU) electric rate, pre-cooling or pre-heating before the peak saves money every day. Companies are beginning to automate this. Renew Home, formed by merging Google’s Nest Renew and OhmConnect, says about 5 million customers use its Energy Shift feature, which adjusts thermostats throughout the day, and in Salt River Project’s tests those homes delivered 27 MW of peak relief “more or less automatically” (Canary Media). During Winter Storm Fern in January 2026, Energy Shift homes cut 50 MW for a Southeast utility, about twice that utility’s official winter thermostat program (Canary Media).

These are industry-reported figures, and savings depend heavily on the rate plan. Before enrolling, check whether your utility offers a TOU or heat pump rate on our utility rates page.

Programs we couldn’t price, and who’s left out

Some programs don’t pay a yearly credit. NV Energy installs a free PowerShift thermostat and events run about two hours between June and September (NV Energy). Salt River Project offers up to $100 off a thermostat through its Bring Your Own Thermostat program (SRP). Evergy caps events at 20 a year but doesn’t publish the reward on its page (Evergy). Thermostat makers also pay through their own apps; ecobee advertises up to $125 in rewards (ecobee).

Ductless mini-split owners are often excluded. Mass Save requires a central, ducted system (Mass Save), and Ameren excludes ductless and multistage heat pumps (Ameren). Puget Sound Energy (PSE) is an exception: it accepts Mysa and Sinopé thermostats, at a lower $20 sign-up and $10 a year (PSE).

Six trends shaping what heat pumps earn

What’s coming in the next few years

The biggest near-term change is the calendar. Winter seasons open this fall and winter for Ameren (October), PGE and PSE (November), and Duke (December). Further out, market rules and equipment standards should make flexible heat pumps easier to count, and easier to pay.

Not just heat pumps

A thermostat is often the first device a household enrolls, but it is rarely the last. The same VPP can call on a heat pump water heater, a home battery, an EV charger, or rooftop solar with storage. Each changes what the others are worth: a battery can cover the heat pump during an event so the house never warms, and an EV can charge after the peak rather than during it.

Our sister sites cover the other devices: Battery Economics compares 17 home battery VPP programs, and Drive Economics covers EVs. In future case studies, we’ll combine these devices and model what a whole home earns in specific regions.

Who this fits

• Worth enrolling: anyone with a ducted heat pump and a compatible smart thermostat. The payments cover the thermostat, events are few, and you can override any of them.
• Especially worth it: electric-heat homes in the Carolinas, Oregon, Washington, and Missouri, where winter events add a second season of pay, and SCE customers with a connected water heater.
• Think twice: homes that are drafty, hard to keep comfortable, or rely on strip heat in cold snaps. A winter event there can mean a cold morning and an expensive recovery.

Questions to ask before enrolling

• How many events a year, how long, how many degrees, and in which seasons?
• Will the program pre-heat or pre-cool, and can I limit the offset?
• After a winter event, will my system recover without switching on backup strip heat?
• Do I have to take part in a minimum share of events to be paid?
• Can I combine it with my TOU rate, heat pump rebates, and a thermostat discount?
• Is my thermostat and heat pump combination eligible, especially for ductless or multistage systems?