5 Ways Virtual Power Plants Can Help Multifamily Buildings Cut Energy Costs

Mar 25

With energy prices on the rise and sustainability high on everyone’s radar, multifamily property owners and managers are looking for smarter ways to reduce expenses and improve building performance.

One innovative solution that’s quickly gaining traction? Virtual Power Plants, also known as VPPs.

These technology-powered networks are making it easier than ever to manage and lower energy use across buildings, improve NOI and boost building resilience, all without sacrificing comfort or control.

What Is a Virtual Power Plant?

A Virtual Power Plant (VPP) is a system that connects Distributed Energy Resources (DERs), like smart thermostats, solar panels, and batteries, and uses software to coordinate and optimize them. Instead of operating like a traditional power plant in one fixed location, a VPP spreads energy generation and management across a network of buildings and devices. VPPs also work to reduce energy consumption in a building.

How VPPs Can Help You Save

Reduce Peak Demand Charges
Utilities often charge higher rates during peak times when electricity demand is highest. Nearly every commercially metered building pays for electricity based on the maximum amount of electricity used in any 15 minute period throughout the month. Demand charges can make up a third to a half of the bill.
VPPs help shift energy use to off-peak hours by automatically adjusting systems like HVAC to run when energy is cheaper—saving money without impacting residents because the demand charge is lower.
Generate Revenue with Your Energy Assets
If your property has solar panels or battery storage, a VPP can help you put those assets to work. Energy can be purchased at times when rates are low, and excess energy can be sold back to the grid when rates are high, creating a new revenue stream while offsetting overall energy costs.The Federal Energy Regulatory Commission requires grid operators to purchase electricity from VPPs.
Participate in Demand Response Programs
Many utilities offer incentives for reducing energy use during high-demand periods. Through VPPs, buildings can join these programs and automatically reduce energy use when requested, helping to ease grid strain and get rewarded for it.
Improve Energy Efficiency
VPPs use real-time data and predictive analytics to optimize energy consumption across a building or portfolio. Insights into how systems are performing and where energy is being used inefficiently allow for smarter decisions and reduced waste.
Strengthen Grid Resilience
With extreme weather events becoming more common, energy reliability is a growing concern. VPPs help properties tap into backup power sources, like batteries or neighboring buildings in the network, to stay operational during outages or grid instability.

Why It’s a Smart Time to Get Involved

Utility programs and regulatory incentives for VPP participation are growing fast. Getting ahead of the curve means more opportunities to save on energy bills, increase property value, and contribute to a cleaner, more resilient grid.

Interested in exploring how your property can benefit from a VPP?

Now is a great time to learn more about integrating your building into a smarter energy network. With the right systems in place, multifamily properties can save money, support the grid, and take meaningful steps toward a more sustainable future.

What is a negawatt?
A negawatt is a unit of energy saved through efficiency or conservation. Instead of generating more power, a "negawatt" represents electricity that isn’t used thanks to smarter energy use – essentially, a “negative megawatt.”