When Renew Home split off from Google in 2023, many in the energy sector saw it as a sign that distributed capacity was inching closer to reality.
According to CEO Ben Brown, the idea at Renew Home’s inception was that traditional demand response programs were hard to scale, because they generally required customers to compromise on things like their favored indoor temperature to get a utility bill discount. For residential flexibility to work more broadly, programs would have to both maintain comfort and convenience while offering rewards, he explained.
Over the last three years, Renew Home has focused on providing that balance via its energy management platform, growing its coverage to 8 million devices, most of them smart thermostats. But now, as load growth looms over the energy sector and data center developers run into a capacity crunch, the company has entered a new phase of expansion: capitalizing on the potential for residential ratepayers to benefit from the artificial intelligence boom, Brown said.
That’s the thesis behind a partnership among Renew Home, Tesla, and Sunrun — three of the largest residential virtual power plant players in the U.S. — which announced late last month that they had a combined 16 gigawatts of capacity available to sell to data centers. The goal was to “change the conversation” about the scale of flexible capacity already available, he explained.
There aren’t any other generation resources selling capacity to data centers that are up and running today, Brown said. As hyperscalers scramble for capacity, it’s flown under the radar that there’s already a lot of existing residential flexibility on the grid: “I don’t think that most policymakers, utility executives, or hyperscalers really knew that there’s such a large existing resource that’s just on the sidelines right now,” Brown said.
The strategy behind the three-way partnership is twofold: to be public about their combined available resources across platforms, and to encourage the market to view residential VPPs as both a demand and supply side resource.
Brown added that combining a diverse array of assets, including solar, batteries, and smart home devices, gives the companies the ability to shift demand, especially when it peaks during the summer and winter, as well as export electrons to the grid.
A quiet rollout
While residential VPPs are growing at a much faster rate than commercial and industrial programs, the latter still make up the bulk of existing program capacity.
Renew Home’s available capacity scaled somewhat quietly, because most of its customers are not enrolled in traditional utility demand response or other market-facing programs, Brown explained. Around 80% opt in to Renew Home’s standard program during initial setup, which involves the company adjusting thermostats to maximize energy cost savings. That often includes pre-cooling a home to avoid energy consumption during peak price hours, for example.
But of the roughly 9 GWs of load Renew Home manages today — 3 GW of which comprise HVAC systems from not-yet-announced partners — only 20% are enrolled in existing programs.
That means the remaining 80% can be steered into new offerings — from utility capacity products to PJM’s backstop procurement and bilateral deals with hyperscalers, without having to unwind or reallocate capacity, Brown said.
It also means Renew Home doesn’t plan on being in the business of convincing homeowners they should flex their own load to make room for data centers on the system. Homeowners opt in to have their smart devices controlled by Renew Home, not to participate in specific programs, Brown explained.
Hyperscalers indirectly provide the benefits and rewards to ratepayers, he added. Historically utilities and PUCs filled that role, but now additional stakeholders, including hyperscalers and other large loads, are stepping up.
Still, the question of who ultimately finances the rewards program doesn’t change the conversation with the customer, who, in theory, won’t see any change in their experience, Brown added.
“We’re going out there trying to maximize the benefit for you, regardless of who is investing in that benefit,” he said.
Partnership logistics
The partnership between Renew Home, Sunrun, and Tesla has been in the works for about a year, Brown said. But it’s really a formalization of a conversation the three companies — and the wider sector — have been having for much longer about how to get residential flexibility to a meaningful scale for the grid. Bilateral conversations with hyperscalers around how to leverage that flexibility were already happening.
The technical details of how devices across the three providers will be aggregated depends on the location and the use case, Brown said. In some markets, utilities may contract directly with Renew Home, while Tesla and Sunrun coordinate their assets behind the scenes. In others, a hyperscaler might procure a bundled product that draws on all three fleets but is optimized and scheduled through a single platform.
For now, the focus is on aggregating assets that are already installed at homes around the country, including in PJM, where the trio plan to bid one GW of flexible capacity into the upcoming emergency backstop procurement.
That’s different from the approach favored by Voltus, which launched a bring-your-own capacity product for data centers last fall after expanding its commercial and industrial portfolio to include more residential assets via a partnership with Octopus. Under that framework, hyperscalers can finance a VPP program in a capacity-constrained region, and then Voltus will procure customers and deliver the megawatts from distributed resources directly to the local utility to offset the data center’s load.
