UC San Diego’s Agile Electrification Launches Major Research Initiative for the Living Laboratory to Explore New Virtual Power Plant Models

SAN DIEGO, Calif. — October 21, 2026 — Agile Electrification, a research initiative based at the UC San Diego Design Lab, today announced a new phase of research for the Living Laboratory that is focused on developing and testing new approaches to residential electrification. The new study will explore novel ways to design Virtual Power Plant (VPP) models that create value for homeowners, commercial energy users (including data centers), and regulated utilities. The Living Laboratory will partner with 200 California households to study the incentives and governance structures that encourage and enable homeowners to opt-in and act collectively, including how they want decisions to be made, how much control they want to retain, and how they should be compensated for the capacity they provide. Researchers will use those findings to design and test potential programs that organize distributed home energy resources into new, reliable, and scalable capacity.

Electricity demand is rising as transportation and buildings electrify, while data centers add significant new loads. Conventional grid infrastructure can take years to build. Making better use of energy equipment already installed, especially residential solar, could provide a faster, more cost-effective source of capacity.

By the end of 2025, California’s three major investor-owned utility territories had about 2 million residential rooftop solar sites, representing 13.3 gigawatts of installed solar capacity. Yet battery storage was identified at only about 315,000 of those sites, or roughly one in six according to an analysis of California Public Utilities Commission interconnection records. This gap represents a significant opportunity to unlock more value from existing solar infrastructure. The challenge is developing new incentives and program structures that work for both homeowners and energy buyers.

Most VPPs today are organized around a utility, large solar provider or other central operator. The Living Laboratory will investigate a different model that’s designed around the homeowner. It will investigate what happens when independent homeowners organize their privately-owned energy resources, outline the terms under which they are willing to participate, and define the parameters that predict whether they will opt in or out.

Participants include up to 200 homes with existing solar and experts from across the energy ecosystem, including:

• Homeowners, who will test different approaches in real-world conditions and help researchers understand what drives participation, builds trust and delivers meaningful value.
• Residential solar contractors, who work on the front lines with homeowners and understand how energy systems are designed, installed, and managed in the real world. Their participation can also reveal new business models and revenue opportunities for local energy providers.
• Technology companies, developing new ways to connect data, coordinate home energy systems, and make that information useful to homeowners and energy buyers.
• Behavioral economists, studying the motivations, incentives and rules that encourage groups of homeowners to participate and cooperate.
• Grid experts, evaluating how distributed home energy resources can operate together as reliable capacity and how models tested across individual homes could perform at grid scale.
• Financial institutions, exploring how new financing and payment structures could fund home energy resources and share the resulting value among homeowners and other market participants.

Together, the research will test new models for creating value from home energy assets, including solar, batteries, electric vehicles, heat pumps, and connected appliances. For example, researchers will test whether utilities, data centers and other large energy users could help finance distributed energy resources and purchase capacity directly from participating households. The goal is to identify models that work for homeowners while creating new sources of reliable energy capacity and value across the market.

“California already has an enormous distributed energy system sitting on people’s roofs and inside their homes,” said Keaton Chia of UC San Diego’s DERConnect, which specializes in testing distributed energy technologies and their performance on the grid. “Virtual power plants have shown that these resources can work together to provide meaningful grid capacity, but technical coordination is only part of the challenge. We need to understand the incentives, business models, and program structures that will make these resources more valuable and useful, and that can adapt as technology, market demand, and consumer needs evolve. The Living Laboratory gives us a chance to test these approaches in the real world and discover what works for both homeowners and the grid.”

Building beyond today’s virtual power plant model

This new phase of the Living Laboratory comes as utilities and large technology companies increasingly look to households as a source of near-term energy capacity. Many current VPP models enroll customers within established utility or national-provider programs, use outside funding or customer incentives to secure participation, and aggregate the resulting energy benefits for the grid. These programs demonstrate that distributed resources can work together at scale.

Agile Electrification is exploring how a much broader range of privately owned home energy resources can participate in the energy market, including legacy and independently installed solar systems that may sit outside large national third-party ownership and utility enrollment channels. Rather than beginning with a predetermined grid program and asking customers to participate, Agile Electrification’s research begins with the customer, the contractor, and the energy assets already in the home.

“VPPs have shown how the technology can work, but we want to understand something even bigger: what type of institution makes people want to participate in the long run, how capacity is valued and sold, who sets the rules, and how those rules change as the market evolves,” said Andrew Krause, CEO of Northern Pacific Power and Designer in Residence at UCSD for Agile Electrification. “The Living Laboratory gives us a chance to test those questions in the real world and discover models that no company or utility offers yet. Ultimately, homeowners should understand their options, retain control over their equipment and choose the programs that deliver the most value.”

Testing the complete system by including the people in it

Over about 12 months, researchers will combine real-world data and experimentation with digital twins and large-scale simulation to study seasonal variation and model what could happen at much greater scale. The Living Laboratory will work with households in California’s northern Bay Area with different combinations of solar panels, batteries, EVs, heat pumps, smart thermostats, and other connected devices from multiple manufacturers.

Researchers will examine how homeowners understand VPP participation, what they look for in a VPP program, and what levels of control they want over their energy assets. This research is particularly important as VPP programs continue to fluctuate, resulting in shifting rules and unclear guidelines for participating households. The goal is to use the insights from the Living Laboratory to design programs that earn homeowner trust and maintain active participation over time.

Balto Energy will serve as a key data, systems-design and experimentation partner. It has also designed a new model for TPOs, where VPP participation is clear and the terms are co-designed alongside homeowners. Balto uses AI to connect data across home energy systems and help them work together more seamlessly and efficiently. For the Living Laboratory, Balto will create digital twins of participating homes, and calibrate that data to show how home energy systems can actually perform. Researchers can use these digital representations to evaluate different technologies, rates, incentives, and operating rules before testing them in the real world with participating households.

“A home is not simply a battery to dispatch,” said Carl Lenox, Head of Product at Balto Energy. “It is a dynamic system shaped by the building, its equipment, the weather, and the people living there. AI gives us new ways to model the interaction of all of those factors and perform scenario analysis that would have been too complex or costly to achieve before.”

The resulting data will be connected with UC San Diego’s DERConnect research platform and grid-scale simulation capabilities. This will allow the team to determine whether a program that works across 200 homes could perform across a larger neighborhood, a whole city, or a fully electrified California.

Designing a new grid-to-consumer relationship

The Living Laboratory will study how regulations shape distributed-energy participation. It will outline how benefits, decisions, and responsibilities are shared, what happens when conditions change, and how programs can adapt and evolve without sacrificing customer trust.

Marco Janssen, Professor and Director of the Center for Behavior, Institutions, and the Environment at Arizona State University and a leading scholar of collective action, will contribute expertise in how people and organizations create durable rules for managing shared resources. Janssen previously collaborated with Nobel laureate Elinor Ostrom, along with fellow ASU professor John Anderies, on research to understand concepts around collective action, specifically developing frameworks for understanding how people, institutions and physical infrastructure interact.

“Infrastructure succeeds not only through engineering, but through the institutional arrangements that sustain and govern it,” said Janssen. “This Living Lab lets us pressure-test those conditions under real circumstances.”

This study will also examine contracts governing home energy equipment. Many financing and lease arrangements available today limit how equipment can be operated, or who can earn revenue from participation in energy programs. Researchers will test approaches that help consumers understand their options from the point of purchase, compare offers, and make informed decisions about their equipment.

Agile Electrification’s Living Laboratory brings together UC San Diego Design Lab, UC San Diego DERConnect, Arizona State University, Northern Pacific Power, Balto Energy, DERAPI, WattCarbon and others to develop working models that can inform future energy products, utility programs, financing structures and public policy.

Agile Electrification is currently inviting groups who are working in residential electrification, the changing landscape of utility structures, and emerging energy use cases to participate in and support the Living Laboratory. For more information, visit agileelectrification.org.

About Agile Electrification

Agile Electrification is a research and innovation initiative based at the UC San Diego Design Lab focused on unlocking the potential of distributed energy resources to create a more flexible, resilient and affordable energy system. The initiative brings together researchers, energy companies, contractors, technologists, policymakers and consumers to develop and test new approaches to residential electrification, energy coordination and virtual power plants. Through real-world experimentation, Agile Electrification explores how technology, consumer behavior, financial incentives and policy can enable households to participate more actively in the energy system.

About Balto Energy

Balto Energy is building a utility for the last mile of the grid: the home. It pairs AI that understands every home with the local installers homeowners already trust. Balto is building an employee-owned network of solar and electrification contractors, and gives them AI tools to grow their businesses long after the first panels go up. For homeowners, Balto models each home’s energy future, recommends the right mix of solar, batteries, heat pumps and EVs, and stays with them as their needs change and new technology arrives. Last century’s grid was built for centralized power plants. This century’s energy sources are decentralized and run through the home. Balto’s founding team has spent decades in solar and built the company around the idea that solar is the first step, not the finish line. Balto Energy is based in San Diego, California. Learn more at baltoenergy.com.