What if you got paid to use less power during heat waves?

On a June afternoon when anearly heat wave baked parts of Eastern Canada,Paul Richardson was surprised to notice thesmart thermostat in his Ottawa home,usually set to 23 C, was reading 25 C.

Then he remembered he'd given his hydro company permission to remotely adjust it in exchange for a $75 gift card.

During heat waves like the one currently blasting southern Manitoba,power-hungry air conditionersstrain the electrical grid. Now, instead of pushing power plants to generate extra power by burning fossil fuels, some utilities are paying customers like Richardson to become part of what's known as a virtual power plant.

This is a network of devices that generate, use andstore energy. It could include smart thermostats, water heaters, electric car batteries and solar panels with battery storage.The key is finding a way to connectand controlthem all together so that energy saved, stored or releasedby thesmall devices on the network eventuallyadds up to the scale of a physicalpower plant.

That's where people like Richardson come in. He's one of more than 100,000 Ontario residentsenrolled in the province's Independent Electricity System Operator(IESO)program calledSave on Energy Peak Perks.

They give their utility permission to adjust their thermostat upto two degrees Celsius during periods of peak electricity demand between June 1 and Sept.30 on weekday afternoons and early evenings, up to 10 times a year.

Doing this reduces energy use, which allows the utility to balance supply and demand of electricity and relieves strain on the gridsomething a traditionalpower plant does by generating extra electricity.

Richardson thinks it's a good deal for him.

"It's not a whole lot of effort on my part," he said. "It helps the grid and hey, you get 70 bucks for it why not?"

Reducing demand and improving efficiency

Reducing demand for electricity isthe strategy used by many virtual power plants likePeak Perks. The program can free up90 megawatts each time it's activated that's like taking a city the size of Kingston, Ont., (population 130,000) off the grid, IESO said.

Brendan Haley, director of policy at the Ottawa-based think-tank Efficiency Canada,says unlike traditional power plants, virtual power plants can do more thanjust generate power if they include devices like batteries from electric cars, they can also soak up and store excess energy.

And while bigpower plantstend to be far away from the customers that use them, virtual power plants exchange power locally, which is more efficient.

According to Haley, all of this is whatmakes virtual power plants better than traditional generation-only power plants.

Plus, he said, they benefit consumers financially: "You're paying a customer instead of paying a power plant operator."

Working withrenewable energy sources

Francis Bradley, president of Electricity Canada, thinks virtual power plants are going to be "absolutely essential to the future."

He noted thatelectricity demand is expected to double or tripleby 2050, and that will require more wind and solar generation to be added to the grid. But these renewable energy sources only generate power when the wind blows or when the sun shines. They also switch on and off suddenly, resulting in uneven supply.

Bradley suggests that using virtual power plants andbatteriesin conjunction with wind and solarpowerwill helpsmooth out and balancesupply and demand.

Cost savings and earnings for customers

Virtual power plants are also less expensive to operate and easier to set up than real ones, which have to be constructed.

Ontario's Peak Perks launched in May 2023, and by February 2024 ithad enrolled more than 100,000 people. Participants get a $75 gift card for signing up, and a$20 gift card for everyyear they stay in the program.

Robby Sohi, IESO's chief operating officer saysthat most of the time, electricity use is far below the grid's maximum generation capacity. What poses a challenge is when demand peaks during weather events like heat waves and cold snaps. Virtual power plants can help flatten those peaks because Sohi says they offer"absolutely the cheapest megawatt that you can get."

AU.S. Department of Energy study last year found virtual power plants are40 to 60 per cent cheaper than alternatives when it comes to managing peak demand.It estimated the U.S. could save $10 billion in annual grid costs by deploying 80 to 160 gigawattsfromvirtual power plants by 2030.

Sohi noted that the Peak Perks program has lots of room to grow, and could potentially make availablehundreds of megawatts more than it has. So far, only a fraction of the 600,000 Ontario households with a smart thermostat have signed up.

According to Haley, smart thermostats are just the beginning.Electric hot water tanks arethe natural next step he says they could be heated when there'sexcess wind or solar energy and theneffectively act as energy storage.

Sohi thinks consumers will benefit by being able to make or save money by selling or conserving power when the price is high.

"We've never had this opportunity before," he said.

Turning consumers into 'prosumers'

Calling on customers to cut power usage when generation can't keep up isn't new. Utilities have traditionally asked big industrial customers such as steel plants to cut power usage during large peaks.

Last winter,Alberta's Electric System Operator sent out an emergency alert in January asking people to cut their power to "essential needs only" or riskrotating blackouts. That successfully led to a 200 megawatt drop in power usage though none of the customers got paid for it.

WATCH | When extreme cold pushedAlberta's electricity grid to the brink:

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BC Hydro runs an invite-only program whereparticipants can earn bill credits by cutting electricity use during power-hungry events, like heat waves. It plans to make the program available to all its customers in October.

New technology means this process can be automated,allowing customers to earn money as an integral part of electricity markets turning them into what those in the industry callprosumers.

So far, Ontario's Peak Perks is the biggest program of its kind in Canada.

A Google-backed virtual power plant called Renew Home launched in the U.S. earlier this year, notingit could already provide threegigawattsof power (about 30 times the size of Peak Perks). It plansto expand to 50 gigawatts by 2050. For comparison, Ontario's Pickering Nuclear Generating Station, which bills itself as one of the largest nuclear stationsin the world, produces a maximum amount ofabout three gigawatts.

Solar potential

Solartility, a Calgary-based startup, aims to create virtual power plants with residential solar panelsandbatteries.

The company has developed software to network individual residential solar panel arrayswith rented batteriesto maximize earnings for homeowners as the price of power varies.

"It's like the stock market," said Shayne Butcher, the company's general manager. "We're buying low and selling high."

Solartility hopes to start marketing to the 20,000 homes in Alberta that already have solar panels this year.

Though there have been many small virtual power plant pilots across the country, Haley says the next step is to see how large the projects can become and make them an integral part of the electrical grid.

"To me, it doesn't makesense to over build the electricity system for a few hours or days of the year when there might be peak demands," hesaid,noting that usingvirtual power plants instead could save taxpayers and consumers millions by preventing the unnecessary construction of traditional power plantsas governments push toward a net-zero future.

"It's really this combination of energy efficiency and demand flexibility that can reduce those peaks, save money foreveryone, directly pay customers and actually be deployed a lot quicker than these more centralized energy solutions."