Over the past five years, electricity prices have risen faster than an already elevated rate of inflation, increasing household electricity bills and putting renewed pressure on utilities, regulators, and policymakers to address affordability. The purpose of this study is to evaluate how aggregating flexible household technologies—including smart thermostats, electric vehicles, and behind-the-meter batteries—could reduce system costs and translate those savings into lower electricity bills for customers.

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The Affordability Advantage:

How Virtual Power Plants Can Alleviate Household Electricity Bill Pressure

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Everyday Electric

VPPs are among the fastest, cleanest, and least expensive forms of new capacity

VPPs are uniquely positioned to address current challenges

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Study Methodology

For an illustrative, 1-million residential customer utility, we estimate the scale a VPP could reach within the next five years using OEM-led enrollment strategies, and show how this value translates into affordability benefits for ratepayers and participants.

Study Methodology

For an illustrative, 1-million residential customer utility, we (1) estimate the scale a VPP could reach within the next five years using OEM-led enrollment strategies, (2) calculate the value the VPP can provide, and (3) show how this value translates into affordability benefits for ratepayers and participants.

A flowchart outlining steps for building a VPP, modeling its value (capacity, energy, distribution), and bill impacts.

The total value created by the VPP is over 7 times the cost of enabling it. Further, the primary “cost” of the VPP is not really a cost at all, but a performance payment to participating households. The result is that the vast majority of the value created by the VPP goes to consumers.

The VPP Generates Significant Financial Benefits to Consumers

Stacked bar chart showing $65M/yr in system benefits, $9M/yr in implementation costs, and $57M/yr in consumer financial benefits.

Bar chart showing annual cost reductions for ratepayers with and without a Virtual Power Plant (VPP) program, including inflation.

The VPP Cuts Expected Household Electricity Bill Increases in Half

Brattle analyzes trading records, communications, order and execution data, account history, compensation and vesting information, and relevant market data. The trades at issue are evaluated in the context of prior activity, taking into consideration liquidity needs, diversification, hedging, taxes, existence of trading plans, and other possible factors affecting trading decisions. Brattle also quantifies alleged gains or losses avoided under appropriate alternative assumptions.

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Evaluating trading patterns and economic benefit

Daily and intraday event studies help assess whether the alleged information led to a statistically and economically significant price response. Our analysis considers event windows, benchmark models, information leakage, delayed reactions, market conditions, and confounding news. This work helps determine whether an observed price movement can reasonably be linked to the alleged material nonpublic information.

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Assessing market reaction and materiality

Our experts analyze the information available to the market before and during the alleged trading period, including public filings, earnings materials, analyst research, news, rumors, industry developments, and macroeconomic information. We evaluate what the market already knew or expected, whether the alleged information added anything new, and whether other information better explains the market response.

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Analyzing the total mix of information

Brattle's experience across regulatory investigations, enforcement proceedings, civil litigation, and criminal cases informs every stage of our analysis. Our experts understand how allegations are developed, how economic and market evidence is evaluated, and how analytical findings are tested throughout an investigation or litigation. This perspective helps us focus on the questions that matter most to regulators, prosecutors, counsel, and courts.

By the time the VPP reaches scale (approximately five years), it reduces bill increases for average households by more than half. Bill increases are almost completely offset for VPP participants in inflation-adjusted terms.

Based on recent trends, we consider a forward-looking scenario in which, absent the deployment of a VPP, retail electricity bills continue to grow at a pace that is 1% per year faster than inflation. At this rate of growth over 5 years, average annual household bills will be nearly $100 greater than today in inflation-adjusted terms.

The net value of the VPP (avoided resource costs net of performance payments and implementation costs) flows through to residential rates, saving all households money on their electricity bill. Since a significant share of the customer base participates in the VPP, customers see a sizable payment on average.

Non-participating households do not receive performance payments, but still avoid a third of the bill increase through net system cost savings that flow through to all ratepayers.

Bill growth for participating households is almost entirely offset in inflation-adjusted terms.

If all utilities were to achieve a 4% system peak reduction from residential VPPs, national capability would more than triple, from 10 GW to 35 GW, generating an additional $4–7 billion per year in financial benefits for households.

“Utility-Scale” VPPs can be Achieved through Enhanced Enrollment

Bar chart shows utility VPP capability. Scaling to top 10th percentile triples residential VPP (10 GW to 35 GW).

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authors

about brattle

The Brattle Group is a premier global consulting firm specializing in economics and finance. With more than 550 professionals across North America, Europe, and Asia-Pacific, and a distinguished network of leading academics and industry experts, we bring analytical rigor, credibility, and clarity to complex challenges. For decades, clients have trusted Brattle for independent analysis in litigation, energy and financial markets, and regulatory and strategic advisory settings.

For additional information about our experts and services, please visit brattle.com.

Defined by excellence and committed to delivering clarity in the face of complexity.

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Ryan Hledik

PRINCIPAL | SAN FRANCISCO

[email protected]

Kailin Graham

ENERGY ASSOCIATE | NEW YORK

[email protected]

Financial

Investigations

White-collar cases that allege covert or illicit schemes are often ultimately exposed or explained through analysis of financial records other than company financial statements. In the simplest examples, financial analysis may show whether investor funds were used for their stated purpose. More elaborate schemes may involve trading strategies; bribery; false claims; money laundering; start-ups, initial coin offerings (ICOs), or reverse mergers that are, in fact, pump-and-dump schemes; or classic Ponzi schemes in which the most recent duped investors’ funds are used to pay off earlier investors as well as enriching perpetrators.

In such cases, Brattle experts assist investigators and defense counsel by organizing and analyzing financial records, such as bank statements, brokerage accounts, trading data, and wire transfers. Increasingly, financial records include public and private blockchain activity and cryptocurrency wallets. Our analysis may also integrate email, phone calls, texts and IMs, SWIFT messages, and other communication media to link financial activity with specific stated purposes and individuals.

Representative Engagements

In US v. Sam Bankman-Fried – referred to as one of the “biggest financial frauds in American history” – Brattle supported the only government expert witness, a professor of accounting. The Brattle team conducted both fiat and crypto tracing analyses using bank statements, blockchains, and crypto trading data. Our team analyzed flows and uses of funds across related accounts and entities, leveraging our forensic accounting expertise.

Click to view the link: US v. Sam Bankman-Fried

In US v. Liu et al., a Brattle team aided prosecutors in investigating whether a China-based company used a web of shell entities to avoid paying US export tariffs. Brattle’s experts traced entities under the control of the company’s chairman and examined how those entities were disclosed or misrepresented to investors. Analysis showed that hundreds of millions of dollars flowed through shell companies used by the company to avoid paying export tariffs.

Click to view the link: US v. Liu et al.

In US v. Tuzman, Brattle consultants and testifying experts analyzed detailed information relating to actions by the ex-CEO of the software platform company KIT Digital to transfer company funds to a hedge fund and trade the company’s common stock to artificially inflate its share price and trading volume. Consultants traced fund flows between the company, the hedge fund, and the trading activity. Brattle experts analyzed the corresponding financial statement reporting and its impact on the company’s market value. A Brattle expert testified about the stock price impact of the alleged fraud for sentencing purposes.

Analyses of Accounting Treatment of IP Licensing Transactions

In a criminal case against a senior executive of a public company, Brattle analyzed the business purposes and accounting treatment of certain intellectual property (IP) licensing transactions and whether they were used to overstate or smooth earnings to allow the company to meet earning expectations. The Brattle team analyzed financial records, accounting records, and audit work papers to understand the impact of the transactions and how they were being disclosed to investors and the company’s auditor. The team also examined email communications to assess what the auditor knew or should have known about the transactions and assumptions underlying the IP impairment testing and identified emails that were deleted by management by comparing recent productions with more complete archives. Brattle supported an accounting expert and former audit partner to prepare opinions on key questions of accounting treatment.

Representative Engagements

In an insider trading and fund misappropriation case, US v. Blakstad, a Brattle team developed a financial analysis tracing investor funds in Midcontinental Petroleum, Inc. Controlled by the defendant, the investments were used to fund personal expenses and later used as a vehicle to make use of proceeds of insider trading in Illumina, Inc. stock options.

Click to view the link: An insider trading and fund misappropriation case

Reconstructing Employer Contributions in Puerto Rico’s Pension Fund Bankruptcy

In defense of a bondholder lien claim on assets of the bankrupt public pension fund of Puerto Rico, a Brattle team reconstructed the flow of employer contributions used to service the bonds. We investigated whether employer contributions paid over ten years were properly used to fund bond repayments and interest obligations, and determined whether any remaining assets of the pension fund at bankruptcy were funded from employer contributions.

In US v. Atilla, Brattle conducted a data-intensive investigation into violations of US sanctions against Iran by Turkish financial services businesses that were disguising their activity as gold and, later, food trade. The investigation involved tracing financial transactions through accounts at Turkish and United Arab Emirates banks in multiple currencies and the corresponding US bank transactions when transfers were made in US dollars. Brattle integrated these data sources onto a single platform, creating metadata and data on communications involving bank employees and known persons of interest outside the bank. Our analysis also used changes in the sanctions regime to identify potentially related activity and communications.

In US v. Budovsky, Brattle conducted a detailed investigation of an $8 billion digital currency money-laundering scheme by an early cryptocurrency firm, Liberty Reserve. Brattle leveraged state-of-the-art data analytics to identify evidence of money laundering within the massive haystack of structured and unstructured data. By assembling, standardizing, and integrating data from different sources, Brattle’s team helped uncover anomalies and patterns indicative of illicit activity in one of the first and largest international money laundering prosecutions to date.