Virtual power plants could serve more than 15 percent of peak electricity demand in California by 2035, saving roughly $750 million annually in power system costs, according to a new report from the Brattle Group.

The study, prepared for the GridLab consultancy and shared with POLITICO’s E&E News, focuses on commercially available technologies such as smart thermostats, electric vehicle charging and “grid-interactive” water heating. Only voluntary participation in VPP programs is needed to reach the market potential identified by Brattle, researchers said in the study.

Virtual power plants, a decarbonization priority for the Biden administration, use software to link together electrical equipment and appliances at different locations to manage electricity demand and potentially distribute unused energy throughout the network. VPPs could provide nearly 7,700 megawatts of power in California by 2035, the Brattle report found. That’s enough electricity to power millions of homes.

Still, new policies in California are necessary to deliver a 15 percent market share by 2035, according to Ryan Hledik, a principal at Brattle. The study's findings could be useful across the United States.

“The potential that we’ve identified in our study won’t just be organically achieved on its own without changing something,” Hledik said in an interview. “Policies definitely can help to drive things in the direction of the potential estimate that we developed.”

The Brattle report comes amid a push from utilities nationwide to build new natural gas plants to meet electricity demand increases in the future. Some energy experts have cautioned that utilities are likely overestimating demand spikes based in part on potentially unrealistic expectations for data center growth. VPPs could cut those projected increases.

“It’s hard for me to say whether all of that data center load growth that utilities are talking about is real or not,” said Hledik. “But really what VPPs are is a solution to reliably dealing with the new load that will be coming on the system in the next three to five or 10 years.”

In recent years, California has suffered electricity disruptions, most notably blackouts amid extreme heat in 2020. VPP supporters say the technology will help avoid future disruptions.

“The weather’s going to get hotter, and we can’t foresee some of these extreme weather — especially wildfire — situations,” Edson Perez, a senior principal at the the clean energy group Advanced Energy United, said in an interview.

VPPs can “help avoid blackouts,” Perez said.

Last year, the globe recorded the highest average temperature on record. Experts say temperature rise is expected to easily pass climate targets of 1.5 and 2 degrees Celsius above 19th-century levels absent major changes in energy production across sectors.