Virtual power plants are having a moment. If you have ever received a text message from your utility telling you to turn down the power during a heat wave when everyone is cranking their air conditioners, then you understand what demand response is. That’s the origin story for this technology. In recent years, it’s significantly leveled up. VPP software now allows utilities to tap into rooftop solar panels, home batteries, charging electric vehicles, and smart appliances to balance out the grid when the supply of electrons from conventional power plants can’t keep up demand.

Electricity demand in the U.S. is growing so quickly that the consultancy BloombergNEF this week raised its forecast by nearly 40% over its prediction from just seven months ago, as I covered in my Heatmap newsletter this week. The gas turbines needed for the most popular kinds of fossil fueled power plants are backordered by years. Nuclear reactors take years to build and there’s still plenty of debate over where to put new ones. Solar and wind are facing new policy pushback from the Trump administration. That makes the prospect of tapping into the energy assets already sprinkled around the country that much more appealing when electricity demand from data centers is soaring faster than new generation can be built.

All that is context for the latest scoop I published yesterday in Latitude Media:

The Brooklyn-based EnergyHub, whose grid software is already in use by more than 120 utilities, is set to acquire smart-thermostat heavyweight Resideo Grid Services, Latitude Media has learned.

The two companies have a history. They worked together more than a decade ago, in the days when virtual power plants were still largely thought of as emergency options to balance demand when the grid is overtaxed. In the years that followed, Resideo Grid Services — launched as a division of industrial giant Honeywell — emerged as a leading provider of tools to patch smart thermostats into virtual power plant networks. EnergyHub, meanwhile, made deals to deploy its software on wires controlled by utility giants such as APS, Duke Energy, National Grid, and Southern California Edison.

“We reached the conclusion about a year ago that the industry was ready for a little consolidation, and that we really need to move faster with VPPs,” Seth Frader-Thompson, EnergyHub’s president, told Latitude Media. “We’re all acutely aware at this point of the pressures on the grid, and this felt like an opportunity to join forces and start doing this at a greater scale.”

Resideo, the parent company of Resideo Grid Services, specializes in smart thermostats. But to catch up to where EnergyHub was in the VPP business, “we needed a big investment,” said Dave Oberholzer, the general manager at RGS.

“We were always strong in thermostats since Resideo is a thermostat company. But we were just starting to get into batteries. We were far behind on EVs,” Oberholzer told Latitude Media. “This really accelerates our roadmaps significantly.”

There’s a particularly interesting detail I learned while reporting this piece. The VPP industry has a standard called the Huels test, essentially a Turing test for their software networks. I explain here:

In the coming weeks, the company plans to release a report on when it expects to pass what’s known in the industry as the Huels test. Akin to the Turing test, which describes the threshold at which artificial intelligence would become indistinguishable from a person to a human, the Huels test defines the point at which a grid operator can no longer tell the difference between a virtual power plant and a conventional generating station.

“Today, I think a VPP can convincingly pass a narrow version of the Huels test for a peaking gas plant that doesn’t run that much,” Frader-Thompson said. “But what we need to do is get more hours and more megawatts for each hour.”

The growing demand for VPPs, he said, should help provide that opportunity.

“VPPs are the fastest thing to deploy out there,” Frader-Thompson said. “They tend to be 50% the cost of traditional generation and are by far the most consumer friendly. Fastest, cheapest and most customer friendly? Not a bad place to be.”

There’s more interesting details in the story, so check it out. You can read the full story here.