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Understanding virtual power plants
Australia's embrace of solar energy, evident on over three million rooftops, highlights its popularity. Yet, solar power's dependency on sunlight poses challenges.
Unlike conventional energy sources, solar can't be adjusted to meet demand, straining the grid. Enter Virtual Power Plants: networks that synchronise and manage distributed solar and battery systems.
A virtual power plant (VPP) aims to provide clean energy when required, stabilising the grid without relying on big power stations or extensive storage. It uses connected solar panels and batteries spread across the grid.
This guide explores virtual power plants, detailing their function, providers offering virtual power plant solar plans, and their viability for consumers considering sustainable energy solutions.
What are virtual power plants?
A Virtual Power Plant functions as a decentralised energy grid formed by interconnected home solar battery units.
Managed by advanced AI software, a virtual power plant taps into stored solar energy from these batteries during peak demand periods, stabilising the grid and reducing reliance on fossil fuels.
Here’s how it operates:
- Solar energy stored in individual home batteries is fed back into the grid as needed.
- Multiple batteries within a virtual power plant network collaborate like a localised power station, orchestrated remotely by an electricity provider or distributor.
- These entities use sophisticated technology to gather and analyse data from various sources, including weather forecasts, usage patterns, market trends, and historical consumption data.
- This data informs the virtual power plant network's decisions to optimise energy supply in response to fluctuating demand.
Can I join a virtual power plant?
It's important to understand that by joining a virtual power plant, you are allowing the provider to manage your solar battery usage.
While programs specify maximum export limits, participation may occasionally restrict your access to your own solar energy, so check the terms and conditions before you sign on the dotted line. Here are the main requirements to join a virtual power plant:
- Solar panels and battery: You need both solar panels and a solar battery to qualify for a virtual power plant. Most programs require you to install their designated solar battery, although some allow you to use a compatible battery of your choice.
- Electricity plan commitment: You must agree to an electricity plan with the provider, often with a minimum contract period (e.g., five years).
- Exclusion criteria: Homes with life support needs are usually not able to join a virtual power plant due to their impact on grid response. Also, participants typically are not able to join more than one program simultaneously.
- Participation limits: Virtual power plant programs often have a maximum capacity for participants. For instance, the largest plant in South Australia supports up to approximately 50,000 systems.
Which providers offer virtual power plants?
If you're considering joining a virtual power plant network, it’s worth checking whether your existing provider can offer what you’re looking for.
As you may be aware, availability of these plans depends on both the provider and the state you’re in in Australia, but you can call our Aussie-based team here at Compare Energy on 1300 790 106 and we can walk you through it.
Currently, the list of Australian providers who can offer virtual power plant plants include:
- ActewAGL VPP: Virtual Power Plant
- AGL VPP: Virtual Power Plant
- Amber VPP: SmartShift
- Diamond Energy VPP: WATTBANK VPP
- Discover Energy VPP: Virtual Power Plant
- EnergyAustralia VPP: PowerResponse
- Energy Locals VPP: Tesla Energy Plan
- Jacana Energy VPP: Virtual Power Plant
- Nectr VPP: Nectr Home Battery Add-on
- Origin VPP: Loop
- Powershop VPP: Virtual Power Plant
- Engie VPP: Virtual Power Plant
Some energy distributors, like Ausgrid in Sydney, also conduct VPP trials for local residents to participate in.
What’s in it for you?
Virtual power plants in Australia offer numerous advantages to participants, making them an attractive option for homeowners looking to harness solar energy efficiently. These programs often provide financial incentives such as subsidies, bill credits, sign-up bonuses, and favourable feed-in rates.
One of the primary benefits is the opportunity for subsidised installations of home battery systems, which enhance energy storage capabilities and reduce reliance on the grid during peak periods.
By participating in a VPP, homeowners can potentially lower their electricity bills through increased self-consumption of solar energy and reduced reliance on grid-supplied electricity. VPPs also contribute to grid stability by enabling the coordinated management of distributed energy resources.
This helps in balancing supply and demand, especially during periods of peak electricity usage or fluctuations in renewable energy generation.
In addition, participating in a VPP allows homeowners to play a proactive role in supporting renewable energy initiatives and reducing carbon footprints. It empowers them to contribute to a more sustainable energy future while benefiting from financial incentives tailored to promote adoption of clean energy technologies.
Eligibility criteria and subsidy offerings vary among different VPP providers and regions, so it's important for interested homeowners to review specific program details from retailers to make informed decisions about participation.
Pros and cons of virtual power plants
| Pros | Cons |
| Financial incentives: Offers subsidies, bill credits, feed-in tariffs, reducing electricity costs | Limited control: Participants may have limited control over battery usage during grid events |
| Increased energy independence: Enhances self-consumption of solar energy, reducing reliance on the grid | Dependence on provider: Relies on the VPP operator for management and optimisation of energy usage |
| Grid stability: Supports grid stability by managing distributed energy resources effectively | Initial setup costs: Installing a home battery may require upfront investment, despite subsidies |
| Environmental benefits: Reduces carbon footprint by promoting renewable energy usage | Technical complexity: Requires compatible technology and understanding |
| Community contribution: Contributes to a sustainable energy future and supports renewable energy initiatives. | Market variation: Benefits and availability of subsidies may vary across different virtual power plant programs and regions |
| Regulatory changes: Potential impact from changes in energy regulations or policies affecting VPP operations |
Should you choose a virtual power plant?
Ultimately, your decision hinges on your household's energy consumption patterns, your solar energy goals, and the confidence you have in your chosen VPP electricity provider. If you have surplus energy to spare or aim to maximise returns from your solar battery, a VPP could be an excellent addition to your energy strategy.
However, if your primary interest lies in securing a discounted solar battery installation, you might find better value in exploring solar rebates offered by your local state or territory government.
Contact Compare Energy
For those considering solar panels or a home battery, give our team a call on 1300 790 106. We’ll talk you through everything you need to know about signing up with a virtual power plant.
