What is a virtual power plant?

A virtual power plant (VPP) is a network of distributed energy resources – such as residential solar and battery systems – that all work together as a single power plant.

The solar and battery systems can be located across many neighbourhoods and centrally controlled using WiFi technology and sophisticated software to charge or dispatch energy from the batteries.

VPP operators offer a range of financial incentives and other benefits to households in return for joining a VPP. These incentives can include discounted solar and battery systems or lease-to-own plans, reward payments, low electricity tariffs, back-up protection, and credits on your electricity bill each time your battery is used by the operator during a VPP event.

Everyone benefits

During a VPP event, the operator may discharge (sell) some of the electricity in your battery and/or charge your battery (buying electricity from the grid). Some operators may use your solar and battery system to provide grid stability services by discharging and/or charging the batteries for shorter periods at rapid speed to raise or lower the frequency of electricity in the grid. Either way, the VPP operator will seek to generate revenue from trading electricity on the National Electricity Market, and reward you and the other households enrolled in the VPP for your participation.

Tips for households

While the concept of joining a VPP is still somewhat new, VPPs are quickly gaining momentum as households look to take advantage of the financial incentives they offer.

When researching a VPP, you might like to consider:

  • What do you know about the VPP operator and electricity retailer (if it is not the same company)?
  • Which batteries can be enrolled in the VPP?
  • How much does the system cost (including installation and new solar panels if needed)?

  • How will you be rewarded for participating in the VPP (ie. annual, monthly or daily reward payments, a discounted battery, an exclusive retail offer)?
  • What electricity plan will you be on and how does the usage charge and daily supply charge and Feed in Tariff (FiT) compare to other retail offers in the market?
  • How much of the battery can you reserve for back up protection?
  • Is there a contract term and/or early termination fee?

In South Australia, there are several VPPs in the market using batteries which are eligible for the Home Battery Scheme subsidy of up to $6,000.

A summary of the VPPs in South Australia is listed below.