The benefits of joining a virtual power plant
A virtual power plant (VPP) is a network of home solar battery systems all working together in a coordinated way. It enables lots of small household batteries to form a single large power source and is part of the solution for shifting the electricity system to renewable electricity. By registering your solar battery system with a VPP, you could make money from the electricity stored in your battery and help transform the electricity network in New South Wales.
How does a solar battery system work?
Your home solar battery system creates a mini ‘power station’ in your house that produces and stores solar electricity. Your solar PV panels generate electricity to power your home. Any excess solar electricity is stored in your battery for use later, generally in the evenings or when it's overcast and the solar panels aren't generating electricity.
Normally when your battery is fully charged, the excess solar electricity you generate is automatically exported to the local electricity network (known as the grid). You can get paid for this exported electricity through a feed-in tariff from your electricity retailer. Electricity retailers can choose to offer a feed-in tariff and they decide what the price is. The Independent Pricing and Regulatory Tribunal (IPART) provide a benchmark range that helps guide electricity retailers. This range is currently 6.0 - 7.3 cents per kilowatt hour (kWh). This feed-in tariff is normally seen as a credit on your electricity bill.
There is now another way to make money from your solar battery system, by joining a VPP service.
How does a VPP work?
A VPP combines the electricity from many individual home batteries into a large power source that can be coordinated remotely by the VPP provider. This network of batteries can then operate as a mini power station, delivering renewable electricity to the grid and providing network support services on demand.
There are a range of VPP providers. The ways they operate their VPPs and the value they can offer you can vary. Commonly when you join a VPP, you will have the option to get extra value from the electricity stored in your battery when it is needed by the grid the most, such as on the hottest days of summer.
The VPP operator will not use all the electricity available in your battery and they don’t use it often. The operator will only use the amount of electricity that you have agreed to when joining the VPP service.
Your VPP provider will optimise the operation of your solar system for you. This ensures you get the most value from your system while supporting the local grid. As a result, you help to build a cleaner, more reliable electricity system and earn additional money on top of your normal solar feed-in tariff.
Things to consider
Participating in a VPP may depend on:
- where you live
- what system you have installed
- your electricity retailer.
What are the benefits of a VPP?
There are a number of benefits associated with joining a VPP. These include:
- being paid for the electricity exported and the services provided from your battery to the grid. This can happen in several ways including:
- receiving an additional payment on top of your normal solar feed-in tariff
- accessing discounted electricity rates through a VPP provider that is also an electricity retailer
- supporting the grid via your battery to help prevent black outs during times of high demand such as the hottest days of summer, or generator failures.
- helping to build a modern electricity grid that supports more renewable electricity to be added to the grid
How much can I earn?
The financial return from participating in a VPP depends on your VPP provider. Some VPP providers offer a fixed payment or pay you every time your battery is being accessed. Others may offer discounted electricity rates. A typical VPP provider will have a base customer offer ranging from $100 to $200 each year. Depending on the size of your battery system and the number of times your battery is accessed, the benefits can vary significantly between offers and providers. You should always seek multiple quotes and question providers about their VPP offers.
How can I get involved?
The technology behind VPPs has been tested in Australia over the past few years. VPPs are currently offered by some electricity retailers and specialist providers. It is good to note that the type of battery you install will also influence which VPPs you can participate in.
The list below shows the available VPP providers in NSW and their compatible battery brands. To enable participation in a VPP program some VPP providers may require installation of an energy management device, and others may require software to work with a specific model and brand of battery system.
^ Requires compatible range of SolarEdge inverters to participate in VPP
* Shinehub, Evergen and Reposit are channel partners of the Ausgrid VPP trial.
If you are interested in being part of a VPP, you should discuss your options with your solar battery system provider or call VPP providers directly. Questions to ask include:
- How many times in a year will you access my battery?
- What impact will the VPP events have on my energy bill?
- How will I know if I am better off as a part of the VPP?'
- What are the financial benefits?
- If you are interested in learning more about solar battery systems, read the NSW Home Solar Battery Guide.
- If you are thinking about installing a home solar battery system, the Empowering Homes solar battery loan offer could be right for you. Read more here.
- Please refer to the EnergySwitch website for more information on energy products and services offered in NSW.
- If you have any questions regarding information on this page, please contact the NSW Government's program team on empoweringhomes [at] planning.nsw.gov.au
Page last updated on 15 January 2021