vpp

What is a Virtual Power Plant (VPP)?

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Do you have solar panels and a battery? Then you may be eligible to join a Virtual Power Plant (VPP) program. In this Canstar Blue guide we explain what a VPP is, how it works and discuss the pros and cons of joining one.

With more than three million Aussie rooftops now sporting solar panels, it’s clear that the sunburnt nation loves its solar energy. And why shouldn’t it? With an abundance of this renewable energy source at our fingertips, it’d be silly not to capitalise on it.

But solar energy isn’t always sunshine and rainbows for those looking to utilise it. In fact, one of its biggest strengths is also its biggest weakness – and that’s its intermittency. The sun can’t be controlled, which means it can’t be turned up or down depending on demand. And this, unfortunately, can place a severe strain on the electricity grid. But what if there was a way to combat this?

Enter Virtual Power Plant (VPP) networks.

In this Canstar Blue Guide, we reveal all you need to know about VPPs including what they are, how they work, which providers offer VPP plans and if they are worth signing up to.

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What is a VPP?

A VPP network is essentially a mini power grid that’s created through home solar battery units. It’s a smart network, usually managed by an AI software, that uses power stored from nominated batteries to provide extra support to the grid in times of peak demand.

The energy drawn from each battery then allows renewable energy to be harnessed quickly, keeping the network stable and reducing reliance on fossil fuels.

How does a VPP work?

energy grid

Essentially, a VPP draws solar energy, which has been stored in a home battery, and sends it back into the grid as it needs it. A VPP network connects several batteries in a local area to operate as a mini power station.

VPP networks are typically coordinated remotely by an electricity provider or distributor, which owns the VPP network. These companies use technology that draws data from a variety of sources to forecast demand. From here, the VPP network can then play to demand and export additional solar power as required. Some of these data sources include:

  • Weather forecast
  • Usage data
  • Market trends
  • Historical consumption patterns

What is the goal of a VPP?

The goal of a VPP is to provide clean energy on demand and help stabilise the grid. It can be used to provide the same services as a traditional power station but without the need for large, centralised generation and storage assets. Instead, it draws on existing solar PV and battery storage systems connected to the grid.

Who is eligible to join a VPP?

Each VPP has its own set of criteria, but generally you will need to have solar panels and a solar battery to be eligible. Most programs currently available require you to install a solar battery through a designated provider. There are some, however, that allow you to ‘bring your own battery’, but even still, these must be compatible solar battery brands and models. If a retailer requires you to purchase a battery system through their preferred company, it will generally offer some form of subsidy.

You’ll also need to agree to an electricity plan with that provider or company to join its VPP and there may be minimum contract terms you’ll need to adhere to i.e., you must remain with the provider for at least five years.

Households with someone on life support are typically exempt from joining a VPP network, due to the role these programs take in demand response for the grid. Homeowners are also unable to join more than one VPP program at a time.

There is generally a cap on the maximum number of participants a VPP program can take at any one time, usually ranging from 1,000 households all the way up to 50,000.

It is important to note that with a VPP, you are essentially giving someone else control of your solar battery and its output for a period of time. While almost all programs highlight a maximum export amount or discharge limit that they’ll take, it should be noted that entering into one of these programs may limit your own access to your solar energy on the odd occasion. As such, it is vital that you understand all of the conditions of your program before signing up.

Which providers offer VPP plans and programs?

If you are interested in joining a VPP network, we’ve listed some of the electricity providers that offer them below. Please keep in mind some of these programs may only be available in certain states or distribution zones. Always contact a provider directly and read the terms and conditions before making a purchase decision.

The electricity providers in Australia with a VPP program include:

Some energy distributors, such as Ausgrid in Sydney, also run VPP trials for local residents to participate in.

Compare Solar Plans

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Ausgrid network in Sydney but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Energex network in Brisbane but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on SA Power network in Adelaide but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

What should I consider before joining a VPP?

batteries

Possibly the biggest consideration for households before joining a VPP is the fact that their solar battery and its stored energy will now be shared.

Being part of a VPP essentially means you’re giving control of your battery system to someone else. This could mean in the case of a blackout or power outage, you may be left without any reserve storage if the VPP has drained the battery. While most programs have a limit on the amount of power they can draw from a battery, some programs do not and can drain your battery as they see fit.

That being said, a VPP can be an excellent way to shave a few bucks off your energy bill and help bring more renewable energy sources into the grid. Most programs are rather generous with the feed-in rates that are paid back and there are reasonable guidelines when it comes to draining power from your solar battery. Plus, by being connected to a smart system, you and your chosen VPP provider can also keep a close eye on the health and lifespan of your battery, making it easier to identify connection issues as they arise.

The key takeaway is most people typically invest in batteries so that they can have control over their own energy usage. But by entering into a VPP, you’re essentially giving up that control. As such, it’s important to outweigh the pros and cons of joining a VPP in the first place. Will receiving a discounted battery installation or credit on your bill suffice for the large portions of solar energy you are giving up? And if you aren’t receiving a discount off your battery installation – will the cost of your solar battery and install be compensated by the bill credits for sending your power back to the grid instead of using it for your own home? This might be something to keep in mind.

Should I join a VPP?

Ultimately, this decision will come down to your home energy usage habits, intended plans for solar energy and of course, the trust you have in your chosen VPP electricity provider. If you’ve got the energy to spare or want to earn a little more off your solar battery then a VPP may be a great addition to your energy plan. But, if you’re just looking at a VPP for the discounted solar battery installation, then you may be better off seeking out a solar rebate from your local state or territory government instead.

If you’re interested in getting solar panels or a battery for your home, then be sure to check out our annual solar installer ratings. Here we reveal the best solar installers in Australia, as voted by consumers, based on customer service, installation process, performance of solar system, durability, set-up costs and overall satisfaction. Check out this year’s winner below.

Solar Panel Installers

Image credit: metamoreworks/Shutterstock.com, ABCDstock/Shutterstock.com, Roschetzky Photography/Shutterstock.com

Kelseigh Wrigley
Energy Specialist
Kelseigh Wrigley was a content producer at Canstar Blue for three years until 2024, most recently as an Energy Specialist. She holds a Bachelor of Journalism from the Queensland University of Technology.

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