Virtual power plants (VPP) have been billed as the future of green energy, and here in Australia several VPP companies are already in operation – including us.
But what is a VPP, how does it work and are there benefits to joining? Let’s discuss.
What is a virtual power plant (VPP)?
A virtual power plant is a network of renewable energy resources (like solar panels and battery storage systems) connected via the cloud, working together as their own combined ‘power plant’. Instead of there being a single plant which runs everything, it’s lots of ‘micro-generators’ distributed across the town, city or region.
When one part of the network isn’t using much power but another area needs more, the micro-generators team up to distribute electricity where it’s required, making sure everyone has enough and taking strain off the grid. When demand drops, the micro-generators store their electricity in batteries to be used later.
This network can include both residential and commercial solar systems, and wind turbines too.
Solar Victoria has a short explainer video to help illustrate this.
How does a VPP work?
For a VPP to work, there must be a network of renewable energy sources (i.e. the solar panels on your home) and a central ‘aggregator’, that is, a central computer operated by a VPP company which helps to monitor, combine and control the flow of electricity.
That central computer takes small amounts of energy from a lot of different places, distributing it around the network based on who needs what. Already in use across much of Australia, this process is helping residents and businesses circumvent reliance on non-renewable energy sources – making networks like VPPs key to a completely green future.
What a common VPP looks like
- After purchasing solar panels, an inverter and a VPP-capable battery for your home, you sign up to a VPP company’s network.
- Your home generates its own electricity. The VPP company monitors your battery storage levels and draws from reserves to feed power back into the grid.
- The VPP company uses remote software to coordinate your battery with everyone else’s, distributing the power as needed.
- If your neighbour is low on power, they might get some of yours. If you’re low on power, you can get some of theirs.
- Power is also traded on the National Energy Market, helping to optimise energy usage, increase grid reliability and provide discounts to VPP micro-generators like you.
Learn more: What is a solar battery storage system?
Do homeowners get discounts for joining a VPP?
It’s common for Australian VPP companies to provide some kind of financial incentive as a part of their contract.
While the market is still evolving, two types of financial bonuses for customers are emerging as commonplace:
- Getting discounts on energy bills for providing electricity back into the grid (currently most common).
- Getting paid via feed-in tariffs for supply electricity to the grid (growing less common).
What is a VPP-capable battery?
Not all solar storage batteries are capable of connecting to a VPP network. In order to be VPP-ready, a battery must be:
- Safe to operate as a part of a VPP.
- Capable of connecting to Wi-Fi, and controllable by the VPP company.
- Capable of reporting its battery charge level to the VPP company.
To find out if yours is VPP-ready, you may have to check with the manufacturer.
Are VPPs greener than traditional power plants?
Virtual power plants are considered significantly greener than their traditional counterparts for three big reasons:
- Renewable by design. VPPs are built from networks of micro solar and wind generators. These are renewable, readily available resources that contribute far less to greenhouse gas emissions than big power plants.
- Less wastage. By carefully controlling supply and demand across the network through advanced automation and monitoring software, VPP companies can more accurately provide the right amount of power in the right place, and store what isn’t needed, reducing wastage.
- More cost efficient. Power plants take up an enormous amount of space, and cost a considerable fortune to build, maintain and upgrade over time. VPPs tuck neatly away into people’s homes and businesses, and because they’re built on cloud-based technology, they can be updated all the time without the same infrastructure costs.
Benefits of joining a VPP
There are many benefits to joining a VPP, including:
- Earning back the cost of your solar system. Saving on your electricity bills or earning from feed-in tariffs can help you break even on your original solar installation.
- Reduced electricity bills. Any discount on the monthly electricity bill is a welcome reprieve during a period of high living costs.
- Grid reliability. Traditional power plants come under strain during periods of heavy use, or if something goes wrong (i.e. harsh weather). By relying on lots of little micro-generators instead, VPPs ease that strain and can reserve power for when it’s needed later – improving reliability.
- Contributing to a green cause. VPPs are being billed as the future of energy, and joining now helps these networks to grow and improve.
How to join a VPP network
1. Power your home with solar
Step one is to ensure your home is solar powered, and that you have VPP-capable battery storage ready to go. Even if you don’t end up joining a VPP network like ours, going solar powered could help you save on bills in the long-term and puts you in a position to join later, if not immediately.
If you aren’t sure what you need, it may help to talk to an expert first. Contact our team and we’ll help you understand what’s right for your home, plus what rebates or programs are available in your state.
Learn more: Build your own solar quote
2. Check which VPPs operate in your area
A quick online search for “VPP companies in <your city>” will help you get an idea as to who is offering VPP services near you, and what it’s going to take to sign up.
Most providers will have eligibility criteria that you have to meet, generally to do with your solar setup. Some are free to join, while others have various setup or membership fees to take into account.
3. Always read the contract
Before signing anything, make sure you read the contract thoroughly to ensure you’re comfortable with the terms, the benefits and the requirements on your end.
Ready to go? Your renewable future starts today
It’s easy to join a VPP in Australia when you talk to the right experts. We offer a range of services to help Aussies switch to renewable energy, including solar and battery installation, retrofitted batteries, EV chargers, heat pumps and VPP services. Book a no-obligations consultation with us today to learn more about what’s possible with your home or business, and where you’ll need to start.
