What are Virtual Power Plants (VPPs) in Australia?⚡[2025]
Posted 26 Nov
Posted 26 Nov
We're developing into a world where individual homes and businesses are happily producing their own power, but not-so happily overloading the grid when the sun is shining. This results in instability and chaos in the grid with an over-abundance of solar energy during the daytime, but none at nighttime when the sun is down.
This is where Virtual Power Plants play a role in helping stabilise the electrical grid.
A Virtual Power Plant is a decentralised network of properties which individually contribute to generating and storing energy with DER (solar and battery systems) to supplement grid demand and production imbalances.
Created by Australians, Virtual Power Plants were designed to enable 24/7 access to energy during grid outages or sun unavailability.
It is important to note that a Virtual Power Plant is different to a Microgrid as the 2 serve similar but different purposes.
To understand what a Virtual Power Plant is, let's quickly understand what a Microgrid is.
A microgrid is a system is a localised electrical system like solar and battery, that operates independently or in combination to the main electricity grid.
Virtual Power Plants consist of microgrids to participate in producing, storing, and exporting energy when the network requires help in stabilising the grid.
So overall, using software and automation, the network supplements imbalances in the grid with energy supplied from VPP participants, who in return earn rewards.
By joining a Virtual Power Plant network, you would be contributing to a larger effort to stabilise the grid and rely on a more sustainable means of energy.
Networks like Origin Energy offer a $200 sign-up bonus, $1/kWh feed-in-tariff exports, and no lock-in contracts. They also mention that they will only take a maximum of 200kWh per year.
Depending on your situation, joining a VPP may allow you to get a faster return-on-investment on your solar and battery system as you are rewarded for exports.
There are also available rebates for those who join a Virtual Power Plant network through the Peak Demand Reduction Scheme.
Whilst joining a Virtual Power Plant has its upsides, there are some caveats, depending on what VPP network you choose.
The Fine Print
Ensure you conduct your research into the requirements and terms and conditions that the VPP network offers as elements like FiTs and
control parameters.
Drainage
Depending on what VPP you join, they will reserve a certain amount of energy for your consumption. This amount may vary based on
specified requirements.
Limited Control
Because you're joining a network, the algorithm will reduce your control over battery levels. This could be an issue if you wanted to prepare for a possible grid outage.
Reduced Lifespan
Depending on the network and its parameters, joining a VPP may reduce your battery's lifespan due to the increase charging and
discharging rates.
Eligibility
For existing battery owners, your battery and solar setup may not be compatible in joining a Virtual Power Plant network.
Whilst solar is a great option to offset daytime consumption, the collective exports from rooftop solar drives the electricity grid to instability during the middle of the day during off-peak hours, which becomes unavailable when we most need it during peak hours. More about On vs. Off Peak hours here.
What Australia requires is this great amount of daytime energy to be stored and then supplied at night during peak hours like dinner time.
So in short, you'll probably need a battery in addition to your solar if you want to join a Virtual Power Plant network.
Yes, Virtual Power Plants are boosting adoption of solar and battery systems in Australia. With the rapid uptake of solar and battery storage across Australia, this network of self-sufficiency is becoming a bigger reality.
As more homes and businesses become their own microgrids, they can participate in virtual power plants, they help stabilise the grid.
With the PDRS battery subsidy, NSW solar owners can not only get a discount off their first battery, but can also claim a rebate of joining a VPP network.
A combination of getting rewarded for investing in a solar and battery system, as well benefiting from the energy it exports, VPPs are encouraging the adoption of solar and battery storage in Australia.
Australian households have a few Virtual Power Plant networks available to choose from, but which one is the best? The short answer is, it really depends on your energy requirements and goals. Because each network and customer will differ in requirements, it is hard to give an all-round answer.
However, to help provide more options, we really recommend Amber SmartShift. Amber allow you to export your energy into the wholesale electricity market, and unlike other VPP providers, they don't take a cut of the value of your exports as they charge a monthly fee instead.
There is discussion around whether Amber is a VPP by definition, as they allow you to take control of your battery whenever you'd like.
Generally, yes, joining a VPP could shorten your battery's lifespan as there may be higher rates of charging and discharging.
However, this answer will greatly depend on factors like, the chosen VPP network and its requirements, the battery model and type, and your consumption lifestyle.
Some VPP networks may have a capped amount of energy they will take monthly, which could reduce overall battery degradation.
The idea of Virtual Power Plant participation usually involves short bursts of energy exports into the grid at moments of instability. The frequency of this will vary network to network.
The more participants that join a Virtual Power Plant, would mean that each individual would have to contribute less to meet grid instability needs.
Imagine a world of coordinated battery systems all over NSW soaking up the abundant solar energy that we receive throughout the day to be used later when the sun is down instead of grid electricity.
Virtual Power Plants are definitely playing a part in the transition to renewable energy with orchestrated grid synchronisation to achieve balance.
This would accelerate the benefits of solar panel production for 24/7 absorption through the day to allow for the usage of solar energy
through the night when production has stopped.
This would minimise the issue of high peak demand periods on a large-scale, encouraging homes to be more self-sustainable in the way
they both produce and store energy.
Overall, joining a Virtual Power Plant can be beneficial for homes and businesses all over Australia.
We really recommend carefully reading the fine print in contracts and agreements to ensure you're getting the most out of your battery storage system.
As solar and battery systems continue to rapidly adopted, Virtual Power Plants will proceed to deliver value to customers to help faster return-on-investment timeframes and rewards.
Here are some frequently asked questions for Virtual Power Plant (VPP) networks in Australia.
Discover available rooftop solar PV rebates, loans, and incentives in Newcastle, Maitland, and the Hunter, NSW and explore eligibility and how to apply.
Discover the differences between AC-coupled and DC-coupled solar battery storage and how they differ in configuration for homes across Australia in 2025.
Discover the differences between Tesla Powerwall 3 and Sungrow SBH battery storage and which one is better suited for homes across Australia, NSW in 2025.
Leave a Comment