What are Virtual Power Plants (VPPs) in Australia?⚡[2025]
Posted 26 Nov
Posted 26 Nov
Imagine a community where numerous properties produce power with their solar systems, happily powering their property and not to happily overloading the grid when the sun is shining. The result, potential chaos in grid stability with too much energy at midday, but no solar energy at night. Solutions need to be found to help grid stability. This is where Virtual Power Plants (VPPs) play a role.
Virtual Power Plants (VPPs) are a network of properties that individually generate and store renewable energy, which all contribute grid imbalances, balancing production with demand.
The development of Virtual Power Plants was innovated by Australia. As a country we punch well above our weight in the world of high technology innovation, not just sport.
Virtual Power Plants would boost Australia's Solar production performance for available consumption 24/7, which would buffer the timing of solar production and grid outages.
A virtual power plant is different to a microgrid. More about the differences between microgrids & VPPs here.
As a micro-grid, a property can participate in a virtual power plant by independently producing and storing energy for self and shared-consumption. Solar being the primary produced energy, which is then stored in solar battery storage for when the sun is unavailable.
This network of microgrids, are lots properties connected to help with grid stability as a unified energy system where electricity production and consumption is all optimally balanced across a large area. This essentially acts as a large, decentralised power plant.
Using automation, homes and businesses could sustainably produce, and supply electricity to the community for energy security. So in simple, Virtual Power Plants allow you to use and serve the grid's energy using automation deciding where the energy comes from and goes.
The benefits of a Virtual Power Plant would be the dynamic energy distribution system that would allow for flexibility in our geographical energy consumption. Virtual Power Plants for solar would allow you to take full advantage of existing solar systems and for a self-consuming community that doesn’t rely heavily on fossil fuel energy production.
This not only would take full advantage of installed solar systems, but it would encourage new systems to be installed which would only make the distribution system more flexible. This kind of system would meet grid demands almost instantly by taking advantage of local production and store for optimal efficiency and seamless flow transitions.
As a result of the reduced dependency of traditional power plants, it would have a huge environmental impact both directly and indirectly from the reduction in carbon emissions and would also shorten return-on-investment timeframes for solar and battery.
A downside of joining virtual power plant is the likelihood of having no energy left in the battery for you to use, however there
are options to prevent the battery state of charge (SoC) from going to a certain percentage (e.g. 20% minimum).
The immediate concern amongst VPP participants is the vulnerability to security breaches in the network system.
We expect VPP providers to be aware of this fear, and to implement the required security elements.
Lastly, depending on what company you go with, you may not have the flexibility to charge and discharge at optimal times (e.g.,
Discharging at times of peak demand)
for optimal returns. However, Amber allows for full control and turning optimisations on and off at any time.
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.
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 get a discount off their first battery, to become eligible for joining a VPP network.
House rooftop energy falls into the category of a Distributed Energy Resource (DER) and efficiency logic dictates that this energy is best used close to the point where it is generated. Storage follows the same logic; storing it close to where it is generated and used - the ultimate efficiency.
Yes, Australia has access to Virtual Power Plants throughout Australia, allowing solar and battery customers to participate in contributing to an energy network for rewards. Providers such as Amber Smartshift® allow you to export your energy into the wholesale electricity market unlike other VPP providers that take a cut of the value you generate. You can get access to their service via a small monthly subscription.
People wonder about the wear and tear to which their batteries might be exposed if they were to participate in a Virtual Power Plant.
The industry feedback suggests that the energy taken from the batteries is quite low at about 6 kWh/month. The strength of the VPP
system in its grid stabilising role is the breath of battery owner participation and the short bursts of energy needed with the right
timing to stabilise the grid. The income offered from some VPP offerings are considerable and would also vastly
speed-up return-on-investment timeframes.
With electric vehicles exploding in popularity in the past couple of years, it has put increased demand on the electrical grid in order to
recharge these large portable batteries. This increased charging demand indicates that we need to either ramp up grid production or find
renewable solutions.
Currently, there are solar charging capable electric vehicle chargers that
allow EV's to be powered by fully-renewable solar energy. This charging system could greatly benefit from battery storage and would
permit eco-friendly charging at all times of the day and night with the absorption of solar energy.
Virtual Power Plants via Vehicle-to-home and Vehicle-to-grid may also evolve to take
advantage of their large-capacity batteries.
With the emerging renewable technologies, it removes the need for expensive grid upgrades whilst also creating a more efficient energy system that would stabilise the grid intelligently, and may even be powered by AI in the future. Whilst electricity grids are very valuable, their nature and function is continuously changing, and it must adapt to suit the needs of the evolving consumption trends, infrastructure, and modern times.
Owners of Solar and Battery that are involved with a VPP are compensated. Amber for example allow for
wholesale electricity prices to maximise your systems' performance. You can use their calculator and see how much you can earn.
We genuinely recommend Amber as they don’t take a cut out of the profits made on your trades, instead it’s a simple monthly fee. Here
is a list of the VPP offerings in Australia.
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.
However, the application of battery storage must be elegant and be not just masses of uncoordinated batteries 'doing their own thing.'
Using the technology we currently have, the universal online connections could orchestrate a grid wide synchronised system to achieve
in reference to Goldilocks, 'not too much not too little but just the right amount of sponging up of energy from a 'hot' grid and
spoon-feeding an energy needy grid'.
Computers do this marvelously, reliably, cheaply, and tirelessly. The techniques for doing this are the remit of tested, tried, and
emerging Virtual Power Plant (VPP) technologies.
Naturally people participating in such an orchestra would want to be rewarded for their service in helping to stabilise the grid, both by supplying energy in times of grid need and also soaking up in their batteries some of that excess midday solar energy.
Remember energy sent to the grid system always needs to have somewhere to go to maintain a balance, either into customers loads or into some sort of storage; batteries being the most convenient, fast-responding technology.
Like other technologies such as Vehicle-to-Grid, Australia is slowly adopting and developing the infrastructure it needs for systems like these. The future will involve complex transitions to new and advanced automations that will give us the energy we need in the most sustainable and efficient way possible.
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