What is a virtual power plant?
A virtual power plant (VPP) is a network of distributed energy resources - such as residential solar and battery systems - that all work together as a single power plant.
The solar and battery systems can be located across many neighbourhoods and centrally controlled using WiFi technology and sophisticated software to charge or dispatch energy from the batteries.
VPP operators offer a range of financial incentives and other benefits to households in return for joining a VPP. These incentives can include discounted solar and battery systems or lease-to-own plans, reward payments, low electricity tariffs, back-up protection, and credits on your electricity bill each time your battery is used by the operator during a VPP event.
Everyone benefits
During a VPP event, the operator may discharge (sell) some of the electricity in your battery and/or charge your battery (buying electricity from the grid). Some operators may use your solar and battery system to provide grid stability services by discharging and/or charging the batteries for shorter periods at rapid speed to raise or lower the frequency of electricity in the grid. Either way, the VPP operator will seek to generate revenue from trading electricity on the National Electricity Market, and reward you and the other households enrolled in the VPP for your participation.
Tips for households
While the concept of joining a VPP is still somewhat new, VPPs are quickly gaining momentum as households look to take advantage of the financial incentives they offer.
When researching a VPP, you might like to consider:
- What do you know about the VPP operator and electricity retailer (if it is not the same company)?
- Which batteries can be enrolled in the VPP?
- How much does the system cost (including installation and new solar panels if needed)?
- How will you be rewarded for participating in the VPP (ie. annual, monthly or daily reward payments, a discounted battery, an exclusive retail offer)?
- What electricity plan will you be on and how does the usage charge and daily supply charge and Feed in Tariff (FiT) compare to other retail offers in the market?
- How much of the battery can you reserve for back up protection?
- Is there a contract term and/or early termination fee?
- How much electricity is the VPP operator contractually allowed to draw from your battery each year?
In South Australia, there are several VPPs in the market using batteries which are eligible for the Home Battery Scheme subsidy.
A summary of some of the VPPs in South Australia is listed below.
Simply Energy Virtual Power Plant
Simply Energy offers customers a daily VPP access credit payment of $7p/day, up to a maximum of $5,100 over two years in return for joining your battery with the Simply Energy VPP. Eligible batteries include: Tesla Powerwall, LG Chem, sonnen, Eguana Technologies and Varta, in a range of battery sizes.
New solar panels are not included in the battery price and should be discussed with one of Simply Energy’s approved system providers.
AGL Virtual Power Plant
AGL offers customers with an existing solar and battery system as well as customers who are looking to purchase their battery through AGL, unique benefits for joining the AGL VPP. AGL’s Bring your Own Battery offer provides customers with a sign-up bonus of $100 and an ongoing credit of $15 per month, equivalent to $180 per year on their AGL energy bill. Customers looking to purchase their battery through AGL receive $1,000 towards the cost of the system when joining the VPP.
Eligible batteries currently include the Tesla Powerwall as well as LG Chem batteries with a Solar Edge inverter, with the range of eligible hardware. New solar panels are not included in the battery price and should be discussed when enquiring.
ShineHub Community
ShineHub together with electricity retailer PowerShop offers customers VPP payments between $0.37 up to $7.05/kWh, estimated at $300 p/year. Eligible batteries include: the Alpha-ESS in a range of battery sizes.
New solar panels are not included in the battery price and should be discussed when enquiring.
Tesla Energy Plan
Tesla together with electricity retailer Energy Locals offers customers a competitive electricity retail offer including $0 daily supply charge (saving Tesla Energy Plan customers approximately $300 p/year). Tesla Energy Plan customers are able to purchase a 13.5kWh Tesla Powerwall at an exclusive low price.
New solar panels are not included in the battery price and should be discussed when enquiring.
SonnenFlat
Customers with an existing sonnenBatterie and solar system are able to choose from a number of ‘Pay As You Go’ monthly electricity plans under the sonnenFlat VPP. Plans start from $49 per month. Depending on the generation and storage capacity of the solar and battery system, the customer is provided with an annual household electricity usage allowance. The customer must produce the minimum annual solar generation quantity outlined in the plan over a 12 month period or the allowance is adjusted.
Consumption from the grid in excess of the yearly energy allowance is charged at a competitive per kWh rate. Eligible batteries include: the sonnenBatterie eco and hybrid series in various sizes starting from 4 kWh usable capacity.
Last updated 19/12/2019.