Virtual Power Plants: Your 2024 guide.

What is a Virtual Power Plant?

A Virtual Power Plant or VPP is a network of decentralised generation/storage units. This could range from wind farms to rooftop solar and battery storage. When we say decentralised. We purely mean, not all in just one spot. You and your neighbour could be in the same virtual power plant as your other mate 2 hours across town. That is one of the great parts of a VPP.

The concept of a Virtual Power Plant for Aussie Households is to bring together thousands of batteries across the country to form one big virtual battery connected via the internet. These are then controlled remotely, generally by the VPP provider to maximise the benefit from your solar and battery.  For example, when the price of power goes up on the wholesale energy market these batteries may discharge together and earn the VPP provider money. Most VPP providers will then share some of the revenue to the battery owner but each VPP offering is different.

In its more simpler of scenarios, a virtual power plant may even operate to arbitrage and store your own energy in the most effective and efficient way maximising your self-consumption and reducing your reliance and impact on the grid.

Why Do We Have Virtual Power Plants?

VPPs are being used and developed all over the world, not just in Australia. Their benefits and value are vast for everyone involved in the grid and thus are gaining popularity immensely.

In Australia, they are growing so quickly because everyone in the electricity network from customers to distributors. We will go into a little more detail to help paint the picture.

Like a lot of things, when they were first building significant electricity networks in Australia, they weren’t planning on the incredible amount of electricity we consume today and they weren’t planning on customers having such incredible ability to generate so much electricity themselves in the form of rooftop solar. This in turn creates a few bumps in the system.

The grid needs to work in balance. If the grid is demanding more power we must put more in or it will fail and cause black outs. If there isn’t much demand and we push lots of energy in with nowhere for it to go, it will also cause issues with over voltage and frequency problems. I know, you wouldn’t think too much energy is a problem but it is.

During the middle of the day when the sun is pumping and your solar panels are producing lots of power, most homeowners will be sending a lot back to the grid. Often, the grid doesn’t need this energy and it actually causes problems for the distributor as we have explained. It is also problematic for energy retailers because households are being paid feed in tariffs for this energy they are sending back but the retailer has nothing to do with it.

The energy markets are open markets so when demand is high, the price you can buy and sell energy for is high. If demand is low and generation is high, the cost of energy goes down big time and can even go into the red.

This is becoming such a big problem for distributors, some (and we think eventually all) are bringing in what is colloquially coined “Sun Tax”. It is a simple supply and demand concept that has been forced by the incredible increase in roof top solar without batteries. If the grid doesn’t need the energy, you will be charged for sending it back. If the grid needs it, you will be incentivised. Quite simple. It got some bad attention because no one likes hearing about Tax but there is a super simple solution, get a solar battery!

VPP’s and solar batteries give the owners and operators the power to decide what to do with energy rather than just sending excess back to the grid. This means we don’t need to spend as much upgrading the grid, you can keep your energy for when you are or the grid needs it and home owners won’t be paying any pesky sun tax!

Renewables get a lot of heat in this Country because you can’t tell the sun when to shine of the wind when to below, but when you get a battery it doesn’t matter! Home owners batteries and grid scale batteries are all important and all contribute individually and as part of VPPs.

How Does It Actually Work?

VPPs can help your home and the grid in so many ways. Let’s imagine one scenario together to help illustrate.

Summer rolls in and you have one of those super hot days, we all know them. During the day, all is well because the sun is shining, everyone's solar is pumping. Kids are in the pool, you're sipping on a cold bevie, what a day to be alive!

Then, nightfall comes. There isn’t a southerly buster, it’s still stinking hot. The big difference, the sun isn’t shining. All of those solar systems are sleeping until the morning, but your energy usage isn’t! The grid now is under immense pressure. The same grid scale generators that were being used during the day, now need to try to keep up at night. Impossible.

In this scenario, you and all of your friends who are savvy and installed a battery won’t be contributing to the problem. You will be using your cheap, clean green energy from your battery that your solar made during the day. However, the grid is still getting hammered.

In this scenario a battery that is part of a VPP will use some or all of your battery's energy to send back to the grid to keep up with demand. In return, you and the VPP operator will be rewarded financially for helping the grid out.

The actual commands to sell back to the grid or buy back from the grid are generally all sent by the operator of the VPP you have signed up to. They use advanced energy monitoring and management software to know what is happening with the grid's demand and usage coupled with the price of energy. A Lot of the time your battery and solar will just operate as normal, then if required a command will be sent to your battery over your Wifi to make sure it does what it needs to do.

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Eligibility To Join A VPP

A common question from homeowners, the eligibility of joining a VPP varies from VPP to VPP. The underlying number one criteria is that you will need a solar battery. From there, there can be lot’s of moving parts.

At Green.com.au we think less is more so as we build our own VPP, we are focusing on ensuring everyone can join that has solar and a battery. Why make things hard, hey?

However, all VPPs are different so we will cover some of the criteria you might come across with other VPP’s below.

What type of battery do you have?  Not all VPP’s can support all batteries hardware and software so there will often be a list of acceptable batteries to join a VPP.

How big your solar system is?  Some VPP’s will dictate you need a minimum amount of solar to join. This is to ensure you generate enough of your own power to charge your battery so when the VPP needs to do it’s work, you will more than likely have lots of energy stored.

Where do you live? A common one, not all VPP’s operate in all areas. Some smaller VPPs we focus on areas to create critical mass in one spot to help them trade and arbitrage more effectively.

Do you have reliable WiFi? VPP’s rely on wifi to monitor and manage the batteries in the fleet so without wifi, they just can’t work.

Are you already part of a VPP? Seems like a silly question but you can’t be part of more then one VPP.

Can Businesses Join VPPs?

100%. The bigger the battery, the better. There is generally no limitation on the size of a battery that works within a VPP and the bigger a battery is, the more effective it can support the grid in its area.

Businesses who participate in VPP often get incredible value when participating in VPP’s for many different reasons but mostly because the more solar, the bigger the battery can then mean the bigger the benefit.

Does Joining A VPP Impact Retail Energy rates?

Currently, most VPPs in the Aussie market are run by retailers and will have a retail energy plan attached. There are so many variables when looking at energy rates so it is important when considering a VPP to also consider the rates that come with it.

Some VPP’s do operate independently to your retail agreement meaning you can have your VPP and your retail energy plan independent from different organisations.

Do I Have To Enter A Contract With A VPP?

Unlike retail energy plans that you can swap and change as you see fit some VPPs have contracts terms especially around duration and some don’t.  Just make sure you check before you sign on the dotted line or click on that final confirmation step. There have been some VPP’s offering sign on bonuses in lots of different forms but be careful with these. Often if you take one, you will have to stay with them for a certain period of time or you will be charged an exit fee.

Are VPP’s Worth Joining

In many cases, we believe joining a VPP is 100% worth it. It is important to pick the right one to suit your needs but once you have found it, they can help you manage and monetise your home or businesses energy like never before. Solar is good, solar and batteries are great, solar and batteries connected to a VPP is energy GOD status.

Conclusion

Hopefully by now you should know everything you need to know about VPPs. Green.com.au is an advocate for VPPs and are proud to be building our own, enabling our customers to manage and monetise their renewable energy assets better.

Whether you want to join a VPP to actively trade your energy and monetise every element of your generation and storage or if you simply want to manage and arbitrage your solar and solar battery in the most effective way, there is a VPP out there for you.

If you do have any more questions, please do not hesitate to reach out to the team at Green.com.au today.