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Virtual Power Plants in Australia?🔋VPP's Explained 2024

Posted 27 Nov '23

Are Virtual Power Plants the Future of Grid Electricity?⚡

Imagine a town, or state, or country where millions of households and businesses with their solar systems and batteries happily powering along. And not so happily at times overpowering the grid while the sun shines. A world where fixed fossil fuel generators are closing, and variable renewables are on the rise. The result, potential chaos and grid instability through too much energy at midday and not enough when the sun sets, and everyone needs electricity to cook dinner. Solutions need to be found and this is where Virtual Power Plants (VPP) play a role.


What are VPP’s?

VPP's or Virtual Power Plants are simply an orchestra of thousands of residential and commercial properties all individually producing and storing energy, balancing electricity production with consumption, and grid imbalances; essentially stabilising the energy network.

Tesla Powerwall VPP Virtual power plant
VPP Virtual Power Plant chart diagram

How do Virtual Power Plants work?

VPP’s are in short, an independent property than can produce and store energy for self-consumption. In this case the energy production is solar energy, which then is stored in battery storage for use when the sun power is not available.

These independent properties, which all create, and store energy would be included in a unified system where energy production, storage, and consumption are all balanced across a large area, using all assets to essentially act as one huge, decentralised power plant. This system would allow for the simple concept of self-sufficiency, where an owner can produce everything they need sustainably, as well as supplying the community with energy that can be optimally balanced across a variety of homes and businesses for complete energy security for all.

Put simply, Virtual Power Plant’s allow you to use and serve the grid’s energy using automation to decide where the energy should go and come from.

What are the Benefits/Advantages of Virtual Power Plants?

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.




Virtual Power Plant benefits elite power group

The Disadvantages to VPP's

Drainage

Another downside 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).

Security

The immediate concern amongst VPP participants is the vulnerability to security breaches in the network system.

Limited Options

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.

Does Australia have Virtual Power Plants?

Australia currently has access to VPP services all throughout Australia such as Amber Smartshift® which allows exporting 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.

We love Amber because it’s a simple and easy way to take advantage of your solar and battery energy systems, so we will be using them as an example.

Do Virtual Power Plants shorten my Battery's lifespan?

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.

Home solar battery residential setup VPP virtual power plant


How much can you earn with a VPP?

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.

Amber SmartShift Amber SmartShift VPP Options VPP Options

Conclusion

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.

Home residential battery storage energy
BYD energy storage solar power battery

To aggregate these scattered micro power plants new businesses have emerged. Sometimes these are traditional energy retailers adding VPP to their offerings, sometimes they are businesses that offer unique VPP services. Their task, with the aid of sophisticated automated trading software, is to look for opportunities where the spot price of electricity in an ongoing automated auction rises and their customers would benefit financially by sending bursts of energy from their batteries into the grid. Also, at midday when the auction system flags a negative price for electricity there is an opportunity for their customers to receive bursts of energy into their batteries and be paid for doing so. To give some idea of the span of wholesale electricity prices in those times of oversupply and under supply the spot price can reach down to -$1/kWh and as high as an eye watering +$15/kWh.

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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