What are Virtual Power Plants (VPPs)?

As more and more Aussies opt for renewables when it comes to powering their home, the question of “what else can I do?” often comes to mind. And, as part of that ‘next step’ research, you may have found yourself coming across terms like ‘battery aggregation’ or ‘energy sharing’. In general, both of these terms refer to the same concept – a Virtual Power Plant (or, a ‘VPP’.)

A relatively new concept, VPPs aren’t quite as common in energy discussions as solar panels, inverters, and home battery systems. Nonetheless, they’re still quite a hot topic among solar-equipped households. But what’s all the fuss about? What does a VPP have to offer a solar homeowner? Is there a financial benefit? Is it worth getting involved with a VPP at all? In this article, we’ll help you break it down. We’ll look at VPPs, their history, their purpose, and most importantly, what they can offer you.

What is a VPP and how does it work?

As you enter the world of renewables, you’re almost immediately introduced to a slew of acronyms – like SoC, PV, kWh* and more. Still, among that sea of technical terms, you may come across something called a VPP – and this is one acronym you don’t want to forget. A VPP, or ‘Virtual Power Plant’, is a distributed energy resource network (also known in acronym form as ‘DER’). As its name suggests, a virtual power plant is virtual – it’s software-based, as opposed to a physical network, like a server room or physical power structure. And, they’re fairly new – in fact, VPPs, while conceptualised in the ’90’s, have only really been used at scale on the solar scene since 2016.

Loosely, VPPs work to facilitate the collective action of the DER during periods of high demand or instability on the power grid. They do this by accessing solar production and battery capacity from nearby homes to stabilise the grid. Think of it this way – imagine a neighbourhood where several homes have rooftop solar panels installed, along with batteries for energy storage. Individually, these systems generate and store electricity to meet the homeowners’ needs. However, when integrated into a Virtual Power Plant, these assets become interconnected nodes within a larger network.

During periods of high demand or grid instability, excess solar energy generated by one household can be redirected to charge batteries in another home, balancing supply and demand in real-time. Similarly, when the grid requires additional power, the VPP can bundle extra energy from multiple sources to provide a reliable supply. In a VPP environment, the software can manage the flow of electricity from these various sources, seamlessly integrating it into the power grid as if it were a single, larger power plant.

Overall, a VPP functions as a ‘connector,’ integrating the top solar generation resources from an area with the electricity grid. This synergy creates a balanced relationship that enhances grid stability, optimises solar power distribution, and benefits the community.

*SoC – State of Charge, PV – Photovoltaic (referring to solar panel production), kWh – Kilowatt Hours.

What are the benefits of joining a VPP?

Being a part of a VPP can offer benefits to homeowners, along with the potential to enhance both your energy experience, and the bottom line on your electricity bill. One of the primary advantages is the range of financial incentives available – for example, some VPPs may offer initial sign-on bonuses, bill credits or other benefits selected by the VPP operator.

Of course, it’s not just all about the sign-on bonus. Long-term engagement with a VPP can also yield substantial rewards. For example, staying with a provider for an extended period might earn you loyalty credits, ‘paid’ in bill credits. Some VPPs will offer percentage-based discounts on your energy bill, which can significantly lower your overall energy costs. Of course, this isn’t a given across every VPP, as every operator will have their own perks. Before you sign up, its worth discussing these with the VPP operator, and doing your research.

Beyond the financial perks, joining a VPP can help support the stability of the electricity grid, and support your community’s energy needs. Playing a role in preventing unnecessary blackouts and ensuring a reliable power supply is a valuable contribution – one that might make you quite popular at the next community barbecue!

Can you save money with a VPP?

Joining a VPP can lead to noticeable savings on your energy bills. By participating, you’re not only given the opportunity to reduce your own energy costs, but you’re also contributing to a more stable and sustainable energy grid. This collective effort helps ensure a cleaner future for the planet and provides community-wide benefits. It’s a win-win situation where your involvement helps advance renewable energy while also potentially padding your bank account.

The financial aspects of joining a VPP can vary; some programs are free to join, while others may involve setup or membership fees. For those who are proactive about monitoring their energy use, tools like the MyRedback app can be invaluable. This app allows you to track your battery’s discharging patterns and solar production trends, giving you a clear picture of how your energy system is performing. If you’re already utilising solar power and benefiting from feed-in tariffs, participating in a VPP could further enhance your savings. In the grand scheme, this approach is often more cost-effective compared to purchasing energy from the grid.

What about blackouts?

It’s no secret that Australia is a hotbed for natural disasters. From floods to cyclones and everything in between, our country has seen its fair share of nature’s wrath. These events can disrupt the electricity grid, leading to widespread blackouts. For homeowners, this raises the question: can a VPP or home solar and battery system help during these outages?

The good news is that a solar and battery system can provide backup power during blackouts, depending on your setup. If your home has blackout protection enabled through your battery system, it can automatically disconnect from the grid and switch to supplying power from your battery. This allows you to keep essential appliances like fridges, lights, and security systems running when you need them most. It’s even possible to recharge your battery during the day with solar power, keeping your home powered throughout an extended outage.

In the context of a VPP, participating homes can contribute to greater grid stability, reducing the likelihood of blackouts for the wider community. While VPPs are not designed to directly supply power during a blackout, the stability they bring to the grid can help mitigate disruptions before they occur. Think about it – less blackouts = less need to rely on backup power.

So, whether you’re looking for peace of mind during emergencies or want to play a role in enhancing the resilience of the grid, having a solar and battery system with VPP compatibility is a smart investment.

Can I join a VPP with my Redback system?

Great news for Redback customers – you can join a VPP with your Redback system. Redback has robust software capabilities that make our systems compatible with all major VPPs in Australia.

Whether you’re interested in joining an existing VPP or are exploring options, your Redback system is ready to participate. Additionally, we’re excited to be developing our very own VPP program called OneClick VPP. This initiative aims to streamline the process for homeowners and installers, making it even easier to join a VPP. By simplifying enrolment and enhancing integration, OneClick can help take the stress out of joining a VPP, and help you start achieving maximum ROI, quicker. Stay tuned for more information on OneClick VPP!

Are VPPs worth it?

The short answer – absolutely! Participating in a VPP can offer both immediate and long-term benefits. From financial incentives and cost savings to supporting community energy stability, the advantages are significant.

With a Redback system, you’re already equipped to maximise your solar and battery system’s potential. Joining a VPP takes that potential further, providing opportunities to offset costs, contribute to grid reliability, and even earn bonuses or discounts.

In the end, joining a VPP isn’t just a financial decision—it’s a step toward a cleaner, more sustainable energy future. And with Redback’s support, including compatibility with existing programs and the upcoming OneClick initiative, it’s never been easier to make the most of your renewable energy investment.