What Is A Virtual Power Plant? (VPP)

Everything You need to Know About Virtual Power Plants or VPP's

Traditionally Australia’s energy supply has come from large scale centralised generation plants such as a coal power station. They are great for generating electricity but awful for the future of the world and general health. 

Australia’s energy landscape is changing constantly and the push for renewable energy from private and public sectors has never been so loud. 

Across Australia you will notice the term “Virtual Power Plant” or “VPP” being tossed around quite a lot. 

We are going to cover everything you need to know about Virtual Power Plants. 

What is a Virtual Power Plant (VPP)?

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. 

In the case of residential solar and batteries, a Virtual Power Plant connects multiple solar PV systems and battery storage units across different sites which are then connected virtually. Sounds cool, right? 

The concept of a Virtual Power Plant is to bring together many batteries across the country to form one big virtual battery, when the price of power goes up on the wholesale energy market these batteries will 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.

Are Virtual Power Plants Worth It?

Teho loves batteries. We love the autonomy and technology and we love the concept of banding communities together through the power of renewable energy.

While the return on investment for batteries is getting better, especially when some states provide a financial incentive or rebate to get one, solar still has a much faster payback period.

The introduction of virtual power plants does make the numbers on batteries look more attractive. Not only do the numbers look better, the idea and concept are what really drives people to get involved in one of these offerings. Trading the stored excess solar power in the battery with the grid is very exciting. 

One downside of a Virtual Power Plant is the lack of control by the owner of the solar and battery system. When you sign up to these plans as you read through the information, it will mention how much power the Virtual Power Plant operator is able to draw at any time. We have looked at so many different VPP’s and have seen it be up to 80% at any given time. 

When the motivation for most when purchasing a battery for their home is to increase their own autonomy, sharing stored energy with others and handing over control to a Virtual Power Plant operator can be a tough concept to digest.


Most frequently asked questions and answers

A Virtual Power Plant or VPP is a network of decentralised generation/storage units. Once banded together they can support and trade with the energy grid providing stability and flexibly for both network operators and consumers. 

VPP stands for ‘Virtual Power Plant’.

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