Virtual power plants could play a key role in Australia’s electricity retailing

This power plant by your house could turn rooftop solar into a power source for the energy market.

Virtual power plants (VPPs) could play a key role in Australia’s electricity retailing after the country surpassed 3 million rooftop solar installations, the Institute for Energy Economics and Financial Analysis (IEEFA) reported.

A VPP is a network of distributed energy resources, including rooftop solar, batteries, electric vehicles, and smart appliances, that could work as a single power source. It could also be aggregated through a software to participate in energy markets.

“The potential of VPPs is yet to be realized. There is a lack of significant revenue for distributed energy resource owners or VPP providers,” Gabrielle Kuiper said.

“Households are currently only being paid around $200/year for the use of their battery by aggregators to participate in energy and ancillary services markets. The margins are thin.”

The Australian Energy Market Operator had previously projected that there could be 700 megawatts (MW) of VPP by 2022. By IEEFA’s estimate, the figure is nearer 300MW for households in the National Energy Market.

According to Kuiper, VPPs will likely see the value in investing in VPP software and systems as he maintains that VPPs are the future of electricity retailing.

Just this March, Origin Energy disclosed plans to expand its in-house VPPs to 2,000MW from 205MW within four years.

“Origin clearly understands the value of distributed energy resources,” Kuiper said.

“To secure their future, retailers should offer the combination of rooftop solar, batteries, managed EV charging while being a VPP-tailer for both residential and commercial customers.”