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The widespread adoption of solar and storage batteries in Australia has seen the rise of a new key player in the solar industry. Virtual Power Plants have been gaining traction on the renewable energy’s grapevine in the last year. With whispers of increased battery optimisation through the new way to trade.

What is a Virtual Power Plants (VPP)

Virtual Power Plants are a fleet of solar batteries working together to sell, store and trade electricity to the grid. A VPP is a software that connects a battery via Wi-Fi to a fleet of local batteries. Together they function as a local power plant.

What came before the Virtual Power Plants?

Traditionally, power is generated and traded from a single source. For most of Australia, this source is a coal-fired power plant. These coal-fired power plants generate electricity and distribute it across homes and businesses according to demand. With Australia’s unwavering commitment to the renewable energies, our reliance on coal-fired power plants is steadily lifting.

Trading with standalone solar

In a sense homeowners with solar have always had their own small power stations. Most homes with rooftop solar sell their excess solar electricity back to the electricity grid and earn a Feed-In Tariff (FIT) for each kW of electricity traded.

In other words, electricity retailers, whether that be AGL, Origin or others, will directly purchase unused solar power. Typically they will pay a reduced rate (5-20c p/kW) and sell it back to other homeowners in the area at normal rates (20-30c p/kW). For the most part, this transaction is considered profitable and convenient for both parties.

Trading with a solar battery

With the rise of solar in Australian has come the rise of solar batteries. For most homeowners, solar batteries represent the next step in independent energy generation. Installing a solar battery transforms the way homeowners use the electricity grid. Most solar batteries allow the user to store, draw and sell electricity to and from the grid.

For example, Tesla batteries allow their users to select between three cycling modes, self-powered mode, advanced time-based control-balanced mode and advanced time-based control cost savings mode. Each mode changes how the Tesla battery powers the home and trades with the grid. Tesla users can select what mode to run their battery on based on their desired outcome. It’s important to keep in mind Tesla is one of the best AC coupled batteries in the market. While most solar batteries have monitoring and trading features, few are as advanced.

Trading with a Virtual Power Plant (VPP)

So if Australian’s have been happily trading their solar electricity and battery storage back to the grid for over a decade why the sudden need for Virtual Power Plants? Virtual Power Plants are the next step up from autonomous trading with a solar battery. This is because Virtual power plants are not just a setting on a battery. They build on software like Tesla’s to create the optimal energy storage environment for the user’s home and wallet. A Virtual Power Plant is an advanced software that connects the battery to a responsive fleet of solar batteries. These batteries operate together in ‘the cloud’ to substitute coal-fired power plants.

What does a VPP look like?

Older styles of VPP’s are a physical box or device that connect to the battery. However, nowadays most VPP’s are simply software downloaded on a phone or laptop. The software connects the battery to the cloud and allows the user to monitor and control the VPP via an APP. In most cases it’s as simple as download the app connect the battery and voila you have joined a VPP fleet.

Benefits of a Virtual Power Plant

Across the board, Virtual Power Plants are attractive to battery users because they optimise battery performance and save the user money. Software that stores, sells and trades excess electricity when it is profitable for the homeowner appealing to any solar battery user. Depending on the VPP provider there also are a range of different benefits and incentives to join.

Limitations and Setbacks

VPPs are only available for specific solar batteries, locations and retailers. Different VPP providers are partnered with a select group of manufactures networks and retailers.

VPP providers need to work with the battery manufactures to ensure their software is compatible with the battery technology. VPP providers are slowly building their repertoire of compatible battery brands offered to their users. Among the most common batteries for VPPs are ALPHA ESS, Tesla, and LG.

In order, to be effective VPPs rely on the number of participants. A fleet of only one or two batteries will not be an efficient power plant. VPPs are typically available in areas with that largest population of solar batteries. The availability and accessibility of VPP’s is ever-growing with more homeowners across Australia adding solar batteries to their solar set-up every day.

The Future of Virtual Power Plants

Despite VPP’s being around for nearly a decade it is still early days. As more homeowner install solar batteries and familiarise themselves with the process of energy trading, the necessity for VPP’s grows. Those in the energy industry are quickly accepting that the future will be built around renewable energy and independent generation. The CSIRO has predicted a massive 45% of energy generation will be independent by 20501.  Australians are declaring their independence from coal electricity.  The shift towards independent generation and Virtual Power Plants is a collective and progressive step forward.

CSIRO and Energy Networks Australia (2017) Electricity Network Transformation Roadmap: Final Report accessed 25 November 2020 https://www.energynetworks.com.au/assets/uploads/entr_final_report_april_2017.pdf traded

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