The way we generate and use energy is rapidly changing, and it’s an exciting time! Renewable energy is on the rise, and we’re seeing more and more organisations, people, and communities taking control of their energy production and consumption. Virtual Power Plants (VPPs) offer the potential to play a key part in this shift, providing a smart and collaborative way to power our communities.
What exactly is a Virtual Power Plant?
Think of a VPP as a team effort in the energy world. It’s a network that brings together various sources of energy, like:
- Solar panels & batteries: Rooftop solar and batteries can store excess renewable energy to be later shared with the community in times of peak demand.
- Smart devices: Even things like smart thermostats can play a role by using less energy when demand is high.
- Electric vehicles (EVs): In the future EVs may even help by feeding power back when they’re not being driven.
VPPs use clever software to manage all these resources, making sure they work together efficiently to keep the lights on.
Types of Virtual Power Plants
VPPs come in different shapes and sizes, depending on what kind of energy sources they connect:
- Home VPPs: Focusing on solar and batteries in people’s homes.
- Business VPPs: Connecting larger energy storage systems in businesses and industries.
- Mixed VPPs: Combining homes, businesses, and more for a diverse and reliable network.
- EV VPPs: While not available just yet, in the future we may be able to utilise the batteries within electric vehicles to provide energy back to the grid.
Learn more in Vehicle-To-Grid (V2G) Technology: Using EVs as a dynamic energy storage system
VPP Benefits
VPPs bring a whole range of positive changes:
- More renewable energy: VPPs help us use more solar and wind power by storing energy and adjusting demand.
- Environmental & climate: By using more renewables, we reduce carbon emissions, pollution and create a healthier planet.
- Stronger energy grid: VPPs can help make the grid more stable and reliable, preventing blackouts.
- Lower energy bills & costs: By reducing peak demand, VPPs can help keep energy costs down.
- Everyone can participate: VPPs empower individuals and communities to be part of the energy solution.
Learn more in A Guide to Community Energy in Australia: Power to the People
How it works: The technical side
VPPs rely on a combination of technologies:
- Energy resources: Solar panels, batteries, EVs, and smart devices.
- Monitoring: These smart devices track energy use and generation in real-time.
- Communication networks: These allow all the components to talk to each other.
- Software: This manages the energy flow and makes sure everything runs smoothly.
- Grid integration: VPPs connect to the existing grid to ensure seamless operation.
VPPs in action: Australian examples
Australia is a leader in VPP innovation and development:
South Australia’s Virtual Power Plant (SA VPP)
SA is host to one of the largest VPPs in the world, using batteries in thousands of homes. This program has been very successful in providing energy stability and has proven the ability of VPPs to support the energy grid and enhance community resilience.
Project Symphony (WA VPP)
This pilot project in WA allowed households in a certain area the opportunity to participate in demand response and grid support.
There are various companies that are creating VPP programs. Solarquotes has a great database of VPP’s available in Australia and their relevant characteristics.
Learn more in How Organisations Can Strengthen Their Energy & Climate Resilience
Things for Organisations & Non Profits to consider when signing up for a VPP
There are benefits to VPPs but there are risks as you can be exposing yourself to the wholesale energy market and if you use energy at the wrong time you could be in for a shock on your next bill. If your non profit is thinking about signing up to one, research the lifetime costs and anticipated savings as well as the terms and conditions carefully. You should consider the following.
Are you an active energy manager?
Does your organisation have someone dedicated to managing your energy use? Your organisation should be an active energy manager (with someone responsible for the task) and have access to good monitoring data via monitoring software which covers your solar production, battery storage and consumption patterns. You should also have the ability to shift your energy consumption to different times and a battery with sufficient storage capacity to avoid drawing from the grid in peak periods.
1. Cost & Savings
- Upfront Costs: Are there any initial fees or equipment purchases, such as solar panels or batteries?
- Savings: Understand how much you can save on your energy bills. Some VPPs offer savings from reducing electricity costs during peak demand, while others offer incentives or rebates for participation.
- Fee Structure: Clarify if there are ongoing subscription fees or commissions taken from any energy savings or profits you might earn.
2. Eligibility & Equipment Requirements
- Energy Resources Needed: Check if you already have or need specific equipment (e.g., solar panels, home batteries, or smart meters) to participate.
- Infrastructure Compatibility: Ensure your home or property is suitable for integration with the VPP, such as having the proper connection to the grid and local utility requirements.
3. Energy Generation & Storage Control
- Control Over Energy Usage: Some VPPs might have access to control or adjust your energy resources (like when your battery discharges or when to draw power from the grid). Make sure you understand how much control you’re giving up.
- Battery/Storage Support: If you’re using energy storage, ensure that the VPP is compatible with your battery system, and ask about any potential impact on the lifespan of your storage device.
4. Incentives and Rewards
- Grid Services: Some VPPs offer payments or incentives for allowing your energy system to contribute to grid balancing or demand response programs.
- Participation Rewards: Research the rewards or compensation for participating in VPP programs. For example, do you earn payments based on energy savings or profits, or is it more about bill credits?
5. Terms and Conditions
- Contract Length and Flexibility: Review the length of the contract and whether it’s easy to exit without penalties. You should understand any long-term commitment and the terms for canceling or switching providers.
- Performance Metrics: What are the expected energy generation, storage performance, and compensation metrics for the VPP? Check if there’s a guarantee or benchmark for how much you will earn or save.
6. Grid Impact and Reliability
- Power Outages: Ask if participating in a VPP will affect your ability to keep your power during outages. Some VPPs might contribute to grid stability, but it might also mean your energy resources are used by the grid at times when you need them.
7. Data Privacy and Security
- Data Collection: Make sure you know what personal and energy usage data the VPP provider will collect and how it will be used.
- Data Sharing: Find out if your data is shared with third parties or used for purposes beyond the VPP.
8. Customer Support and Service
- Customer Service Availability: Ensure that the VPP provider offers adequate support, especially if there’s a problem with equipment or during times of grid instability.
9. Environmental and Social Impact
- Sustainability: Check if the VPP is tied to renewable energy sources and contributes to broader environmental goals.
- Community Involvement: Some VPPs may have community initiatives, helping local communities or offering access to energy for underserved areas.
VPPs are a game-changer for the energy sector, paving the way for a cleaner, more reliable, and fairer energy system. As technology evolves and more people embrace distributed energy, VPPs will become even more crucial in powering our future.
Learn more in Australia’s Renewable Energy Revolution
Embrace a Sustainable Future & Be Part of Australia’s Renewable Energy Revolution
Interest-free loans for solar panels and other renewable energy systems are empowering non-profit and community organisations to embrace a sustainable future. By reducing energy costs and minimising your environmental and carbon footprint and striving for net zero, your non profit, charity, community group, or social enterprise can focus on what you do best: serving your community and making a positive impact. CORENA is helping to drive the transition to a clean energy future, one project at a time.
To learn more, check out how to apply for a loan, or register for one of our upcoming Online Q&A Information Sessions.
