How does a virtual power plant work?

More than 700,000 Victorian households are using solar to power their homes and drive down energy costs.

VPPs offer households with solar batteries another way to reduce energy costs by harnessing the power of their battery system to share clean energy with the community.

What is a virtual power plant?

A virtual power plant (VPP) connects batteries in an energy sharing network. Small amounts of energy stored in many individual home solar batteries add up to large amounts that can be used to help balance out supply and demand on the electricity grid.

By joining a VPP, households with solar panel and battery systems can access financial benefits and share their clean energy with the community.

How does a virtual power plant work?

In a VPP, a collection of solar batteries operate as a network for energy generation. This helps manage energy flow and reduce reliance on the grid in times of higher demand.

Watch this video to learn more about how VPPs work:

What does energy sharing mean for my household?

Being part of a VPP can reduce your energy bills, and provide support to the grid and your community. Sharing energy has benefits for individuals, communities, and the environment.

To take part in a VPP program, you need to have solar panels and a solar battery installed. You’ll also need to check whether your system is compatible with the VPP program you are interested in.

VPP providers may offer various incentives like discounts on batteries, reduced energy bills or regular compensation for taking part.

They will also have different terms and conditions around how they may use your battery. Make sure you understand these. For example, are there limits to the level of discharge to which they can take your battery (e.g. no less than 20% of its state of charge), or how many times per year they can interact with it (‘management events’)?

Once your solar and battery system is connected to a VPP, sharing energy with the VPP network is automatic. You can typically track your energy use and export through an app, device or web-based portal.