A Virtual Power Plant (VPP) describes the use of multiple power assets – such as rooftop solar and batteries – to provide a similar service to a large, standalone power plant. This means, rather than the power coming from one central point – like a wind farm or a coal-fired power station – the power is spread out across many smaller resources.

The smaller power assets that make up a VPP are called decentralised energy resources (DERs). They – and the VPPs they potentially make up – are not limited to solar and batteries on homes, either. Today, many businesses provide services like demand response, which provide similar benefits, as do electric vehicles (EVs) – which can also provide opportunities to create coordinated power networks.

Whatever form they may take, when we talk about VPPs, we’re talking about a virtual network of connected assets and customer load that can be managed as one.


Power plants on roofs

Across Australia, 2.46 million homes have rooftop solar panels – more than 21% of homes – and tens of thousands are adding home batteries.1

How does it work?

The rooftop solar soaks up the daytime sun, and batteries store that energy, so it can be used when the sun goes down or when it’s needed most.

Additionally, though - the individual batteries can also be coordinated by orchestration software, and the small amounts of energy stored in individual batteries can come together to become a large amount of controllable energy.


Behind the scenes – and behind the meter

Our electricity system is evolving into a more modern energy mix to include a wide variety of different technologies and energy generation:

  • Traditional coal-fired power stations
  • Solar and wind farms
  • Hydro power schemes
  • Flexible gas-fired peaking plants,
  • Grid-scale batteries.

In addition, consumers themselves bring generation to the networks.

Behind-the-meter generation – that is, power generated by customers, primarily from rooftop solar – is expected to continue to grow, to the point that by 2050 (according to CSIRO and Energy Networks Australia) 30 - 45% of Australia’s annual electricity consumption could be supplied from consumer-owned generators.2

The exponential rise of behind-the-meter generation (and storage, through residential batteries) presents a tremendous opportunity for the grid and for customers.



In 2016, AGL launched a VPP in metropolitan Adelaide, South Australia, in partnership with the Australian Renewable Energy Agency (ARENA). When it was launched, it was the largest retailer-led residential VPP in the world of its kind: 1,000 batteries communicating with each through a cloud-based platform, creating a connected system that can operate as the equivalent of a 5MW solar peaking plant when needed.

This large-scale trial has now been rolled out to other states, including New South Wales, Victoria, and Queensland.


Looking ahead to the future

VPPs aren’t just limited to batteries in homes and businesses. We’re exploring what VPPs might look like into the future: for example, a more sophisticated orchestration of energy in the commercial and industrial space, or the opportunities that the growth of EVs present.

By 2030, we expect 700,000 Australian homes and businesses to have behind-the-meter energy storage, with more than 2.6 million electric vehicles on the road.3 4 That equates to a twenty-fold growth in energy storage by 2030 – around 4 GWh of energy stored in batteries connected to home and business, and 36 GWh of energy stored in EV batteries.5

That’s a lot of power. From a VPP perspective, it means harnessing a portion of the power of an EV battery to help supply and stabilise the grid, with attendant benefits for the grid, the community, and our customers.

The orchestration of energy extends even further into other areas, like demand response. In the commercial and industrial (C&I) space, for example, businesses like steel mills, cool stores, water utilities, data centres, and many others can reduce their electricity demand for one or more hours at a time with generally minimal impact on their business.


The energy sector is transforming

We know what the long-term future of energy looks like: renewable energy backed by flexible energy storage technologies that will help power our homes, businesses, vehicles, and lives. Flexible storage comes in many forms – from enormous grid-scale batteries, through to individual batteries and electric vehicles.

Rooftop solar, batteries, EVs, and the orchestration that supports virtual power plans are part of that future – and the future is bright.

1 Department of Industry, Science, Energy and Resources (2020) Solar PV and batteries accessed 12 August 2020 https://www.energy.gov.au/households/solar-pv-and-batteries
2 CSIRO and Energy Networks Australia (2017) Electricity Network Transformation Roadmap: Final Report accessed 12 August 2020 https://www.energynetworks.com.au/assets/uploads/entr_final_report_april_2017.pdf
3 AEMO (2019) 2019 Electricity Statement of Opportunities accessed 17 August 2020 https://aemo.com.au/-/media/files/electricity/nem/planning_and_forecasting/nem_esoo/2019/2019-electricity-statement-of-opportunities.pdf
4 Energeia (2018) Australian Electric Vehicle Market Study accessed 17 August 2020 https://arena.gov.au/assets/2018/06/australian-ev-market-study-report.pdf
5 AEMO (2019) 2019 forecasting and planning scenarios, inputs, and assumptions accessed 17 August 2020 https://aemo.com.au/-/media/Files/Electricity/NEM/Planning_and_Forecasting/Inputs-Assumptions-Methodologies/2019/2019-20-Forecasting-and-Planning-Scenarios-Inputs-and-Assumptions-Report.pdf