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Virtual Power Plants Explained

In this article we explore the inner workings of VPPs in an attempt to help homeowners decide if this system will benefit them.

Is a Virtual Power Plant (VPP) Right for Me?

The concept of virtual power plants (VPP) couldn’t have come at a better time. With research suggesting that the increasing amount of solar on the grid could result in an unstable power supply, alternatives need to be found so that we can transition to 100% renewable energy.  With this in mind, we explore the inner workings of VPPs in an attempt to help homeowners decide if this system will benefit them.

 

What is a virtual power plant?

A VPP is a collection of home solar batteries that can provide on-demand battery power to support the electricity grid in times of need. This helps fill the gaps when there’s not enough solar or wind power for everyone while still using renewable energy instead of dirty coal or gas power. This type of system allows for cheaper solar energy to support the grid and the wider community.

The objective of a VPP is to help stabilise the grid, prevent blackouts, and lower overall electricity costs. This is achieved by distributing the power generated by the individual batteries and is generally done during peak times of the day where a lot of electricity is needed at once. An example of a peak time is after work when the majority of people are in their houses using electricity to cook and clean.

While individual homes would have a hard time doing this on their own, virtual power plants make it easy by bringing in automated control systems via a web-based network. As a result, a single and reliable energy supply is created because the stored battery power of the group of batteries can be available on-demand.

 

How do virtual power plants work for homeowners?

Participating in a VPP can allow homeowners get extra savings for the right for the VPP to draw power from their battery when more energy is needed in the grid.

While in some instances this may result in customers using grid power at night, providers such as ShineHub are making sure that this doesn’t disadvantage customers by making sure customers are always making money if the battery is used for the VPP.

With ShineHub, even if a customer’s battery is fully drained and they use grid power, financially they will still be better off for using the VPP because they will have earned a higher payment for participating than it costs to buy power from the grid at night.

 

Why should I join a virtual power plant?

In addition to adding additional savings on customer’s electricity bills, VPPs help benefit others in your community as well. Peak energy prices makes electricity more expensive for everyone who has an electricity bill. By providing a lower cost alternative with on-demand battery power, the VPP helps to bring down costs for everyone - not just those who have solar.

VPPs also positively impact the movement to 100% renewable energy. In order to make 100% renewables work, there needs to be renewable energy available on-demand. This is to fill the gaps that happen when the sun doesn’t shine or the wind doesn’t blow. VPPs are a solution to this and as they are shown to work, will likely become a big part of the Australian energy mix in the near future.

 

How do I apply for virtual power plant in SA?

To get on board you need to have a compatible solar battery and sign up for the virtual power plant offer. This has been made easier by many Australian states such as South Australia who have introduced battery incentive programs to make batteries more affordable.

Once households have purchased the compatible battery system and had it installed, power can be generated and stored in your home. This means that households can generate, store and use energy and have the option to join their virtual power plant of choice.

If you want to get a quote on a home battery which can connect to the ShineHub virtual power plant, simply book a time to talk with one of our solar experts by clicking here.

 

ShineHub and Powershop’s virtual power plant

When applying for the VPP, consider the different providers & the fine print that comes with their plans. Most will offer an upfront benefit or payment. Yet they only give approximately $0.10/kWh when they use your battery power. If homeowner’s batteries are drained and they need to buy grid power at night, you end up losing money because grid power is at least $0.31/kWh. The VPP provider has full control of your battery, so this could happen daily, putting the customer at a disadvantage and reducing any upfront benefits provided.

With ShineHub, customers operating off the VPP always earn more than the price of grid power whenever their battery power is sent to the grid. For example, customers get at minimum $0.37/kWh all the way up to $7.05/kWh for power used from the battery for the VPP. Instead of losing money every time your battery is used for the VPP, with ShineHub and Powershop, customers are always making money because the VPP payment is higher than the cost of grid power.

It is also important to note that most VPP providers require a contract, normally of at least 1 year. Customers will also be charged an early buyout penalty for cancelling the contract prematurely. With ShineHub, VPP customers can leave anytime without penalty because there are no contracts.

 

Want to learn more about how you can reduce, or even eliminate your electricity bills with solar, batteries, and virtual power plants?  Book a time to chat with us here and ask about our special introductory battery offer for the first 1,000 virtual power plant participants who can get a solar battery for just $1 a day!

Alex Georgiou
Alex is a home energy expert with experience across virtually every area of the industry, ranging from energy efficiency and smart home gear to the latest solar and battery technologies. As co-founder of ShineHub, he is responsible for delivering the best digital experience in the industry for customers as well as managing customer-facing communications.
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