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Virtual Power Plants: Empowering electricity consumers

Photo of man examining home battery systemImage credit: ARENATHE NEED

Australia is at the start of a distributed energy revolution that could see half the nation’s electricity generating capacity provided by rooftop solar within 20 years. A third of all residences could also have installed an energy storage system by then. This is due to consumers increasingly demanding more choice and control over their energy source, use and cost.

This change presents huge opportunities as well as challenges. To make energy more affordable and future-proof the electricity grid there is a need to better coordinate rooftop solar, batteries and other devices owned by consumers.

Virtual Power Plants, or VPPs, are being developed with support from ARENA to meet this need. VPPs coordinate and control thousands of residential solar PV systems, batteries and other smart energy devices so they behave like a traditional power plant. This makes it possible for VPPs to help keep the grid stable, manage peaks in electricity demand and allow participating homes and businesses to be paid for providing these services.


ARENA has been helping to develop VPPs since 2014, committing $25.2 million to projects that have increased in scale and sophistication over time. These include pilot projects that demonstrate VPPs in action as well as research projects that develop technologies and business models to help VPPs operate and earn revenue for participants.

ARENA’s VPP projects include:

  • AEMO VPP demonstration program: delivering operational data from VPPs to AEMO, and providing an evidence base to inform changes to regulatory settings or AEMO operational processes
  • AGL’s VPP: Network of 1000 cloud-controlled residential premises that operates as a 5 MW VPP
  • Alkimos Beach: developing, deploying and testing a new energy retail model for community-scale battery storage
  • CONSORT: Australian National University’s project on Bruny Island that uses battery systems and Network-Aware Coordination software to support a constrained electricity network (that experiences low-quality electricity supply)
  • CSIRO’s Virtual Power Station 2: advanced VPP that coordinates load, generation and energy storage, building on previous CSIRO research
  • GreenSync’s deX platform: a prototype online platform that helps electricity networks to trade with distributed energy resource owners
  • Ergon Retail's VPPx pilot: demonstrated a commercial and operational model for providing grid-connected solar PV and battery storage systems for 33 systems in three Queensland towns
  • Horizon Power’s Project Highgarden: exploring the most economically efficient ways to design and manage a future grid to maximise solar energy contributions
  • Reposit Power’s GridCredit trials: allowed stored energy to be sold back into the grid when there is a high value in the market
  • Simply Energy’s VPPx: 6 MW of residential energy storage, with ten commercial businesses networked to deliver a further 2 MW of demand response capacity.

VPPs and other ways of coordinating DER were also a significant focus of ARENA’s knowledge sharing activities during 2018-19, and of our new collaborative forum, the Distributed Energy Integration Program (DEIP). ARENA brought together more than 60 stakeholders from state and territory governments, market bodies and industry organisations for a workshop in March 2019 to share knowledge on energy storage systems and VPPs.


An independent evaluation of ARENA’s support for DER, including VPPs, conducted in 2019 found that there was a clear progression in the scale and complexity of VPP projects funded by ARENA. The evaluation outlined clear progress towards VPPs being a viable contributor to secure, reliable and affordable electricity in the context of a high renewable electricity system.

More solutions for delivering secure, reliable and affordable energy and increasing the value provided by renewable energy

The evaluation found that ARENA’s early VPP projects, such as Reposit’s GridCredits and Ergon Retail’s demonstration of solar PV and batteries, made a significant contribution by demonstrating how VPPs could combine and coordinate services from numerous distributed energy resources.

In the case of GreenSync’s deX, the evaluation found ARENA’s early funding support was vital in propelling the project from an innovative idea to a commercial product.

Improved competitiveness of renewable energy technologies

The evaluation found ARENA’s support for Reposit’s GridCredits system and Simply Energy’s VPPx helped these technologies reach a commercial stage.

Industry and government better informed to navigate the energy transition

The evaluation concluded the Alkimos Beach project is contributing to current reliability needs; however VPPs of this kind must be on a larger scale to affect system reliability.

The project increased industry understanding of regulatory issues that will impact VPP deployments as they scale into the future.

Project Highgarden contributed knowledge about how to coordinate rooftop solar PV and battery systems to support network power quality in a microgrid setting.

Improved collaboration on energy innovation

ARENA-supported projects are focusing on how established technologies can be best integrated into the electricity network. Several ARENA VPP projects involve significant collaborations, reflecting the importance of establishing commercial and technical models that work in the context of the roles and responsibilities of electricity network companies, retail companies, the market operator and other participants. For example, GreenSync’s deX project resulted in the formation of an industry-wide collaboration that in 2018 included 68 partner organisations.

A second evaluation, which assessed ARENA’s reliability projects, found ARENA’s DER projects aligned well with key issues the sector needs to address in order to transition to higher penetrations of renewables. The evaluation also found ARENA’s coordination and knowledge sharing activities are especially helpful in relation to the development of new commercial models and addressing regulatory barriers.


Secure, reliable and affordable electricity system with a significantly higher share of renewable energy

ARENA-supported VPP projects are contributing to improved reliability in three areas:

  • addressing regulatory barriers
  • developing new commercial models
  • increasing community engagement with distributed energy resources.

The reliability evaluation estimated that projects focussed on better coordination of DER could deliver benefits worth around $140 million, which would increase if there is a larger take up of DER.