Do you own a home battery, or are planning to get one? Then I have good news. The SolarQuotes Virtual Power Plant (VPP) Comparison Table is up and running. So if you are interested in joining a VPP, you’d better go catch it.
If you’re not feeling energetic enough to chase it down, don’t worry. It’s only new and isn’t running at high speed at the moment. It’s still a work in progress.
We made it because we want to help you get the best deal possible. We also have the ulterior motive of not wanting to be cooked by global warming and are more than happy to help out with anything that may prevent that. (We have a weak spot for future generations.) At the moment the table has information on 11 VPPs available in various parts of the country. We’ll add more as information becomes available and we’ll even get around to improving the layout and presentation.
In this article I’ll quickly go over what a VPP is and why you might want to sign up your home battery to one, and then I’ll go over the details of our comparison table. If there are any improvements you’d like to see made to it, please leave suggestions in the comments.
What Is A VPP?
VPP stands for Virtual Power Plant. It enables your home battery to team up with others and — by their power combined — provide a lot of power. By submitting to centralized control and acting in concert they can behave virtually the same as a traditional power plant, providing power when needed and providing stability to the grid.
Because VPP are treated much the same as a large scale battery or hydroelectric pumped storage facility, they have advantages that aren’t normally available to individual households, such as selling and buying electricity at wholesale instead of retail prices. This means Virtual Power Plants can sell electricity to the grid when the price is high and charge up when the price is low, zero, or negative. They can also receive payments for ancillary services that help keep the grid operating smoothly.
Why Would I Want To Join?
You may be wondering why you’d want to join a VPP. Perhaps you’re happy just using your home battery to reduce your grid consumption and provide backup for the ecto-containment system in your garage:
If this is the case and maintaining control over what happens to your battery is important, then a VPP is not for you. The electricity retailer operating your Virtual Power Plant will, to varying degrees, use power from your battery when it suits them and not when it suits you. Despite this, there are good reasons to join a VPP. Four big ones are:
- They supply power to the grid where it’s needed, reducing the need for long distance and local transmission, lowering the cost of electricity for all.
- They can provide ancillary services that help stabilize the grid, again lowering the cost of electricity for everyone.
- They make it easier to integrate variable renewable energy sources such as wind and solar power into the grid, helping renewable energy expand.
- They will give you money if you participate.
That final point is going to be the main determinant of whether Virtual Power Plants take off or not. Mo’ money, mo’ VPP members.
VPPs May Make Batteries Pay
With the right circumstances and the right VPP a suitable home battery may pay for itself. There are some deals out there that — on the surface — look pretty impressive. But it’s very important to dig below that beautiful shiny surface and make sure your VPP is actually full of money and not financial nastiness.
I intend to do a fair bit of digging into VPP plans over the next few months. I’ll go into detail and let you know if I find any that contain nuggets of financial goodness or if they are full of… other nuggets that are less pleasant. Each time I do a deep dive into a Virtual Power Plant a link will be added to the table.
Why VPPs And Not Big Central Batteries?
Sometimes I hear people — often people who are quite clever and intelligent but who don’t quite fully grasp the concept of greed — say things like:
“How can VPPs compete with large utility scale batteries like the Tesla Big Battery when they have to use a mish-mash of different battery types, some which may have been installed by the Dodgy Brothers, when big companies can purchase batteries in bulk and maintain complete control over their environment, use, and maintenance?”
Whenever I hear something like this I end up sitting there blinking and thinking, “Because money!”
Specifically, other people’s money. As in your money. The VPPs want to make money from the money you’ve spent buying and installing a home battery. For them it’s like free money except competition between Virtual Power Plants is supposed to prevent them from ripping consumers off. Unfortunately, for consumers:
- VPPs are still in their trial phases, so there’s not much competition at the moment.
- Similar to electricity retailing, VPP competition at the retail level is not likely to be efficient. I expect it to be worse as Virtual Power Plants are more complex.
Personally, I think the government should protect the interests of consumers by having homes and businesses join state level VPPs so everyone is on equal footing and no one gets ripped off. Unfortunately, that’s not how things are being done and today it’s definitely a case of caveat emptor — let the buyer beware. While you are protected by Australian Consumer Law, it will still pay to be very cautious when choosing a VPP plan.
Our 10 Row VPP Table
To help people find the VPP plan that’s best for them we’ve put together a comparison table that lays out basic information on each. Currently it has 11 VPPs with 10 rows of information and looks like this (the real table scrolls left to right, up and down):
We’re planning on making it look spiffier in the future.
You can’t see all our beautiful row headings in the picture above, so I’ve put them all in one graphic for you:
I think the titles of the row headings are self-explanatory. If they’re not, the terms are explained below the table. As detailed write ups of individual VPPs are done, links to them will be added.
We also may add additional rows. I’m thinking perhaps we should have one that describes how easy it is for operators to abuse the terms and conditions of the VPP to the battery owner’s detriment. For example, are they permitted to charge and discharge the battery as much as they want without compensation, causing the battery to degrade while providing no benefit to its owner? Even if a Virtual Power Plant has no intention of doing this, I’m sure people will rest easier if they know that according to the terms and conditions it can’t happen.
Home Batteries May Take Off Thanks To VPPs
The cost of producing battery cells has fallen a long way over the last few years, with large electric vehicle manufactures apparently closing in on $150 per kilowatt-hour. Home battery prices have not reflected this decline in cell costs, but at least major manufacturers have been working on the serious reliability and durability issues home and business batteries have suffered from.
Once large companies start mass-producing well tested and reliable battery systems we should see some serious declines in price. Combined with the financial benefits that should come from joining a halfway honest VPP, we may soon have plenty of examples of home and business batteries paying for themselves. This could result in their installation rates sky rocketing. As more home and business batteries are installed, the returns from being part of a Virtual Power Plant will decline (mo’ VPPs, less arbitrage), but this may be more than offset by eventual declines in the cost of battery systems.
5 Minute Settlement Is Coming
I would say if you’re thinking about getting a battery but there are no VPPs available in your area that make it worthwhile, wait 18 months and things may be very different. This is because on the 1st of July 2021, our wholesale electricity market will change to 5 minute settlement periods. We currently have 5 minute prices, but these get averaged out over 30 minutes. This has resulted in some shenanigans by generators gaming the market to push up wholesale electricity prices.
Once it changes to 5 minutes without averaging, it will be much easier for batteries to take advantage of ups and downs in electricity prices and charge up when it’s cheap or sell when it’s high. This should significantly increase the value of being in a VPP, so it may be best not to be locked into a long term contract before that happens.