Thousands of Australian households with rooftop solar and a battery are still keeping their power locked away from virtual power plants, even as regulators say the setup can make the electricity grid more efficient and lower costs. The arrangement asks people to hand control of their batteries to energy companies. That’s the deal. The grid gets flexibility, the company gets the levers, and ordinary households are told it’s all for the greater good.
Chris Richardson’s Frankston home in Melbourne’s south has what he likes to call its own power plant. Solar panels collect sunshine and a battery stores much of that power so it can be used later in the day. Richardson said, "I think, first off, I was driven by the idea that we have to save the planet by putting solar panels on." He added, "But the reality is most people are putting solar panels and batteries on to save money."
Richardson said the system has almost eliminated his power bill and halved his gas costs. He has done it by joining a virtual power plant, or VPP, a network of energy resources like household solar and batteries that can provide power to the grid when needed. He hands control of his battery to an energy company, which then manages the sale of electricity from his battery back to the grid. Richardson said, "Initially when I saw that they were taking electricity out of my battery at night I was a bit 'Oh, they can't do this. This is not fair,'" but later said, "But the reality was it made no difference. I was still running my house for free."
Who Holds the Switch
Australia's competition watchdog found most people getting a battery under the Commonwealth's $7.2 billion subsidy scheme are spurning VPPs. The Australian Competition and Consumer Commission said fewer than a quarter of customers installing batteries were signing up to such schemes, even though customers on a VPP were, on average, better off than those going it alone. Anna Brakey, the ACCC's deputy commissioner, said consumers with batteries might be wary of virtual power plants but it often paid off to "cede control." She said, "Depending on which state you're in, you're paying 20 to 50 per cent less [than a regular customer] if you have a battery that you're using for your own purposes." She added, "If you have a battery and participate in a virtual power plant product, those savings are higher at around 60 per cent."
That’s the bargain on offer: surrender some autonomy, and maybe the bills shrink further. Keep control, and the savings are still there, just not as deep. The language is polite. The structure is not. A household battery becomes a managed asset, folded into a system where the company decides when power moves and when it doesn’t.
Yolande Strengers from the Monash Energy Institute said the question of whether Australia can properly coordinate household solar and batteries was not a trivial one. She said more than 4 million homes have solar panels, while almost half a million now have a battery as well. "We have all of this storage capacity sitting in homes, which is a really unique situation for Australia, for the world, to have all this renewable capacity," Professor Strengers said. "If we can be treating that as a coordinated resource … discharging that power when the system really needs it, and if we can also be charging those batteries when we've got abundant solar in the system, we can improve the efficiency of the overall system."
Who Pays for the Grid
Professor Strengers said coordination could help avoid the need for billions of dollars in upgrades to the grid, as well as benefiting customers who could not get solar panels and batteries themselves. But she said widespread acceptance of VPPs is no sure thing because many households want greater independence and resilience in the energy system and want to take back control. "For many people it's also about wanting greater independence and resilience in the energy system and wanting to take back control," she said.
That tension sits right at the center of the whole setup. The state and its regulators want a coordinated resource. Energy companies want access to household storage. Households want lower bills, but they also want their own hands on the switch. The system keeps asking people to trust the apparatus while it quietly absorbs more of what they own.
Simon Hackett runs a company called Energy Autopilot, which he says will aim to cut out the middleman and give consumers direct access to the electricity market when it launches later this year. He argued VPPs are based on the outdated idea that batteries must be controlled by one or a few big players to help the grid. "There are two downsides of that," Hackett said. "One is you don't have control over those decisions; someone else does, and you don't have control over the profits from that exercise; someone else does."
Hackett said the size and sophistication of batteries was growing as their costs fell, and that customers had every incentive to sell their excess power back to the grid at times of high demand and high prices. He said households now could tap the wholesale market directly and the technology to handle their trading. "That combination turns you into a genuine power plant, that can buy and sell power just like the big boys used to," he said. "That's an enormous change, and it's an ability to do stuff for ourselves that's just never existed."
What They Call Choice
The rise of so-called dynamic retailers, which give households direct access to spot prices, is appealing to some, but experts have warned they are not without their risks. Price volatility in the spot market means extraordinary highs, but some customers could be caught out as prices swing low. Hackett said, "You might make a lot more money. You might actually wind up paying a lot more money." He added, "Of course, you can sign up with any other energy retailer that's out there that does it the good old-fashioned way." He said, "What's going on there is they are accepting that risk instead of you."
So the menu expands, but the hierarchy doesn’t disappear. One version hands control to an energy company. Another hands households straight into the spot market, where the swings can bite hard. Either way, the ordinary customer is told to navigate a system built by others, with the risks and rewards set somewhere above their kitchen table.
At home in Melbourne, Richardson said he is comfortable with his decision to be part of a virtual power plant. He acknowledged that he did not have complete control over his battery but insisted he's still coming out ahead. "I love it," Richardson said, and added that he has given up trying to explain it to friends and colleagues. "[When] I tell people at work, they give me this look like I'm wanting to join up with a Tupperware club or something like that."