Household batteries and solar will be critical for managing highs and lows of the grid

The key role that Australia’s millions of rooftop solar systems stand to play in the running of the national grid, when paired with battery storage and pooled together into carefully orchestrated virtual power plants, has been further detailed in a new report from the Australian Energy Market Operator.

The report, the latest knowledge sharing update from AEMO’s VPP Demonstration program, offers further evidence that home solar and storage can be coordinated in a way that can unlock further value for participating households while also contributing to a more secure electricity system.

The report builds on the key finding of the March update, that showed how VPP capacity can be used in maximum demand periods, or when large amounts of capacity – such as a unit at the Kogan Creek power station[1] – drop out of the system, suddenly.

The interest in VPPs has intensified over the past year or two as it becomes clear that distributed energy – rooftop solar, battery storage, and even batteries from electric vehicles – are going to play a critical role in the future of the grid, providing up to half of all power needs with a decade or two.

That means, however, that the resource has to be managed. Combining them in “virtual power plants” is one option, and the latest study details how VPP capacity can be just as useful at times of minimum demand, and deliver outcomes that could directly benefit Australia’s fleet of large-scale renewable energy generators.

AEMO said this week the latest demonstrations indicated that, if extrapolated out, charging of a very large VPP to very low or negative energy prices could reduce the length and magnitude of a negative spot price period.

For example, the report says, the price could clear at -$10/MWh rather than -$1,000/MWh.

“This type of behaviour could contribute to reduced curtailment of variable renewable energy, as well as reducing the need for ramping large thermal units,” the report said.

“AEMO assumes that discharging of a very large VPP during a very high-priced event could alleviate the price impact of the event. To investigate further, additional VPPs are required to participate in the demonstrations, or for current VPPs to grow in size.”

Established in July 2019, AEMO’s VPP scheme has formed one plank of the market operator’s bid to work out how to manage a grid increasingly dominated by distributed energy resources, including but not limited to the gigawatts of rooftop PV Australians continue to install.

The coordination of this resource through virtual power plants made up of solar, batteries, and smart inverters – and later things like pool pumps, air conditioners and electric vehicles – will be a crucial part of this, as long as we can get it right.

“The operational visibility and capabilities shown by both the South Australian VPPs, one operated by Energy Locals in consortium with Tesla, and the other by AGL represent foundational building blocks to enable AEMO to operate the power system with high levels of DER,” said AEMO DER demonstrations lead Matthew Armitage in a statement on Monday.

“Throughout our program, we’ve observed VPPs’ performance in delivering frequency control services and responding to energy market price signals by charging and discharging fleets of household batteries.

“Evidence suggests that as VPPs scale, these flexible capabilities may help to ease operational grid challenges during both maximum and minimum demand periods, contributing to positive consumer experiences.”

Of course, consumers will be at the heart of the success or failure of VPPs, and Monday’s report also reflects on this side of the equation – and suggests it hasn’t necessarily been all smooth sailing.

“The nature of dealing with consumers has caused challenges to the onboarding process for many prospective participants,” the report notes, rather obliquely.

One of the key sticking points appears to be education – or perhaps communication – and questions around the ongoing willingness of consumers to “prescribe a level of control” of their batteries to VPP operators.

“Due to the minimum FCAS delivery requirements of the demonstration, prospective VPP participants are reliant on consumer uptake,” the report notes.

“AEMO will continue to work with Customer Services Benchmarking Australia… and prospective VPPs to understand how the consumer experience can be improved.

“As the VPP industry matures with a track record of performance, and consumer understanding about VPPs improves, participation rates in the demonstrations are expected to increase.”

To this end, AEMO, in partnership with ARENA and in conjunction with the Energy Consumers Australia (ECA), is also undertaking a survey of VPP participants, with early insights to be released in the third knowledge sharing report in early 2021.

“The VPP trial is important because it will not only help us answer technical questions about this exciting new technology, but how to make it work for people and how they use energy in their homes and businesses,” said Lynne Gallagher, the CEO (interim) Energy Consumers Australia.

“Energy is deeply embedded in the way we live our lives, and bringing consumers into the innovation process is a critical part of developing successful new energy services,” she said.

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  1. ^ such as a unit at the Kogan Creek power station (

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