Virtual Power Plants (VPP) Explained: Australia’s Ultimate Guide 2025

virtual power plant explanation

Virtual Power Plants (VPPs) in Australia are reshaping how energy is generated, stored, and shared. But what is a virtual power plant, how does it actually work, and is it something you should join? This simple guide covers everything you need to know about VPPs, and how they’re shaping the future of energy.

What is a Virtual Power Plant (VPP)?

A Virtual Power Plant is a system that connects home energy devices—like home batteries, rooftop solar systems, electric vehicle (EV) chargers, and electric heat pump hot water systems—into a coordinated network that can support the electricity grid. In exchange, some VPP programs offer rewards such as bill credits or higher feed-in tariffs. VPPs help reduce grid stress during peak demand and improve the efficiency of renewable energy use.

Instead of relying on a single large power source—like a coal or nuclear plant—a VPP uses smart software to coordinate thousands of distributed energy resources (DERs) in real time. This creates a decentralised, flexible energy network that can export power during peak demand and help stabilise Australia’s electricity grid.

While VPPs are designed to connect a range of home devices, most current programs in Australia primarily support solar batteries. Trials like Project EDGE and pilots from Amber Electric are exploring future integration of EV chargers and electric hot water systems—but these features aren’t widely available yet.

Compare solar quotes from up to 7 local installers now.

How Do Virtual Power Plants Work?

When you join a VPP, your home battery becomes part of a connected energy network that’s managed remotely by software. Rather than just storing solar energy for your own use, your battery can also support the grid when needed. The VPP operator automatically decides when your system should:

  • Charge during the day using excess solar energy
  • Hold energy until evening, when grid demand is highest
  • Export stored power back to the grid when demand and prices peak

All of this happens in the background. You’ll continue to use your solar and battery system as normal—but behind the scenes, your home is part of a smarter, more flexible energy grid.

This coordination helps reduce peak demand, respond to real-time energy market conditions, and unlock financial rewards for participating households.

Learn more in our Homeowner’s Guide to Solar Batteries.

Benefits and Drawbacks of Virtual Power Plants

virtual power plant grid stability

If you’re considering joining a Virtual Power Plant, it helps to clearly understand the trade-offs. This section breaks down the key advantages and disadvantages of VPP participation in 2025. For a deeper analysis, visit our guide on whether joining a VPP is worth it for you.

Pros and Cons of Virtual Power Plants (VPPs)

ProsCons
Earn money from your battery:
Some VPPs pay over $1/kWh during peak demand events. Others offer FCAS (Frequency Control Ancillary Services) payments for helping stabilise the grid.
Hard to track your actual battery use or earnings:
Leading VPPs provide access to real-time dashboards, but AEMO highlights consumer visbility concerns. Some providers still don’t offer post-event summaries or clear breakdowns of how credits are earned and calculated. 
Lower battery costs and access to rebates:
Joining a VPP may unlock exclusive battery discounts, sign-up bonuses, and state-level rebates. In NSW and WA, VPP participation is required for some schemes.
Earnings are difficult to predict:
Returns often depend on market conditions and events that are not possible to know in advance
Stack multiple solar & battery incentives:
Combine VPP income with solar feed-in tariffs, battery rebates, and bill credits to improve payback.
Terms & conditions can be complex:
VPP terms vary widely. Check for contract lock-ins, minimum reserve requirements, discharge limits, and exit fees.
Smarter energy automation:
Many VPPs use AI to optimise when your battery charges or discharges based on price signals—no manual input required.
You may lose battery control:
Most VPPs can remotely discharge your battery, which may reduce backup power when you need it.
Support Australia’s clean energy future:
Help reduce peak grid demand, lower fossil fuel reliance, and accelerate the shift to distributed renewable energy.
Battery wear and hidden energy costs:
Extra battery cycling or grid charging may reduce battery life or savings over time.

For more information on battery pricing, system setup, and eligible devices, visit our:

Or calculate your potential returns using our Battery Payback Calculator.

Still unsure? Our free installer quote comparison tool can help you find an installer with a VPP-ready battery system in your area.

Compare solar & battery quotes – up to 7 local installers.

Types of Virtual Power Plants (VPPs)

If you’re thinking about joining a Virtual Power Plant, it’s important to know that not all programs work the same way. Some are run by your energy retailer, others are linked to your battery brand, and some are part of government or network trials. You can explore and compare leading options in our guide to the Top VPP providers in Australia.

Here are the main types available in Australia:

1. VPPs from Energy Retailers

These are run by electricity companies like AGL, Origin, or EnergyAustralia. When you join, you usually need to switch to their electricity plan and agree to let them control how your battery charges and discharges.

  • You may receive bill credits, bonus feed-in tariffs, or fixed monthly payments
  • The retailer uses your battery to help support the broader electricity grid, often during peak times
  • Be sure to check the contract terms and compare electricity rates carefully. For help understanding energy plans, see consumer advice on electricity contracts from the ACCC

2. VPPs from Battery Brands

Some battery manufacturers—like Tesla and Sonnen—offer their own VPP programs. These are designed specifically to work with their battery systems and apps.

  • Systems are fully integrated and often include automatic settings and real-time tracking
  • May include bonus rates or plans for battery owners
  • Only available if your battery is the right make and model

3. Independent VPP Providers

These programs are managed by energy software companies that aren’t electricity retailers or battery makers (e.g. Reposit Power Evergen). They group together thousands of homes and use their combined energy to trade with the grid or provide stability services.

  • May offer more flexible plans and let you keep your current electricity provider
  • Often use advanced tools to manage your battery based on pricing signals and grid needs
  • For more detail on how this works, see how Distributed Energy Resources (DER) are coordinated by the system

4. Government and Network Trials

Some VPPs are offered through local or state-based pilot programs. These are used to test new technology—like connecting hot water systems, EV chargers, or entire suburbs into one shared energy network.

  • Examples include Project EDGE in Victoria and the SA VPP trial
  • Often include rebates or bill incentives in exchange for participation
  • In NSW, the government offers a Virtual Power Plant Incentive for eligible households
  • In WA, access to the battery subsidy requires joining a VPP program

How to Join a Virtual Power Plant

virtual power plant selling power

Joining a Virtual Power Plant in Australia can reduce your energy bills and unlock new financial incentives—but you’ll need the right setup. Here’s a clear breakdown of who can join, what’s required, and how the process works.

Who Can Join a Virtual Power Plant in Australia?

You may be eligible to join a Virtual Power Plant (VPP) if your home has solar, a compatible battery, and you’re connected to the electricity grid. Most of the technical requirements are handled by your installer—but here’s what to expect:

You’re likely eligible if:

Your installer or provider will confirm:

  • You have a smart meter and stable internet connection (used for real-time VPP communication)
  • Your battery or inverter is compatible with VPP software (firmware updates may be required)
  • You’ve received export approval from your electricity network (DNSP) to send energy back to the grid
  • Your system is linked to a valid National Metering Identifier (NMI) — your property’s unique meter number used for billing, rebates, and VPP registration

If you’re unsure, don’t worry—your installer or VPP provider will either handle on your behalf, or provide support for all approvals, setup, and registration.

Note: Off-grid systems are not eligible. Your battery must be connected to the grid and primarily charged using rooftop solar.

How Does the VPP Setup Process Work?

Once your system is eligible, here’s how you join a VPP:

  1. Check system compatibility with your preferred provider
  2. Apply for battery rebates if available in your state
    Check current solar & battery rebates
  3. Installation team or provider registers your system and performs any firmware updates
  4. Your battery joins the VPP network, participating automatically during peak demand events

Most VPPs run in the background, with energy exports managed by smart software. Some programs let you adjust backup reserves or opt out of specific dispatch windows, while others automate everything.

VPP Rebates and Incentives

In 2025, several rebates and incentives make joining a Virtual Power Plant more financially attractive—especially if you’re installing a new battery.

All rebates are tied to your home’s National Metering Identifier (NMI) and are typically only available once per property.

Should You join a VPP?

Joining a Virtual Power Plant can reduce your energy bills, improve grid stability, and help you access battery rebates—but it’s not the right choice for everyone.

When a VPP Might Make Sense

You may want to join a VPP if:

  • You’re installing a new battery and want to reduce upfront costs through rebates or VPP offers
  • You’re comfortable allowing your battery to charge and discharge based on market conditions
  • You live in a state with active VPP programs (like NSW or WA)
  • You don’t rely on your battery as your main blackout backup
  • You’re okay with variable earnings and want to support the clean energy transition

When You Might Want to Wait

A VPP may not be the best fit if:

  • You want full control of your battery at all times
  • You prioritise blackout protection and don’t want your battery discharged before an outage
  • You don’t want to be locked into one electricity retailer or face early exit fees
  • You’re concerned about extra battery wear from frequent cycling or grid charging
  • Your system isn’t compatible or your region lacks approved programs

Some VPPs may charge your battery using grid power to prepare for export events. This can increase wear and affect your energy bill if not clearly disclosed. Others may leave no battery reserve during blackouts. Be sure to confirm how your system will be controlled and what safeguards are in place.

Most VPPs operate in the background, but terms, technology, and earnings vary. Reading the fine print is essential.

Quick 3-Question Test: Is a VPP Right for You

  1. Are you happy to give up some control of your battery in exchange for potential savings or rebates?
  2. Do you understand how your VPP will operate and when your battery might be discharged?
  3. Are you confident that the program offers enough value to offset reduced backup or energy independence?

If you answered “yes” to most of these, a VPP could be worth considering—especially with 2025 rebate incentives. Otherwise, it might be smarter to wait until programs mature or compare other options.

Frequently Asked Questions About Virtual Power Plants (VPPs) in Australia

What is a Virtual Power Plant (VPP) and how does it work?

A Virtual Power Plant (VPP) is a digital network that links home batteries, rooftop solar systems, and other energy devices. Using smart software, a VPP remotely coordinates when energy is stored, used, or exported to the grid. This helps reduce grid strain during peak demand and rewards households & businesses for participating.

Is joining a Virtual Power Plant (VPP) worth it?

Joining a VPP can be worth it if you have a solar battery and live in a state with active incentives (like NSW or WA). You may benefit from upfront battery discounts, bill credits, or payments for exporting power. However, you’ll give up some control of your battery, and earnings can vary. Use a solar and battery payback calculator to assess your potential return.

Who is eligible to join a VPP in Australia?

To join a VPP, your home must typically have:
1. A grid-connected solar system
2. A compatible battery with at least 5 kWh usable storage
3. A smart meter and stable internet
4. Export approval from your local electricity network (DNSP)
5. Your VPP provider or installer can confirm if your system is compatible.

What are the advantages of joining a VPP?

Potential earnings from exporting energy during high-demand events
Access to battery rebates and sign-up bonuses
Smart automation to optimise battery usage
Contribution to grid stability and the clean energy transition

What are the downsides or risks of a VPP?

Reduced control over your battery settings and backup reserve
Possible battery wear from increased cycling
Variable or unclear financial returns
Lock-in contracts or limited retailer options
Some VPPs charge your battery using grid electricity

Can I opt out of a VPP program?

Most VPPs include a minimum contract term or cancellation policy. You can opt out, but early exit fees may apply. Always read the provider’s terms and check whether flexibility is offered.

What is the VPP rebate?

In 2025, the Federal Battery Rebate offers up to $2,950 off eligible VPP-ready batteries. Some state programs add extra rebates for joining a VPP:
NSW: Up to $1,600 battery rebate + $400 VPP bonus
WA: Up to $2,000 rebate (VPP participation required)
Rebates are tied to your home’s National Metering Identifier (NMI).

What types of VPPs exist in Australia?

There are four main types:
Retailer VPPs – Run by energy retailers like AGL and Origin
Battery brand VPPs – Offered by manufacturers like Tesla and Sonnen
Independent VPPs – Run by software platforms like Reposit and Evergen
Government & trial VPPs – State-run or pilot projects (e.g. SA VPP, Project EDGE)

What is the largest VPP in Australia?

As of 2025, the South Australia VPP (SA VPP)—a government-backed program launched with Tesla—is one of the largest operational VPPs in the country, with plans to scale to over 50,000 homes.

Can off-grid homes join a VPP?

No. VPPs require grid connectivity and export approval from your local electricity network. Off-grid systems are not eligible.

Will I still have blackout protection with a VPP?

Not all VPPs guarantee blackout protection. Some may use your battery’s reserve, leaving little energy during outages. If blackout backup is a priority, choose a VPP that allows custom reserve settings or avoid programs that override battery controls.

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James Shand