Mistrust preventing households from signing up as virtual power plants

Chris Richardson of Frankston, Melbourne, has effectively created his own power plant by installing solar panels and a battery, significantly reducing his energy costs. He highlights that while environmental concerns initially motivated him, the primary driver for most people installing solar and batteries is financial savings.

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I think, first off, I was driven by the idea that we have to save the planet by putting solar panels on. But the reality is most people are putting solar panels and batteries on to save money.

Richardson participates in a virtual power plant (VPP), a network of distributed energy resources like household solar and batteries that can supply power to the grid. He allows an energy company to manage his battery, selling stored electricity back to the grid. Although initially hesitant about electricity being drawn from his battery at night, he found it made no difference to his household's power supply and allowed him to run his home for free.

Despite such enthusiasm, Richardson is an exception. Australia's competition watchdog, the Australian Competition and Consumer Commission (ACCC), found that fewer than a quarter of households receiving batteries under a government subsidy scheme are signing up for VPPs. This is despite the ACCC's finding that VPP participants, on average, benefit more than those who manage their systems independently.

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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 the reality was it made no difference. I was still running my house for free.

Anna Brakey, ACCC deputy commissioner, noted that consumers might be wary of VPPs but often find it beneficial to "cede control." She explained that customers using batteries for their own needs typically pay 20 to 50 percent less than regular customers, while those participating in VPPs can achieve savings of around 60 percent.

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consumers with batteries might be wary of virtual power plants but it often paid off to "cede control".

Yolande Strengers from the Monash Energy Institute emphasizes the significance of coordinating Australia's vast household solar and battery capacity. With over 4 million homes equipped with solar panels and nearly half a million with batteries, Australia possesses a unique global resource. Strengers believes that by treating this distributed storage as a coordinated resource, discharging power when the grid needs it and charging batteries during periods of abundant solar generation, the overall efficiency of the energy system can be substantially improved.

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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. 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.