All You Need to Know About Virtual Power Plants

By December 30, 2020January 24th, 2021No Comments

The energy market is one of the most confusing one there is. Long government regulations and intricate supply and demand rules can easily overwhelm most people. Unfortunately, the mass adoption of solar power has only made this equation all the more complex.

While you as a solar power operator can choose to ignore energy economics, fact is it has a direct bearing on how much value you can hope to get out of your solar power system.

Virtual Power Plants (VPPs) are a new and exciting development in the energy market and one you need to understand. As we shall in the passages below, not only are they a necessity, but also help residential solar power owners break into larger markets.

What is a VPP?

Most residential solar power systems are tied to the grid. The home consumes whatever energy the system produces, then sells the remaining to the utility. But, have you wondered what happens to the energy from a PV system once it has crossed the meter? With so many systems feeding their electricity in, the grid must have some way to manage and distribute it.

This is where VPPs step in. A VPP aggregates the energy from all decentralized energy sources like wind, solar, storage units and Combined Heat and Power (CHP). It then intelligently distributes the energy using sophisticated cloud based software.

When you join a VPP, your solar power system gets connected to the former’s central control system through a remote control unit. The central system uses the remote control exchange to both control energy flow from each power unit, but also intelligently manage supply to best meet changes in demand.

A VPP basically brings the grid into the cloud era. For example, AutoGrid which runs VPP in 12 countries is offering its services through Amazon Web Services. This approach allows for a better way to manage the highly elastic supply of solar and wind power.

Why VPPs are Important Today

While VPPs are no doubt an impressive development, one might wonder why existing grid protocols don’t suffice for the same. To understand this, it’s important to know how the grid works.

Traditional power producing units like coal, hydro electricity and natural gas produce energy which is “dispatchable”. This basically means they can tune their energy production up or down based on demand.

Dispatchable energy can only be produced by plants with fixed, predictable output capacities though. For example, a coal fired power plant can burn more coal to meet excess demand. It can also burn less when the demand falls. A dispatched model of energy production makes computing energy costs easier and is therefore preferred by grid operators.

The same however, doesn’t apply to solar or wind power. Since both sunlight and wind have little predictable availability, it’s hard, if not impossible to know how much energy will be available at what time and for how long. In other words, solar and wind are “non-dispatchable” energy sources.

Obviously, non-dispatchable energy presents grid operators with a problem. They frequently face days when there’s more electricity than demand and vice versa. Managing distributed energy producers is also problematic as there may not be enough transmission capacity to carry the excess supply. Or, in the event of insufficient demand, the grid might not have the storage capacity needed to save the energy for a later date.

A VPP can address these issues handily. Since VPPs are connected directly to the energy market and each energy producer, they can receive updated demand requests from distribution system operators, and manage the network such that the best energy output is available at all times. In doing so, a VPP can bring a measure of predictability in energy costs.

Essentially a VPP acts like an “energy internet” where each distributed energy producer is like a server tasked with producing and supplying a certain amount of electricity instead of data.

VPPs also provide residential solar power operators to sell their electricity in a larger energy market. VPPs can be traded as a singular commodity. Since many smaller solar or wind producers may not have the minimum output needed to trade in the market, they can pool their resources together to do the same in much the same way a co-op uses supply from several producers to negotiate better prices.

VPPs in Australia

Australia already has a lot of solar PV rooftops, with more being added every day. And, as battery storage is fast catching up, VPPs are the next logical step.

In October 2020, the Australian Renewable Energy Agency along with Tesla launched a VPP in South Australia. The project aimed at installing solar PV systems and battery storage in 3000 social housing properties.

Aside from the Tesla energy plan, there are several other VPPs residential solar and wind power producers can opt into. These include Simply Energy, AGL, ShineHub, Sonnen, and Discover Energy.

All of these offer attractive incentives including faster solar panel/battery pay-offs, rebates and subsidies for homeowners to join their network. You can find out more about VPPs in Australia at


Ultimately, VPPs benefit everyone. They help bring a measure of predictability and consistency to the renewable energy market. They also help homeowners to get better prices for the electricity they produce. We can safely assume that more VPPs will join the ranks of existing ones and will grow in sophistication in times to come.

VPPs also present homeowners hoping to go solar with an exciting new opportunity. Since you can get better, more stable prices for the electricity your solar power system will produce, now’s the right time to invest in one. Start by browsing through bidmysolar’s™ exhaustive and constantly updated list of solar options.