Australia’s Consumer Watchdog Weighs In On VPP Programs

Participation in new energy services such as virtual power plants is building and consumers need better protection says the Australian Competition and Consumer Commission (ACCC).

In the ACCC’s recently released thirteenth report relating to its inquiry into the National Electricity Market (NEM), new energy services are included for the first time.

Just briefly, a virtual power plant is generally a distributed network of solar and battery systems, with charging and discharging of batteries from and to the grid controlled by a central operator. Participants usually receive incentives for handing over some/all control of their battery. These can include sign-up payments, regular credits, better feed-in tariffs, discounts on mains electricity consumed or discounted/’free’ batteries (or a mix).

The ACCC report indicates 38,200 customers were participating in VPPs across New South Wales, South-East Queensland, Victoria and South Australia as at January this year; increasing at an average rate of 21.9% every six months in the two and a half years to January 2025.

In most states, VPP uptake had still lagged well behind battery installations as at January 2 this year. Here’s the ACCC’s comparison of battery installations and virtual power plant participation rates by region.

The result for New South Wales is a head-scratcher, but the ACCC suggests this may be due to the NSW Government’s VPP subsidy for customers. But even with the incentive, the proportion still seems incredibly high.

It’s worth noting the ACCC’s figures are based on the Australian Energy Market Operator’s (AEMO’s) distributed energy resource register, which is a voluntary database of information about devices installed in the NEM. While representing “a large proportion” of batteries installed, not all are accounted for.

As for why elsewhere consumers are holding back, the ACCC’s research suggests:

• Complexity of VPPs.
• Reduced consumer control.
• A lack of familiarity with Virtual Power Plants.

Healthy Competition Among VPPs

The report indicates steady growth and signs of healthy competition among VPP providers, and that smaller retailers and non-traditional energy providers supply more than three-quarters of virtual power plant customers. To see programs compared side-by-side, check out the SolarQuotes VPP comparison table.

Hammering Batteries An Exception Rather Than The Rule?

One of the concerns consumers have about joining a VPP is how aggressively the operator will discharge/charge their battery to/from the grid, and when. For example, we’ve seen VPP customer reports of operators discharging much of a home battery in the late afternoon and evenings, leaving those households exposed to high mains grid electricity prices. But the ACCC report says:

“… the average amount of electricity dispatched into the grid per customer per year has remained reasonably steady at around 16 kWh over the three years to 2023—24.”

This was another figure I found surprising as I thought it would be much more.

Comparing Electricity Bills

The report indicates the following annual median electricity bill (without rebates) in 2023 to 2024:

• Regular users: $1,565
• Households with solar panels: $1,279
• Households with solar and battery: $936
• Households connected to a VPP: $580

Some VPP Offers Riskier Than Others

The ACCC notes elevated risk for some VPP products. Lengthy contract terms and potentially large exit fees may exist where the VPP involves financing on solar panels and/or batteries, and households hosting provider-owned resources. The lowest risk was associated with ‘bring your own battery’ programs.

More Protections For Consumers Recommended

The ACCC says in order to achieve the maximum level of energy market participation by consumers, including engaging with new services such as Virtual Power Plants, there should be specific consumer protections compelling energy service providers to:

• Ensure consumers are no worse off and are fairly rewarded for their participation.
• Protect the energy asset investments of consumers.
• Put guardrails in place, such as limits to the level of external control that can be exercised.
• Design and distribute energy offers with a focus on the consumer.

The report identifies a number of challenges for consumers and offers insights that could support or inform amendments to the energy-specific consumer protection framework — which is primarily the National Energy Customer Framework (NECF) that operates alongside the Australian Consumer Law (ACL).

Not Just About Virtual Power Plants

There’s much more in the report concerning Virtual Power Plants and other new energy services including electric vehicle tariffs and behavioural demand response; plus all the Commission’s usual reporting.

If you have time on your hands and packed a cut lunch, you can read the 173-page Inquiry into the National Electricity Market report – July 2025 here.

Given how much has changed since the period this report covers — particularly with the launch of the Cheaper Home Batteries program and increased awareness of VPPs in recent months  — the next couple of reports if made publicly available will be interesting; and they will be the final ones for the Inquiry.