Home batteries can lower electricity bills, and those benefits can be even greater when batteries are coordinated through virtual power plants (VPPs).
But a new report from the Australian Competition and Consumer Commission (ACCC) points out that asking people to hand over some control of a battery they’ve paid for requires confidence that it will be used in their best interests.
If the benefits seem obvious, the uptake isn’t. Only about 24% of battery owners currently belong to a VPP.
Why Aren’t More People Signing Up?
There isn’t a single reason. The ACCC points to a mix of concerns around consumer protections, product complexity and how batteries will be managed once customers join a VPP.
Those concerns also matter because AEMO’s Step Change scenario assumes around 53% of home batteries will eventually participate, helping avoid an estimated $7.2 billion in generation and network investment.
Bridging that gap will require more households to join VPPs. The ACCC believes stronger consumer protections and better comparison tools can help achieve that.
Better Protections For Consumers
The report isn’t warning people away from VPPs. In fact, it sees them as an important part of Australia’s energy future.
Instead, it argues consumers need better protections and better information if they’re expected to sign up in larger numbers.
The ACCC says VPP products can vary significantly between providers, making it difficult to work out which one best suits a particular household. It also found some customers may actually be better off with a different VPP — or no VPP at all.
Compatibility can also limit a customer’s choices. Some batteries work with only a small number of VPPs, making it difficult to join a preferred program or switch if a better offer becomes available.
VPP contracts can also give operators significant control over how your battery is used, without guaranteeing a particular financial outcome. In some cases, customers may also have fewer options for independent dispute resolution if problems arise.
What Does The ACCC Want To Change?
The report recommends several reforms aimed at improving consumer protections and making VPPs easier to compare. These include:
- expanding access to energy ombudsman schemes
- introducing a mandatory code covering the sale and supply of consumer energy resources
- creating an overarching consumer duty requiring operators to act in customers’ interests
- improving battery interoperability so consumers have more choice and can switch providers more easily.
The ACCC also says consumers need better tools to compare increasingly complex VPP products before signing up.
Solarquotes founder Finn Peacock has criticised the broader ACCC plan to shake up the regulatory system for home energy, which he says will “make every seller and installer pay into a bigger complaints machine that still only starts working after the customer has been stung, and will only be used by the misbehaving few, mostly paid for by the well-behaved majority.”
Choosing A VPP With Confidence
The ACCC’s recommendations will take time to work through governments and industry.
But consumers don’t have to wait before asking the right questions.
One of the report’s recommendations is for better tools to help consumers compare VPP products. While the ACCC points to government comparison websites as one possible approach, SolarQuotes already provides a dedicated VPP comparison tool covering many of the same issues.
It allows consumers to compare:
- compatible battery brands
- participating electricity retailers
- financial incentives
- contract length
- cancellation fees
- the amount of battery capacity reserved for household use.
No comparison tool can replace reading the contract before you commit. But understanding the differences between VPPs beforehand is one practical way to decide whether a VPP is right for you.
About Kim Wainwright
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The question about VPP is: Is Solar and Battery Storage a home improvement or a tax free business opportunity?
One issue not being discussed is that systems that export power are not contributing to the transmission network, which includes the Poles and Wires, Network and Retail Management and other costs.
This places an unfair burden on those who do not have Solar and batteries, who, based on their consumption, pay for those services in the per-kWh cost.
Perhaps we should be having a discussion as to the potential for the cost per kWh being unbundled, where you pay for consumption plus a service fee for being connected to the grid.
Anthony, that exists already with tariffs and daily supply charges.
Sure, it varies SO much state to state, and even regional DNSPs, eg in SA our DSC is reasonable compared to some other states, but our peak TOU tariff is 57c, and for 13 hours a day !
That hurts for 0600-1000 and then thebig one 1500 to midnight.
Some of that is the cost of supply.
There is this move afoot to increase DSC to $5, mooted by some organisation to AEMO for consideration . . . we already see some DNSPs putting DSC up double on July 1, I’ve seen peoples post showing $2 to $4.
If this happens, there may be an exodus to off grid, for many a shift that requires more investment, adaption of their existing solar / battery(ies).
Then it’s likely the DSC will be put in place for having power run past your home, or vacant land, just like water, and perhaps linked to property value.
No one knows how this move to rooftop generation will work long term, the goal posts and return on investment are very flaky at times.
To take a the DSC bit to its logical extreme, it would apply to every block in a new subdivision even before a single one was sold..Something like that wouldn’t fly.
Anthony Nixon,
If we face facts, then it is necessary to admit that the nearly half million households with batteries actively reduce network load, not only during solar production, but in evening peak demand. That reduces the need for grid upgrades, adding headroom to serve population and other demand increase factors, such as EVs.
Perhaps that means you should pay them, as they relieve the burden of consumers who fail to contribute to total grid infrastructure, behind the meter.
Your suggested unbundling of consumption and connection fees is so very good that is already in place, and has been for decades. (Unless your provider is peculliar in its charging method?)
Solar and battery customers pay charges for poles and wires and all manner of network charges just as you do. Unless fully off grid which is rare.
Shopping around is wise as these vary a little as a retailer price can vary. Some of the bad VPPs also charge a bit. Typically a dollar a day on the low end. Amber customers see all of these and pay wholesale and its around 1.12 a day. There is no way you can export if you dont pay!
Our exports aim to sell surplus so these fees are covered. Negative bills are a target but for 5 months $25-$45 is normal.We used to pay $6k pa.
I’m on AGL’s Battery Rewards in QLD, which I think achieves a better outcome than what VPPs are aiming for.
Peak export is 28c/kWh from 5–9pm. Even in bad weather, I can fill the battery at 6c/kWh from 11am–4pm. I’m on single phase, with a 40kWh battery and 10kW inverter, and clear $2–$4/day after the supply charge, depending on the weather.
My setup pushes ~18kWh of peak power to the grid, enough to cover the evening needs of maybe 2 or so other households. It feels like everyone wins: I make some coin, AGL takes its cut, and the grid gets a bit firmer and presumably cheaper.
““make every seller and installer pay into a bigger complaints machine that still only starts working after the customer has been stung, and will only be used by the misbehaving few, mostly paid for by the well-behaved majority.”
Sounds like insurance to me. But I don’t understand why you think it would only be used by the misbehaving few. Wouldn’t it affect everybody in the industry as well as all consumers in that in effect, standards of behaviour and performance would become established over time along with likely improvements if the ombudsman has sufficient powers? Also consumers would most likely have better information in support of decision making and immediately or over time removal of unfair practices.
It adds some costs and other burdens, but if it is legislated and implemented well – and past experience shows our Federal Government can do these things well if it puts its mind to it. That is a small cost to pay given there are too many cowboys in the industry.
We would be much more inclined to join a VPP if we felt we could trust the company behind it. Given all the years of being mercilessly ripped off why should we trust them with control over our battery usage?
Jim Buckland
I don’t think it’s ever going to fly, consumers are so used to being screwed by energy retailers that the trust is irreparably damaged.
Something I think may work is greatly increasing the feed-in-tariif in peak times, and allowing people to export and make money from those peak times. Has the same outcome, but control and revenue is returned to consumers.
When most VPPs are being run by the same greedy energy companies we are trying to seperate from, why the hell would we give control of OUR equipment to those same companies. We know for a fact that they will use them for their own benefit and profit only.
So many stories of people having their batteries drained by a VPP and leaving nothing for the battery owner to actually use.
Nope, never going to happen.
“So many stories of people having their batteries drained by a VPP and leaving nothing for the battery owner to actually use.”
Good. That means every single kWh I generated from the sun has been used to displace fossil fuels (whether through my house or my neighbour’s). If I need to use any power before the sun refills my battery next day, I’ll buy it at half the rate they just paid me.
It would be better if you could use the energy you generated for free, rather than paying the company those profits given they’ll charged someone else 8-9 times the price they paid you for the free energy you gave them for almost nothing.
I don’t trust ANY retailer to act honestly / ethically, its hard coded in their DNA to exploit customers and I suspect the feeling is,widespread. In all probability that is why VPPs are being shunned..Furthermore the recent increases in connection fees is making grid connections unviable. Far better to disconnect completely.
“a new report from the Australian Competition and Consumer Commission (ACCC) points out that asking people to hand over some control of a battery they’ve paid for requires confidence that it will be used in their best interests.
If the benefits seem obvious, the uptake isn’t. Only about 24% of battery owners currently belong to a VPP.”
Can’t blame the 76% at all really.
Retailers have shown their hand on pricing, gouging where they can, offering hidden deals when people go to switch.
And who can trust back flipping, sorry ‘changing our position’ govco ??
Just stipulation in the battery rebate terms of ‘must be compatible with a VPP’ is enough to send a shiver down many people’s spines.
With compatibility, you have to sort this out by working out what retailer or wholesaler plans suit you, plans that can be changed at a whim, withdrawn, etc.
Even before getting solar, tailoring solar and battery to work with at least a majority of retailer systems.
Better deals than VPPs exist.
Reading complaints from VPP victims over the last few years, I conclude:
Many domestic batteries are too small for VPP participation – they’re often not big enough for own use. Less than 50 kWh, bare minimum, leaves stuff all trading reserve.
VPPs often discharge at modest price premium, only to trigger recharge at higher cost within a few hours. So do flick any VPP which does not guarantee to recharge at lower cost than any discharge drawn!
To achieve 53% battery participation, providers just need to:
Sit up. Shut up. Pay up. Or go without. (Have a nice day)
Discharge only to the prosumer’s monetary benefit, unconditionally guaranteed – on every battery cycle.
Since 3 minutes of sun on Australia’s landmass could power us all for a year, grid monopoly is dead as a mackerel, if you apply yourself.
The big boys still exploit prosumers. Those with an island-capable installation, need only a bit more PV & battery to go off-grid. Then it’s “Goodbye, and thank you for all the fish”.
There are VPPs and VPPs. Amber is our VPP. We hold 100% control. They get paid $25 to manage our battery and solar activity. They give us wholesale. We sell at wholesale. Well well beyond 4c. And curtail negative feed in tariffs.
I have pushed it harder than them via tge app but most choices make sense
I wouldnt sign with the few VPPs who support our battery. They just take. They dont five back much
Rather than VPPs, the same objective could be accomplished with variable rates. Better still, nationalize the Australian energy grid.
I’m with the AGL VPP. Silly event credit payout policies aside (only once per year!), the main negative is that with my SolarEdge kit I’ve had to give up virtually ALL control over my battery. No manual charging or discharging anymore, no automation under my control. According to SolarEdge they’ve had to give full and exclusive control of the battery to the retailer.
The only thing I can do is set a backup reserve level, intended for use if bad weather/blackouts are anticipated. This is not the same as a vpp export limit… I have no ability to set such a limit anyway.
I think I’ll be ending my vpp participation once the 12mth anniversary rolls over in December. Will likely go with a HomeAssistant-managed setup, assuming I can convince my installer to spend the time it takes to get SolarEdge to grant me TCP Modbus access.