Today’s a big day for Virtual Power Plants (VPPs): a federal rebate for VPP-capable batteries is coming online, while two states are offering incentives that require joining one. So why are multiple layers of government teaming up to tempt you into handing over control of your battery to a VPP operator, and should you take the bait?
July 1 alters the economics of home batteries and VPPs in ways I’d only ever dreamed of in the past. The federal battery rebate is bursting onto the scene and making home batteries almost a must-have for millions of households. If your home is connected to the grid, batteries capable of VPP participation are required to get the rebate, but you don’t have to actually join one.
The WA government has gone a step further with its own battery rebate launching today, that insists West Australians bite the bullet and join a VPP if they want to cash in on the state-backed discount.
Meanwhile, the NSW government is ditching its battery rebate entirely and replacing it with a redesigned incentive for joining a VPP, which also kicks in from today.
Do All These Government Incentives Mean VPPs Are Worth It?
Thanks to all these developments, many newly minted battery owners will soon be asking themselves, “Should I join a VPP?”
I say: Yes!
Most households should lash their batteries to a VPP and benefit from the provided payments because they’re worth the minor drawbacks — or at least they are, provided you’ve done your homework and joined a decent one.
VPP payments aren’t great, and their net benefit is likely to be around $200 or less per year. But it adds up, and as most people won’t even notice they’re part of a VPP, it’s not bad for doing next to nothing.
Below I’ll cover the main benefit of joining a VPP — which is money — and give a rough estimate of how much joining one is likely to save you and how it may affect battery payback periods.
What’s a VPP Anyway?
If you join a VPP, your battery will occasionally be used to support the grid. In return, you’ll receive modest but still worthwhile payments. This is all for the good because it lowers the cost of running the grid, which lowers electricity prices for everyone, and it helps the country close down coal power plants. Exactly how your battery is used to support the grid and how often depends on the VPP (read a more detailed explainer on how they work here).
For information on the current state of VPPs, you can use our VPP Comparison Table. Alternatively, you could just look at the image of it I’ve put below, but that’s kind of dumb when you can click through to the real thing.
While we try to keep our VPP Comparison Table up to date, it’s a rapidly changing field, so we can’t guarantee it will always be spot on.
NSW’s VPP Payment
In NSW, there’s a payment for joining a VPP that’s expected to be around $55 per usable kWh of battery capacity. So, for a 15kWh battery, it would be $825. This payment can only be received if the battery has 2-28kWh of usable capacity, and so it should range from around $110 to $1,540. Because that’s a decent amount of money, joining a VPP should make sense to sensible NSW battery owners.
WA Battery Rebate Requires A VPP
WA has Australia’s only state-level battery rebate, and its coolest feature is that it can be combined with the federal battery rebate, making home batteries in WA nearly a no-brainer. But it has the condition that you must join a VPP. This basically makes the WA state rebate one big VPP incentive. And it is pretty big. In the southwest Synergy area, it’s worth $130 per usable kWh of battery capacity, up to a maximum of $1,300. But in regional areas, it’s $380 per usable kWh, up to a maximum of $3,800.
While there’s an existing VPP in WA, new state-provided VPPs will likely be the most popular. The one available to the most people is the Synergy Battery Rewards VPP. This promises to discharge your battery to the grid no more than 30 times per year in return for 70c per kWh discharged. The VPP also promises you won’t be out of pocket for the energy used, which is better than some VPPs.
In the example they give, a battery is drained of 90% of its full usable capacity. If this is done 30 times a year for a 15kWh battery, then the maximum VPP payment would come to $284. Even if you allow 10c per kWh for wear and tear, that’s still $243 per year. While there’s no guarantee your battery will be drained by 90% a total of 30 times a year, it does look like WA VPPs will provide a reasonable payment in comparison to eastern state VPPs. Considering how badly Western Australians have been screwed over when it comes to electricity over the years, this is surprising.
VPP Payment Estimates By State
To get a rough estimate of how much you may save in different states by joining a VPP, I’ve assumed signing up will save $200 a year. I’ve also averaged the NSW VPP payment and the WA state battery rebate out over 10 years, which is the minimum amount of time a decent quality battery should last. This gives the following estimates for a 15kWh battery:
- NSW: $280 annually or $2,800 over 10 years
- NT: nothing currently
- QLD: $200 annually or $2,000 over 10 years
- SA: $200 annually or $2,000 over 10 years
- TAS: nothing currently
- VIC: $200 annually or $2,000 over 10 years
- WA: $330 annually or $3,300 over 10 years
So if you pay $10,000 for your battery, over 10 years VPP payments will — hopefully — cover at least 20% of its cost in most states and considerably more in NSW and WA.
VPPs & Battery Payback Periods
Joining a VPP can significantly reduce battery payback periods. But by just how much is difficult to pin down, as battery payback times are affected by battery cost, household consumption patterns, electricity prices, solar feed-in tariffs, and solar system size.
To give an idea of how VPPs can affect payback periods, I’ve put a rough estimate of the simple payback time for a typical household that installs a 15kWh battery that costs $10,000 in each capital city. The simple payback time is how long it takes for savings and/or credit on electricity bills to equal the installed cost of the battery. I’ve then given the simple payback period with VPP payments of $200 per year. The effects of the NSW VPP payment and the WA battery rebate are included. While no VPPs are currently available in TAS or NT, because this could change, I’ve assumed VPPs that pay $200 per year become available there:
| Annual Savings and Simple Payback Periods for $10,000 15kWh Battery With & Without VPP Payments | ||
|---|---|---|
| Capitals | Without VPP | With VPP |
| Adelaide ($200/year VPP) | 7.6 years | 6.6 years |
| Brisbane ($200/year VPP) | 9.3 years | 7.9 years |
| Canberra ($200/year VPP) | 14.7 years | 11.4 years |
| Darwin ($200/year VPP) | 17.9 years | 13.2 years |
| Hobart ($200/year VPP) | 27.4 years | 17.7 years |
| Melbourne ($200/year VPP) | 14.1 years | 11 years |
| Perth ($200/year VPP) | 8.9 years | 7.1 years |
| Sydney ($200/year VPP) | 9.3 years | 7.2 years |
With the above estimates, joining a VPP will knock a minimum of one year off battery simple payback periods in every capital. The largest reduction occurs in Hobart, where joining a VPP knocks nearly 10 years off that city’s excessively long simple payback time. Where batteries already provide a good return, VPPs improve it, and they can make batteries worthwhile in locations such as Canberra and Melbourne, where payback periods might otherwise be considered too long.
Who Shouldn’t Join A VPP?
There are a few people who probably shouldn’t join a VPP. They may be of no interest to people who are determined to maintain complete control over their batteries and who either can’t join or couldn’t be bothered with the couple that leave you in full control of discharging.
Also, those who place very high value on having backup power may not want to join a VPP because of the small risk of it draining their battery just before a blackout. But these people should first consider if joining a VPP would allow them to buy a bigger battery and improve their overall ability to power through blackouts.
There may also be people who just don’t consider VPP payments high enough to be worth the effort of joining. But if money is not enough to motivate you, because joining a VPP will improve the grid’s ability to integrate renewable energy and hasten the closure of coal power stations, so the environmental benefit may provide you with enough incentive to sign up.
VPPs Are Worthwhile
While VPPs don’t pay as much as I’d like and choice is limited, they pay enough to be worthwhile. While they’re making you modest amounts of money, they also help the country quit fossil fuels, so they’re all for the good. Provided a non-terrible VPP is available that accepts your battery is available, I definitely recommend giving it a go. In NSW and WA, not joining one really only makes sense if you don’t like money.
If you’re still uncertain and want more detail about the issues some VPP schemes present, I’ll be going into more detail about these in a follow-up article next week. Sign up to our free weekly newsletter to ensure you get to read it.
In the meantime, read up on the fine print on the VPP-linked federal and state battery incentives launching today in our comprehensive explainer.
About Ronald Brakels
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Until the price for a 10 KW battery goes down to $2700, installed, it just isn’t value! We installed a Sungrow 10 KW battery, only because we were paying a green loan company, instead of an electricity retailer.
It’s been worth it, purely for backup during the blackouts we have had.
I would think about another 10 KW add-on to the Sungrow modular system, and install a changeover switch to go off-grid. A VPP is the last thing you want in a blackout!
VPP only take a small % of the battery, and with solar that should cover the VPP amount. Should be fine.
From the solar quotes comparison page Ronald linked, seems that most VPPs in our area reserve the right to take between 80% and 100% of our stored capacity. That’s not a small amount by any measure. I’m definitely one who values battery backup; as I type this, our local area is blacked out while we are running off our battery. We didn’t notice the blackout until the inverter pinged my phone with the error message. That’s beyond price for me.
Got an email from AGL yesterday (my current supplier)
Let us use you battery, we will give you “UPTO $600” a year in “giftcards” in addition to your 4c kw feed in rate! (which they have actually dropped to 3c, so they cant even get their paltry offer correct).
The conditions – as long as you export at least 700kwh to the grid in peak times every 3 months. So that would be completely draining my battery a minimum of 55 times in 90 days, leaving me to buy power until the next day.
So flogging my battery, giving them 2800kw over a year, discharging my battery fully over 200 times and they will give me “UPTO” $600 in gift cards – A maximum of 21c a kw while they charge my neighbour on a time of use tariff 2 to 3 times that amount for that power?
yeah nah.
These offers of so many dollars a year reminds me of the FIT payments of 60 cents KWH incentive to fit solar panels.
As time went by the amount dwindled to 20 cents to 10 cents and currently 4 or 2 cents.
Do you trust politicians or CEOs of power companies because I don’t, you will end up with a flat battery and paying higher rates for power.
This is all part of Bowens green fantasy.
The FIT was an incentive to install solar and use it, it had the desired effect but it was never meant to be a money making scheme. When I installed my first system, it cost $5000.00 for a 1.5kW setup, so prices have changed a bit and it is a no brainer to install solar thses days if your place is suitable. Green energy works very well and is not a fantasy, your ideology shines through with that statement. There will challenges for sure, but the technology is getting better all the time, as it always has.
I would look at the life span and gradually degradation of the battery to know when a new battery needs to be purchased. I f your battery loses 30% of charge over time you may be compromised when blackouts occur. Re Eric’s comment above I went off grid with a changeover to grid for long overcast periods. Cost was not the criteria we did this. 17 years later we are still happy to look after our nehbours food in our fridges. during blackouts.
It might technically not be a VPP but I’m surprised that this article didn’t mention Amber. With Amber, you can have your cake (full control of your battery) and eat it (be paid a good FIT when wholesale prices are high). I’m making more money out of my battery with time shifting and arbritage in winter (buying cheaply during the day and consuming during the peak, discharging into wholesale price peaks) than I do in summer charging from solar.
Does signing for VPP make it more difficult to swap providers?
In WA, any VPP payment goes straight to credit your electricity account, so for someone like me who has a large credit on my account already, and never has to pay a bill anymore, it is of no value whatsoever. I can only use my Synergy credit for paying my bill – nothing else.
The only reason I want a battery is for backup purposes, and the last thing I want is for the VPP to drain my battery in a high demand time when the blackouts are most likely to occur. This defeats the purpose totally.
The federal rebate on its own, while good, isn’t enough to justify a battery just for backup purposes – at least, not at current battery prices.
The credit that you have on your Synergy account can be claimed by contacting them. Back in the days of the 40c FIT I used to contact Synergy annually and get a cheque for my credit to be sent to me. It would add up to about $1500 per annum. I assume you can still do the same these days.
I have no intention of using my infrastructure to assist those who do not. We saw on current affairs last month a VPP being drained to 20% during the day and the home owner being slugged for peak usage at night- why not hand over your car keys at night so a random person can borrow it?
It is not our job to support base load for a retailer or generator.
What savings does a VPP give you? A once off rebate and No one will reimburse you for your solar equipment maintenance nor replacement in 10 years .
I dont see any generator saying ‘Yes we will replace your VPP that we used and killed it early’ What tax benefits do I get for being a VPP ?
Avoid VPP unless you work for a retailer or electricity retailer. In that case : Got those car keys handy – I just need the car for a quick trip ?
Hi Chris B,
You’d be interested to know there’s many different ways you can turn a buck out of your car. Seeing as it spends 95% of it’s life parked, there’s good reasons to make use of a depreciating asset, in return for some economic returns.
As taxpayers, should we have zero intention of using our infrastructure to assist those who do not?
The question is can we trust government and the energy companies over that period of time. When I put my solar system in I was getting 21c kwh and it has progressively dropped now down to 4.5 c kwh yes there is an offset that I am avoiding the higher energy prices over that time but most of my usage is at night so the payback for my system has certainly lengthened. At the previous feed in rate I was in an annual credit even at about 15c I was over a year basically breakeven now that is no longer the case by quite a lot. A battery with the federal rebates now makes sense where it didn’t before in terms of payback with my current nighttime usage and the current electricity rates but will the VPP cause a faster degradation in the life of my battery particularly if the energy companies start regularly drawing out of it and what is the chance that they drain the battery significantly enough that I don’t get the use of the power I have stored.
So, curious, how does a VPP control the battery discharge? Is it by IP or OTW signal?
Hi Craig,
Depends on the system but generally it’s via customer owned internet. Some networks inject signals into the grid to control off peak supplies (ripple control) while Qld uses audio frequency over the grid to curtail some solar using a GSD device.
As Chris B pointed out above, the case of Peter Anderson and AGL suggests extreme caution when entering a VPP agreement.
Mr Anderson discovered that, at peak periods, AGL was draining his battery down to 5%. AGL thus avoided paying very high wholesale rates, while paying him peanuts.
Worse, it then charged him at peak prices for the power he needed to buy because AGL had just flattened his battery. So he lost money, and his battery suffered wear and tear and degradation.
Now that’s a nice little earner (for AGL)!
VPPs should be offering us higher payment when they take power from our batteries, because they only do so during peak periods when wholesale prices are high.
And while I appreciate the argument that we should ‘just do it’ for the sake of the country and climate change, I’m not so keen on enriching AGL. Perhaps AGL should ‘just do it’–by paying fairly.
See: https://www.abc.net.au/news/2025-05-09/claims-agl-drained-household-batteries-spark-trust-warning/105234050
The NSW rebate for VPP connection (BESS2) is not really as described.
“In NSW, there’s a payment for joining a VPP that’s expected to be around $55 per usable kWh of battery capacity. So, for a 15kWh battery, it would be $825”
This is based on the NSW Govt Position Paper price of a PRC of $2.50 (as at April 25), however the price of the PRC’s have now increased to over $3, having increased in price you would expect to rebate to increase….
However what the Government did not mention is that they have outsourced the processing of the rebate to Mac Trade Services so you must go through Mac Trade to get the rebate (cannot get it anywhere else), the catch is that Mac Trade are paying no where near $3 for a PRC, they appear to be paying around $1.64!!! so a rebate (even at the old PRC price of $2.50) that was $857 is actually only $565 (for a 15.6 Kwh battery).
Mac Trade have a calculator on their web site and a 15Kwh battery rather than being $825 is in fact only $540…