What is a Virtual Power Plant?
VPPs let your battery earn money by helping stabilise the grid. Here's how they work, what you get paid, and the catch.
A Virtual Power Plant (VPP) bundles thousands of home batteries into a single, dispatchable fleet that retailers and AEMO treat as if it were one giant power station. When the grid needs power, the VPP discharges your battery; when there's a surplus, it charges. You get paid for the service.
What you actually get paid for
Three main revenue streams: 1) Wholesale energy arbitrage — discharging during evening price peaks (often $300-$15,000/MWh), charging during the solar-soaked middle of the day. 2) FCAS (Frequency Control Ancillary Services) — being available to inject or absorb power within seconds to keep grid frequency at 50 Hz. 3) Capacity payments — a flat monthly credit for being part of the fleet.
Different VPP operators package this differently. Some offer a generous flat credit ($300-$1,200/year) and keep the wholesale upside. Others share the wholesale revenue and pay you per kWh discharged. SA-specific schemes (AGL, Tesla, Amber, Energy Locals) all do it differently.
Who's eligible
You need an approved battery + inverter combination and a smart meter that supports 5-minute data. Sigenergy, Tesla Powerwall, Sungrow and AlphaESS are commonly accepted across the major SA VPPs. Power Plus is supported by several too. GoodWe is currently in beta with Amber only — confirm with the retailer before signing.
The catch
When the VPP dispatches your battery, you lose access to that stored energy for backup until it recharges. Most reputable VPPs let you set a reserve floor (e.g. 'never discharge below 30%') so you always have backup capacity. Cycling the battery harder also uses warranty throughput slightly faster — but the revenue almost always outweighs the wear.
Some VPPs lock you into 1-3 year contracts. Read the exit terms carefully; we've seen contracts that charge an early-exit fee equal to the upfront credit.
Key takeaways
- VPPs can add $300-$1,500/year to a battery's return.
- Pick a VPP that lets you set a backup reserve.
- Check the contract length and exit terms before signing.
Sources & further reading
This article is general information only. Figures change with policy, tariffs and product pricing — for a current quote tailored to your home, start an assessment or contact our team.