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Real revenue from Virtual Power Plants?: How businesses can create new revenue streams

When the Australian Energy Market Operator (AEMO) announced its Virtual Power Plant (VPP) Demonstrations project in 2019, the aim was that VPPs would become more widely utilised and an integral part of the future energy market1. So, what is a Virtual Power Plant? According to AEMO, a VPP “Broadly refers to an aggregation of resources (such as decentralised generation, storage and controllable loads) coordinated to deliver services for power system operations and electricity markets.”2 

Importantly, a VPP bundles a group of controllable energy assets to trade power/energy into available markets. These assets could be solar farms, wind farms, combined heat/power units and storage systems such as batteries. This is where a VPP’s major benefit lies – as a medium between the market and Distributed Energy Resources (DER)’s. 

Driving decentralisation of the grid

The primary purpose of DERs is as another energy resource that can be integrated into the National Electricity Market (NEM) – to the benefit of consumers and support of system security. But DERs are already changing the way Australia manages its electricity, driving the ‘decentralisation of the energy grid’. The use of DERs is shifting generation away from the large, centralised power stations and towards on-site generation from households and businesses through rooftop solar, wind, etc.  

45% of Australia's electricity generation could be contributed by DER's by 20504

DER demand is only expected to grow. In fact, the Electricity Network Transmission Roadmap estimates that by 2050, DERs may contribute up to 45% of electricity generation3. Given the Australian government's commitment to a Net Zero future, this move towards decentralised energy provides Australian businesses with an opportunity to create new revenue streams by becoming a key part of this transition.  

VPPs are just getting started 

When the Virtual Power Plant project was announced in 2019, AEMO predicted that there would be 700MW of generation by 20221. While the reality hasn’t matched this3 VPPs are an important tool in the market, relieving the grid during peak times and facilitating renewable energy transition.  

Generating extra revenue from energy

The war in Ukraine, price inflation and high global demand has resulted in one of the worst energy crises ever seen. In Australia, business electricity prices have reached record highs, with the 2022 federal budget predicting even further rises5.  

Smart businesses, however, have found ways to create new revenue streams by contributing to the energy grid. By installing meters and monitoring usage businesses have been able to inject excess energy generation into the grid and generate welcome additional revenue. In fact, some retailers have even begun to offer this as a service, fast-tracking the implementation of monitoring and usage control to help businesses become part of a VPP.  

Join the experts at Energy Action for our upcoming webinar on how your business can take advantage of Virtual Power Plants to drive extra revenue.

Register now

Webinar - How your Business can Generate New Revenue through Virtual Power Plants

24 November, 10:00AM (AEDT)

Sources:

  1. https://aemo.com.au/en/initiatives/major-programs/nem-distributed-energy-resources-der-program/der-demonstrations/virtual-power-plant-vpp-demonstrations
  2. https://aemo.com.au/en/learn/industry-terminology
  3. https://ieefa.org/wp-content/uploads/2022/03/What-Is-the-State-of-Virtual-Power-Plants-in-Australia_March-2022_2.pdf
  4. https://arena.gov.au/renewable-energy/distributed-energy-resources/
  5. https://www.afr.com/politics/federal/electricity-bills-to-rise-despite-falling-coal-and-lng-prices-20221026-p5bt06

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