What is a Virtual Power Plant (VPP)?

A Virtual Power Plant, or VPP for short, is a group of energy assets that work together to pool their power capability. Joining a VPP means you can put your energy assets to good use supporting the Australian grid – and get paid for it.

These assets include things that can export energy into the grid when it’s needed, like solar panels, batteries or backup generators. It also includes energy-consuming assets, like HVAC systems, data centres or cold stores that can be controlled – turned up or down – adapting to what’s happening on the grid.

Using advanced algorithms, automation, and artificial intelligence, the VPP gets individual assets to work together like a traditional power plant – able to respond to the demands of the market.

VPPs are going to play a vital role in Australia’s transition to renewables – and they’re brilliant in virtually every way.

Virtual Power Plant (VPP)

Goodbye fossil fuels. Hello Virtual Power Plants

Goodbye fossil fuels. Hello Virtual Power Plants.

Unless you’ve been hiding under a particularly large rock, you’ll have heard global temperatures are rising. To help combat this, Australia is making moves to reduce emissions and our dependency on fossil fuels.

To do this we need to change how we generate electricity, moving to renewable generation. Renewables are great, however the most popular ones like wind and solar depend on weather for their output, which makes them a bit unpredictable.

VPPs will play a very important role in those moments when the sun doesn’t shine, the wind doesn’t blow or there’s an oversupply of power on the grid.

By 2050, we’re going to need an additional 57GW of dispatchable power to maintain grid stability. You don’t have to be a physics professor to know that’s a mega-load of extra power. But by being part of a VPP you could help supply the energy we need or modulate your load to relieve some of that pressure – and make real money in the process.

Is Hydro Tasmania's VPP right for my business?

If your large business is based in VIC, QLD, SA, NSW or ACT and has controllable large energy-using or energy generating assets, then Hydro Tasmania’s VPP could be right for you.

It can work with energy assets that export, store or consume energy including:

  • TickFlexible loads
  • TickBattery storage
  • TickBack-up generators
  • TickHeating, ventilation, and air conditioner (HVAC) systems
  • TickData centres
  • TickCold stores
  • TickEV fleets and charging stations
  • TickPumps
  • TickElectrolysers

The fastest way to find out if you’re eligible is to speak with our team.

Contact the VPP team

Why join Hydro Tasmania’s a Virtual Power Plant?

100% Australian owned
100% Australian owned

Hydro Tasmania is Australia’s largest generator of renewable energy and their VPP supports Australia’s transition to renewables.

Hydro Tasmania
The benefit of experience

A VPP powered by Hydro Tasmania means your assets are in expert hands with one of the largest participants in Australia’s FCAS (Frequency Control Ancillary Services) market.

Generous revenue sharing
Generous revenue sharing

The revenue sharing model means you retain your share of the profits.

Custom trading platform
Custom trading platform

Our VPP trading application was built by Hydro Tasmania and is supported by an on-site trading team 24/7.

Smaller assets add up
With us, smaller assets add up

Hydro Tasmania’s VPP is one of the few which can aggregate smaller assets to bid as a single larger block into the FCAS market, so you can leverage smaller assets too.

Easy compliance
Easy compliance

As your experienced market partner, Hydro Tasmania will manage bidding and market compliance, so you don’t have to.

How does it work?

A VPP is a network of distributed energy assets that are connected and managed remotely via smart technology. Each time your assets help to support the grid – you can make money. Sounds like a fair deal, right?

Virtual Power Plant

Here’s what happens in a bit more detail:

Hydro Tasmania's VPP

How much could you earn as part of Hydro’s VPP?

Curious to know how much you may have been able to earn in the last 12 months? Register your details with us for a free backcast (you guessed it, it’s the opposite of a forecast, only we use real numbers to estimate what you might have earned over the last year or two).

Register now

Got questions about VPPs?

There’s a good chance you’ll find the answer here in our Virtual Power Plant FAQs.

Why are VPPs important for grid stability and the transition to renewables? openclose

One of the challenges facing Australia in the transition to renewables is grid stability. Burning fossil fuels offers a steady and reliable supply of power, while popular renewables like wind and solar depend on unpredictable weather conditions for their output.

VPPs will play a very important role in those moments when the sun doesn’t shine, the wind doesn’t blow or there’s an oversupply of power in the grid.

During periods of peak demand, virtual power plants can step up, drawing on distributed energy assets to top up any shortfall. Reducing risk of blackouts and brownouts. They also offer an innovative way to consume or store spare power when renewables produce more than we need.

What are the benefits of joining a VPP? openclose

Benefits of joining a VPP include:

  • Earn or save money. Get paid for exporting energy to the grid, absorbing excess energy from the grid or by reducing energy usage during periods of peak demand.
  • Contributes to grid stability. A stable and dependable energy supply minimises brownouts and blackouts.
  • Support the energy transition. VPPs play a crucial role in reducing our dependence on fossil fuels.

How do I make money from a VPP? openclose

As part of a VPP you’ll be paid for helping to stabilise the grid. The help you provide can come in many forms. Your business might provide energy, store excess energy (for example, batteries during periods of high solar generation) or switch off or reduce energy consumption as needed.

You can be paid a price determined by the wholesale energy spot market or offer to have your services on standby during times of high demand – earning money via the FCAS market.

What is the FCAS market and how does it work? openclose

The Australian Energy Market Operator (AEMO) runs what is known as Frequency Control Ancillary Services (FCAS) markets – it’s a group of power assets on standby to respond quickly when the grid is unbalanced.

As part of a VPP you could be paid to have your assets on standby to help the grid to remain stable. It’s win/win.

How does the Wholesale Energy Spot Market work? openclose

The National Electricity Market (NEM) generates a spot price for electricity that reflects supply and demand – a price which updates every five minutes. Sudden changes like extreme weather or interruptions to supply can cause spikes in energy costs.

Hydro’s VPP can give you access to the spot market price to sell your excess electricity (or load reduction capability) when prices look good.

What is a Demand Response program? openclose

Demand Response is a way for utility companies and grid operators to manage and balance supply and demand of electricity during times of high demand or low supply. It incentivises consumers to change their patterns of energy use – for instance temporarily reducing load when the grid is struggling to meet demand.

To enable Demand Response, Hydro’s VPP uses AI to optimise your assets and automation for rapid response – so you generate maximum revenue while we work within the parameters set up for your business. We also offer the option of an Opt-in/Opt-out function so you can override the automation when needed – at the click of a button.

What types of energy assets work for a VPP? openclose

There are essentially two different groups of assets that can participate in a VPP – they interact with the grid slightly differently.

  • Assets that can generate or store power include things like solar panels, generators and batteries that can push energy into the grid, when it’s needed. Batteries are a special case as they can also be charged off the grid and store energy when supply is high, keeping it for a rainy day (when the grid needs a top up).
  • Assets that consume energy also have a role to play in VPPs. Large HVAC systems, pumps, datacentres, cold stores and the like are controllable loads. They sit ready to be turned on and off (or up and down) so that they consume more or less energy, depending on the supply and demand on the grid. Their flexibility makes them useful for finessing the balance of the grid.

How does our business join the Hydro Tasmania VPP? openclose

To join Hydro Tasmania’s Virtual Power Plant you’ll need to get in touch with our team to discuss your assets and figure out if you’re eligible – we'll arrange a back-cast to give you an idea of what you may have been able to earn in the past year or two. From there, we’ll come to an agreement setting out how we’ll operate so it doesn’t disrupt your business. Once setup is complete you can start getting paid.

What kind of support will I get? openclose

You’ll receive ongoing support and access to a VPP customer portal, where you can monitor the status of your assets, gain insights on their trading performance, and keep an eye on the wholesale energy market. And if you have a retail contract with Momentum Energy, you’ll get your own account manager.

Who is responsible for the maintenance of the assets? openclose

Your business is responsible for maintaining your energy assets.

Can my diesel generator(s) participate? openclose

It’s possible to include diesel generation as part of Hydro’s VPP, but there are a few conditions. Your diesel generator will either need to use biodiesel or your emissions will need to be offset – to keep things greener.

Will Hydro’s VPP affect my business operations? openclose

Your business will always come first – the last thing anyone wants is for your core operations to be disrupted in any way that you don’t want us to. We’ll work around the needs of your business. We’ll always work within your operational parameters, and the warranty conditions of your assets.

How much can I earn with Hydro’s VPP? openclose

Ah, the million-dollar question. (Or maybe not quite a million). We can’t predict the future. However, we can utilise revenue back-cast modelling to offer insights into potential earnings based on the past 12 months or more. Request a backcast.

Ready to chat to the team?

In case you can’t tell, we’re a bit excited about VPPs and the savvy role they’ll play in Australia’s transition to renewables. If you’re interested in joining Hydro’s VPP or have questions for the team, contact us and we’ll be in touch soon.

Contact us

Chat to the team