When the federal Cheaper Home Batteries rebate comes into play in July this year, it will be a requirement that all energy storage systems installed through the scheme are capable of participating in a virtual power plant, or VPP.
The idea is that, in the not-too distant future, millions of rooftop solar and battery systems will be able to be aggregated by various third parties – such as retailers – and controlled collectively to offer paid services to the grid.
Certainly, the Australian Energy Market Operator (AEMO) is counting on consumers to join VPPs – that part remains voluntary under the federal rebate rules – to help harness the huge rooftop solar resource that so far remains largely beyond of its control.
AEMO says the establishment of VPPs “coordinated at scale and in a predictable and reliable manner” could significantly reduce the scale of network and other investments needed to firm renewables and maintain reliable and secure electricity supply – making its job easier and, theoretically, cutting the cost of electricity for all.
But new data has underscored just how few solar and battery households are buying in to AEMO’s vision, and raises the question of whether they can be won over to the idea of handing over control of their precious behind-the-meter resources.
According to the latest annual Australian battery market report from industry data analysts SunWiz, most VPPs currently registered with AEMO to provide grid services (FCAS) remain small, while many others have gone backwards or been wound up.
SunWiz reports a total of 56 megawatts MW) of combined behind-the-meter capacity listed by AEMO as a VPP registered in the National Energy Market (NEM) at the end of 2024. At an assumed 5 kilowatts (kW) per site, it says, this might equate to a total of 11,200 households.
Notes: Figures represent megawatts (MW). Red figures show the current level when it has reduced from last year, with last year’s value represented in black. Green figures show the current level when it has increased from last year, with last year’s value represented in black.
Black figures show the current level when it is unchanged from last year.
Almost all of this (51 MW) is in South Australia, and much of that number is likely to be part of the pioneering Tesla VPP, which was launched in SA back in 2019 with plans to take in 50,000 homes, but currently sits at about 7,000 homes and 35 MW, via retailers AGL Energy, Origin Energy and Energy Locals.
By contrast, the report shows a cumulative total of 3,600 MWh of residential home battery storage has been installed across the country, to date – including a record-setting 72,500 new home batteries in 2024, alone.
At a state level, South Australia’s 10,000 battery installations in 2024 reflect a VPP incentive uptake rate
of 10%, the report says, while NSW’s incentive uptake ranges between 4% and 10%.
SunWiz managing director Warwick Johnston says these numbers suggest that while consumers are increasingly warming to batteries, they just “aren’t that interested” in VPPs because “the offering is complex, and the financial benefits are modest or unclear.”
Gabrielle Kuiper – a consumer energy resources expert and policy advisor – agrees, and says cracking the social licence nut on VPP participation will mostly come down to putting the money on the table for consumers.
“We need to make sure that all of these market design or redesign or review processes prioritise easy participation of aggregated, distributed energy resources, and that will provide the financial incentives,” Kuiper told Renew Economy in an interview on the subject late last year.
“In the UK, if you allow your battery to be used to provide to support the network, you can earn 331 pounds per year for exporting from that battery when the grid the local distribution network is constrained.”
But as the SunWiz report also notes, not all of the 20-odd VPP products currently commercially available on the NEM are registered with the market operator to provide FCAS – which makes the true level of uptake much harder to pin down.
“VPP offers keep evolving, with a trend towards BYO battery rather than significant point-of-sale discount,” the report says.
“Offers now tend to be fixed monthly benefits and/or reward during events. VPPs on offer appear to be making it easier to exit the VPP, to reduce the barrier to entry.”
SunWiz data on VPP incentive registration – the New South Wales state government battery rebate offers a higher discount for batteries that sign up to a VPP – by state and retailer over the past three months shows one offer dominating – Amber Electric’s SmartShift program.
Johnston says Amber’s SmartShift along with Origin Loop and Engie, were the largest operators over the period from December 2024 to the end of February 2025.
This is notable, because Amber is leading a new guard of retailers and CER aggregators who put the customer at the centre of their VPP offerings, rather than the broader grid.
More specifically, Amber aims to make batteries work harder for its customers, reducing the return on investment and maximising the use of rooftop generated solar.
“Ours is a bit different, because we’re actually optimising the power use for your home, rather than other VPPs, where they’re trying to optimise a fleet of devices,” Amber Electric staff engineer, Myles Eftos, told the Solar Insiders podcast last month.
“They might control 1000 or 2000 devices all at once. We will actually try to optimise your battery’s use for your exact use case.
“At Amber, the only money we make is off our subscription, … [the] monthly fee we charge, so we actually don’t care how much power you use.
“In fact, we want you to not use power because that helps us move towards our goal of 100% renewable energy use.
“If you’ve got solar panels, we would love you to not be interacting or importing from the grid at all,” Eftos says.
Ultimately, participation in VPPs that are registered to deliver grid services will come down to a combination of delivering the right incentives and building consumer trust in retailers.
“After spending over $10,000 on energy independence, most [households] are reticent to hand back the reins of control to their electricity provider,” says Johnston.
“If consumer participation in a VPP is a ‘social good’ (e.g. providing network stability) then its likely governments will need to strongly incentivise VPPs.”
SunWiz has been producing an annual Australian Battery Market Report since 2015. The full 2024 report is available for purchase here.
Sophie is editor of One Step Off The Grid and editor of its sister site, Renew Economy. Sophie has been writing about clean energy for more than a decade.
