What is a Virtual Power Plant (VPP)?

What is a Virtual Power Plant (VPP)?

Virtual Power Plants are a new and exciting industry born out of the growing solar power presence. So what is a Virtual Power Plant and how can you get involved?

What is a virtual power plant?

A virtual power plant (VPP) is essentially a mini power grid powered by solar panels and solar batteries.

Typically a power plant generates electricity through hydro, wind, etc, and feeds the power it makes to consumers via the national grid. A VPP, in comparison, relies on a smaller network of solar panels and batteries to produce and store energy for consumers.

How does it work?

The exact details depend on who is involved in the VPP but, in general:

  1. A network of individual solar panels/batteries are virtually connected and managed by a third party
  2. These solar panels generate electricity for their owners to use
  3. Any excess electricity is stored in the solar batteries
  4. When electricity demand is high, the stored electricity can be fed back into the national grid, or to other households in the VPP, depending on the structure of the VPP, easing demand and providing cheap, renewable electricity

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What are the benefits of a virtual power plant?

A VPP can provide benefits for everyone involved. The owners of the solar panels get to enjoy the benefits of powering their homes for free by the sun, as well as earning money from selling their excess solar power.

The company running the VPP benefits from access to cheap, renewable energy during times when wholesale power is expensive. For example, instead of having to buy expensive dirty electricity from the grid, it can tap the VPP’s battery store of clean, cheap solar.

And the general population benefits from the fact that VPPs can reduce our reliance on dirty fossil fuels. For while the majority of the nation’s electricity comes from renewable sources, during times of peak demand, the supply is often supplemented by electricity generated from fossil fuels.

What are the downsides?

If you’re part of a VPP, you lose some control over your power usage. Most people who purchase solar batteries do so to store the excess solar electricity they produce, for use at times when their solar panels aren’t generating, for example at night.

Being part of a VPP impacts that freedom, as your stored energy can by used at any time by the VPP provider. Of course, you are compensated for the power drained from your battery, but you’ll need to do further research to see if joining a VPP is a viable option for you from a financial perspective.

How to sign up to a virtual power plant?

There are a handful of small VPP trials and programs happening across the country, but VPPs are currently few and far between in New Zealand.

If you are interested, it’s worth looking into whether your town has any small-scale projects that you can be a part of.

On a larger scale, solarZero is a power provider that works as a VPP, of sorts. solarZero will install solar panels and a battery at your home for no upfront cost. In return, you sign a long-term contract and are charged a monthly fee. The set-up provides two-thirds of your home’s power – the remainder comes from the grid – and any excess solar you produce and store is sent back to the grid during peak times.

You can learn more about solarZero here.

Solar buyback

Even if a virtual power plant is out of the question, you can still benefit from any excess solar power you generate, as many power providers will buy your excess solar for a set price. Click the article below to learn more about what’s on offer.

→  Related article: Solar Power Plans: What Deals are Power Companies Offering?

Compare electricity providers with Canstar Blue

If you are considering solar, the right power plan is paramount. But finding the right provider can be a real challenge.

If you are looking to change electricity providers, or are unsure if you are getting the best deal, Canstar Blue can help. We rate NZ power companies for customer satisfaction and value for money, see the table below for some of the results, or you can click on the button below for the full results of our survey.

Canstar Blue’s latest review of NZ power companies compares them on customer satisfaction. The table below is an abridged version of our full results, available here.

See Our Ratings Methodology

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author andrew broadley

About the author of this page

This report was written by Canstar Content Producer, Andrew Broadley. Andrew is an experienced writer with a wide range of industry experience. Starting out, he cut his teeth working as a writer for print and online magazines, and he has worked in both journalism and editorial roles. His content has covered lifestyle and culture, marketing and, more recently, finance for Canstar.

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