Everything you need to know about VPPs
If you’ve been thinking about green energy sources and you’ve been doing research into all sorts of solar and battery systems, providers, and installers – chances are that you’ve probably come across the term “VPP.”
To help clear up the mystery behind these initials and to give you a greater understanding of what a VPP is, how it works, and how you can benefit from it, we’ve put together a helpful guide for you.
What is a VPP?
VPP stands for Virtual Power Plant.
Where the virtual power plant differs from traditional power plants, is that there is no one, large, singular plant burning harmful fossil fuels to generate all the energy. Instead, a VPP is made up of a network of various decentralised generators, which could include sources as large as wind farms or solar farms. The Nectr VPP network is comprised of a range of our customers’ batteries which store the energy generated by their rooftop solar panels.
The VPP is the network acting as a kind of ‘brain’ for all of its connected solar and battery systems. And like a brain, the VPP is able to manage and optimise the efficiency of the connected systems. It can determine the times at which electricity is less expensive, then activate to direct power from the grid to be stored in batteries. It can also determine times when the grid requires additional energy, then directs that power back to support the grid.
How does a VPP work?
Houses that have solar panels absorb the sun’s energy to power electronic devices and fixtures. And houses that have a solar and battery system are able to store the extra unused energy in the battery, to use when the sun goes away.
Often though, solar panels soak up more of the sun’s energy than they need to power the home and fill the battery. At that point, the extra energy is fed back into the grid. When that happens, Nectr customers on eligible plans receive a Feed-in Tariff (FiT), which is a credit for any unused electricity that they generate, which is sent back into the grid.
However, today, when Nectr customers install a solar and battery system or add a battery to an existing solar system, they become part of the Nectr VPP and receive an additional monthly credit in exchange for access to their battery system.
What happens when the Nectr VPP is activated?
Depending on the specific activation, one of two things may occur when the VPP is activated.
In one instance, when the VPP is activated, your battery will receive a command to charge, and your battery will begin drawing energy from the grid. When this command is received, the needs of your home (at that time) are given priority, and any surplus electricity is then sent to your battery to be stored for use at a later time.
The charge command will be sent at a time when the energy bill rates are low, typically after sunset and overnight. This means that extra energy is drawn from the grid and stored in your battery at the least expensive times, when the needs of your house are at their lowest. During these charging periods, you may see a slight increase in your grid consumption.
In the other instance, the VPP activation causes your battery to discharge energy, to support the grid and ensure grid stability, helping to lower energy costs for both you and our VPP community.
During that time, your household’s needs remain the priority, and any energy released from your battery into the grid, will occur after your household energy demands have been met.
Does the VPP completely empty my battery?
Your battery will always hold a 20% back-up reserve charge, to ensure you are protected in the event of a network power outage. If an outage does occur (such as the grid going down or you lose your grid connection), then your system is configured to provide electricity to one backup circuit in your house.
It is important that you discuss with your installer, which circuit you want selected to be provided with back-up power if an outage occurs. You should ensure that this circuit doesn’t include any high-usage appliances (such as an air conditioner), so you can preserve the back-up power, and avoid tripping the circuit.
So, when the VPP is activated, the amount of energy transferred during an event can range from a very small amount (less than 1 kWh), up to the full battery capacity (excluding the 20% back-up reserve). Additionally, the amount of energy transferred over the course of a year will never exceed the annual limit of 500 kWh.
When is the Nectr VPP activated?
By being a part of Nectr’s VPP, it means that we can monitor and manage your energy, so at different times, we are able to feed your energy back into the grid and help to keep all costs down. Those times are determined by various factors (such as wholesale prices, demand related to weather events, and supply constraints).
Since electricity rates are less expensive, and the electrical needs of your household are lower during the night, the optimal time to charge your battery is overnight. When the VPP is activated and your battery receives a command to charge, it will begin drawing energy from the grid.
Then, in the morning, you have cheaper electricity stored in your battery and less need to draw more from the grid. And later in the day, when your solar panels are working at a higher level of output, your battery charge levels remain high, and there is even less need to use power from the grid during the more expensive times.
The energy produced by your solar panels is utilised in order of priority: firstly, by the fixtures and appliances in your house during the day, then to top up your solar battery, and then, any excess electricity that your panels generate is sent into the grid as a solar export.
Unpredictable VPP activations
There are also times where unpredictable grid incidents occur and affect the supply of power. When this happens, we may require your battery to provide support to help reduce any potential negative impacts that could result in higher prices to customers or even black outs.
Unfortunately, these events are unpredictable and usually seasonal, but they can occur at any time - including during the night. Potential events could include coal power-plant breakdowns, or an approaching storm predicted to affect wind or solar generation.
An example of the kinds of unpredictability could include the incident in 2021, where Callide C (a coal-fired power station in Queensland) exploded, causing a subsequent supply-demand imbalance.
However, even at short notice, your household electricity needs remain the priority, with energy transfer occurring after household demands are met and never in excess of the 20% back-up reserve.
How much energy is transferred into the grid?
Not all batteries connected to the Nectr VPP, experience the same rate of energy transfer. Rates will differ, depending on your energy usage, as well as the battery model you have installed and the battery’s storage capacity.
The Nectr VPP will never transfer 100% of your battery’s energy into the grid, as Nectr sets a 20% backup reserve state of charge (SoC) limit on our customers’ batteries. This means that the Nectr VPP will only control systems whose battery storage is higher than 20% and the battery will stop discharging energy when it reaches the limit.
The amount of energy transferred during an event can range from a very small amount (less than 1kWh), up to the full battery capacity (excluding the 20% backup reserve). Additionally, the amount of energy transferred over the course of a year will never exceed the annual limit of 500kWh.
You can monitor your energy storage system by using the Nectr app on your mobile phone, or by using My Nectr Hive on your computer’s internet browser.
Both of our platforms will give you access to information regarding your solar production, battery charging/discharging power, and your household usage at daily and monthly intervals. You can also see your household usage for the entire time that you’ve had your Nectr solar and battery bundle.
Why are VPPs important?
VPPs increase the share of renewable energy within the grid and help alleviate periods of high prices and high fossil fuel mix. Having a VPP allows Nectr to distribute clean, sustainable, and dispatchable power, that is generated closer to the location where it is consumed. This all helps the energy industry to further reduce its reliance on coal and gas, to lower its carbon emissions, and minimise its overall environmental footprint.
Beyond being a great way to ‘share the energy’ and keep electricity costs down, VPP platforms can also provide accurate insights into energy usage and demand throughout the day, as well as insights across different seasons and weather conditions. Having access to this information allows Nectr to better manage our load, energy assets, and our pricing models.
Nectr can also operate VPPs to help reduce the amount of strain put on the grid during times when energy is in peak demand. A lowered peak demand helps to reduce network distribution costs by improving utilisation, lessening the need for upgrades, and increasing the resilience of the grid. Then in the future, it could even be possible to operate VPPs as connected microgrids - which would enable a faster restoration of power in the event of disasters and blackouts.
Finally, having a VPP allows Nectr to provide clean, sustainable, distributed, and dispatchable power which is generated closer to the location it is consumed. This all helps the energy industry to further reduce its reliance on coal and gas, reduce its carbon emissions, and minimise its overall environmental footprint.
How you can get involved
Those customers receive a $10 bill credit each month of their contract term, in exchange for access to their battery system.
Once you’ve joined up with Nectr and you’ve had your solar and battery systems installed - sharing the energy via the Nectr VPP becomes automatic. It’s that simple!
To become part of the Nectr VPP and start saving, all you have to do is reach out and request a callback, then we can help guide you through.