Why should customers participate in VPPs?
In Part One of our Virtual Power Plant (VPP) series, we explored how transformative technologies like VPP’s are in creating positive change in the energy industry.
Part Two of this series provides an insight into the benefits to energy customers for participating in VPP programs and why energy businesses are working towards having a fully operational VPP program.
1) Why do energy retailers want customers to participate in their VPP programs?
If you currently have a residential solar and battery system installed or are currently investigating adding a battery to your solar system, you’ve no doubt begun seeing energy retailers, battery manufacturers and the like, promoting their VPP programs. The key players are offering bill credits, upfront payments or plan benefits, such as rate discounts - either in addition to or instead of a solar feed-in-tariff. In exchange, the customer agrees to participate in the VPP program for the duration of the agreement.
2) How do I participate?
Participation and the operation of the VPP varies across providers. Some energy retailers/specialists will access your battery at regular intervals throughout the year and provide a financial incentive to you monthly, while others may only access it during times of high demand and provide payment per access. The agreement you enter into will ensure you are aware of how much of the energy stored in your battery can be used, the maximum number of accesses per year and the schedule of access.
Depending on the VPP program, participation means allowing the energy retailer/specialist to remotely access and control your energy storage system as per their contract terms. This could mean once a month, once a quarter, a set number of times per year, etc.
You may think that this will impact on your own battery storage usage, but the energy business is limited by the contract terms, the battery manufacturer's restrictions for your energy storage system, and the requirement that the level of energy stored in your energy storage system does not drop below 20% of useable energy storage capacity, to name a few.
3) What will the VPP program do when accessing my system?
Generally, your VPP provider will:
- monitor the performance of your solar system and energy storage system,
- set the operating mode of your energy storage system,
- draw electricity to your battery from your solar system or the national electricity grid,
- maintain the energy stored in your battery so that we can discharge it at some future time,
- discharge electricity from your battery to the national electricity grid,
- discharge electricity from your battery for your energy usage at the premises,
- bid into the frequency control ancillary service market to help stabilise the electricity grid; and
- provide network services for electricity network companies.
4) How and will Nectr access my energy as part of their VPP program?
Currently, customers of the Nectr Home Battery AddOn plan will participate in our VPP program. We offer a monthly $10 VPP bill credit applied throughout the contract term in exchange for accessing your battery system up to 52 days per calendar year.
However, before actively accessing our customer’s battery systems, Nectr will undertake a learning phase to understand how the basic features of the functioning battery system works post installation. As with the majority of VPP programs, self-consumption optimisation of a household is a priority and the learnings gleaned during this first phase will inform the most beneficial access for our customers battery systems.
Ultimately, customers will one day have control of when energy providers can access their system and even allow access to the excess storage by family members. For Nectr, this feature will be enabled in its customer App. Besides the conventional access and offerings already available (which can be viewed here), the Nectr app will integrate added features to notify customers when we remotely access their energy storage systems, as well as allow the customer to request battery control at any given time.
5) Why the interest in VPPs?
AEMO (Australian Energy Market Operator) is working to establish an open VPP market over the next few years.
This will allow the industry to:
- Establish a trading platform for the distributed energy storage system to bid into the electricity wholesale market when electricity prices are high
- Participate in bidding into Frequency Control Ancillary Services (FCAS) market to contribute to stabilising network frequency when demand or supply of electricity fluctuates.
- Provide network services for when distribution network companies need it.
All of the above will be able to capture additional revenue stream for the energy storage system. In an ideal world, Nectr is also planning to have a ‘profit sharing’ feature available with the customer for additional revenue we capture.
To view part-one of our VPP blog series, you can click here.
If you’d like to learn more about Nectr’s Home Battery AddOn, then you can head here.
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