As the name suggests, a virtual power plant (VPP) is a virtually distributed network of energy resources that can be linked together to deliver energy supply. Unlike a traditional power plant, a VPP does not require its generation to take place in one facility. In fact, currently Australia’s only operating VPPs use rooftop solar and battery storage across homes to deliver power into the grid on demand.
While VPPs have been previously unavailable to commercial and industrial businesses, last year Flow Power announced that we would commit to building Australia’s first Corporate VPP to open new possibilities for our customers. This VPP will be a network of batteries installed on customer sites.
To keep you up to date on this latest trend to take hold of the energy market, we’ve pulled together the key benefits of VPPs so that you can decide if they make sense for your business’s energy strategy:
Breaking barriers to batteries
While the benefits of batteries are countless, the cost associated with them is a roadblock for most businesses. Because of this, it can be hard to determine if there is a return on investment that outweighs the expense.
As battery storage becomes an increasingly viable energy solution for businesses and the grid, more accessible options will come forward. Our Corporate VPP aims to remove the financial barriers to entry and allow more businesses to tap into the benefits of batteries, from securing a source of backup power to providing an on-demand reserve energy to the grid.
Batteries provide dispatchable power, this means that they can be called upon whenever you want to deliver controlled and for the most part, a certain source of energy. Therefore, they assist during times when demand increases or when renewables aren’t generating.
If battery storage is paired with a renewable source of power, such as on-site solar or a power purchase agreement (PPA), it can ‘firm’ up the generation reducing the variability of renewables.
Batteries give businesses another avenue to take part in demand response. Many businesses, such as irrigators, can easily integrate demand response into their energy strategies, while others like hospitals have less flexibility. Adding batteries into the equation is a game changer that allows all businesses to participate in demand response and tap into the benefits.
Businesses that can use a battery for backup power while they shift or decrease their energy use from the grid will reduce costs and can receive payments through demand response programs.
In rare cases like last Thursday and Friday, when the grid experienced extreme conditions, battery storage can step in to help reduce costs for everyone.
New revenue streams
Corporate VPPs can also open up new revenue streams in the energy market. For example, Flow Power can aggregate the power supplied from these businesses to create a large unit of energy that can be bought and sold through the Australian Energy Market Operator’s ancillary services markets. The sale amount for this energy is then distributed to contributing businesses.
This allows businesses to turn the power they are either not using or storing into a new source of revenue.