What is a virtual power plant (VPP)?

What a virtual power plant is

A virtual power plant, or VPP, is a large group of home batteries, usually paired with rooftop solar, that are linked over the internet and controlled by software so they can act like one power station. The Clean Energy Regulator describes it as small energy systems "linked and controlled using smart software" that together "behave like a single power plant".

The company running it is the VPP operator. Often that is an electricity retailer. It can also be a separate company, sometimes called an aggregator, that pools batteries from many homes.

Most days your battery does its normal job: it fills from your solar and runs your home in the evening. When the grid is under strain, say a hot evening with every air conditioner running, the operator signals thousands of batteries to send some stored energy to the grid at once. This is called a VPP event. Some offers also use events to charge your battery from the grid or hold its charge.

How you get paid

There is no standard VPP deal. Solar Victoria lists the common forms of reward:

• a discount on your energy bill
• bill credits for the power your battery shares
• an upfront discount when you buy a battery.

Some offers instead pay a higher feed-in tariff, which is the rate you are paid for each kWh you send to the grid.

As an example of structure, not a recommendation, here is AGL's offer as published on its own website in September 2026:

• a $200 welcome credit
• $80 a year in bill credits for staying connected, paid as $20 a quarter
• $1 in credit for every kWh your battery charges from or discharges to the grid during an event
• a cap of 250 kWh a year moved through your battery in events, and some charge always left for your home (up to 20%, depending on the battery)
• you need an AGL electricity plan, a smart meter, an internet connection and a compatible battery.

AGL's page also shows the catch: after an event you may buy back power your battery would have supplied. In its example, 10 kWh exported earns $10, buying 10 kWh back at 40c costs $4, so you are $6 ahead, not $10.

In NSW there is also a state incentive for connecting a battery to a VPP, claimed through a VPP provider that offers it. The amount depends on how many kWh you make available, up to 28 kWh, it can be claimed once per electricity meter, and from 1 July 2026 batteries up to 50 kWh are eligible. Only some providers offer it, so ask.

What the consumer watchdog found

The ACCC's June 2026 electricity market report found that customers with solar and a battery had median yearly bills $329 to $909 lower than regular customers, and those in a VPP had bills $762 to $1,093 lower. Those are middle values across real households, compared with the ACCC's representative sample of ordinary household customers. They ignore what the systems cost and are not a prediction for your home. The same report said VPP customers "bear most of the risk" for how well the operator runs their battery, and that some VPP customers may be better off switching operator or leaving.

What you give up

• Some control. The operator decides when to use your battery. If an event empties it at 6pm, you buy the rest of your evening from the grid. Solar Victoria also warns you may not be able to charge from the grid at your own off-peak times.
• Freedom to switch. Many VPPs require you to be on the operator's electricity plan, which may carry an exit fee. The ACCC found contracts ranging from about 1 to 12 years, with the longest terms and biggest exit fees tending to come with financed or provider-owned batteries. The most popular offers are now flexible bring-your-own-battery ones, though that flexibility also makes it easier for operators to change the terms.
• Choice of battery. Operators pick which batteries they support. The ACCC found one of the most popular battery brands worked with only 3 of the VPPs it sampled.
• Wear. Extra charging and discharging adds wear, and each manufacturer treats VPP use differently in its warranty. Check the warranty, and any limit on how often and how much the operator can use.

Do you have to join a VPP to get the battery rebate?

No. Under the federal Cheaper Home Batteries Program, an on-grid battery, including its inverter, must be VPP capable. That means the inverter can connect to the grid and to outside parties, can receive and respond to remote signals, and has the communications protocol to do so. The government is explicit: "Participation in a VPP is not required for the program."

You can join at installation or later, though the Clean Energy Regulator notes extra upgrades may be needed if you join later, and you will need an ongoing internet connection. Off-grid systems more than 1 km from the grid do not need to be VPP capable. The rest of the rebate rules are in The 2026 home battery rebate, explained.

How a VPP differs from a wholesale plan like Amber

On a wholesale plan from a retailer such as Amber or Localvolts, you pay and are paid the wholesale market price, which moves up and down through the day. Software then trades your battery against that price: charging when power is cheap and selling when it is dear. Amber's software is called SmartShift. Sunnn+ does the same job for Fox ESS, SAJ, Sungrow, Deye, Sunsynk and Tesla Powerwall batteries on Localvolts.

The line is blurry: the ACCC's report lists Amber's SmartShift among VPP products, and notes customers can opt out of the automation at any time. What matters is who keeps the value and who carries the risk. On a fixed-reward VPP, the operator decides when to use your battery and pays you a set credit, while your usual bill stays on normal retail rates. On a wholesale plan, you get the market price for every kWh you sell and pay it for every kWh you buy, including when prices spike and your battery is empty.

Questions to ask before you sign

1. Do I have to switch to your electricity plan, and how do its rates compare with mine?
2. How long is the contract, and what is the exit fee?
3. How often can you use my battery, how much each time, and is there a yearly cap?
4. How much charge will you always leave for my home?
5. Can I still charge at my own off-peak times, or skip an event?
6. Can you change the rewards or terms during the contract?
7. Does joining affect my battery warranty, and is my battery compatible?
8. In NSW: do you offer the state VPP incentive?

When a VPP is not the best fit

• You want to trade on a wholesale plan. A VPP that requires its own electricity plan rules out Amber or Localvolts while you are in it.
• Your evenings already use the whole battery. Every event takes energy you then buy back.
• The bonus hides a worse plan. A welcome credit is easy to see, higher usage rates are not. Compare the whole bill.

Next step

Sunnn is not an electricity retailer and does not run a VPP that pools customers' batteries. Sunnn+ trades your own battery against the prices on your wholesale plan. We design and quote solar and batteries and arrange installation through accredited installers. Any battery that gets the federal rebate has to be VPP capable, so the choice between a standard plan, a VPP or a wholesale plan with Sunnn+ stays open after installation.

To see modelled numbers for your own home, try the savings calculator, or check your eligibility and we will talk through which setup suits the way you use power. Savings figures are modelled estimates, not guarantees.