Warning over virtual power plants
Consumers with home battery systems have been urged to assess the benefits before signing a VPP agreement.
The Australian Competition and Consumer Commission (ACCC) has warned consumers to carefully consider the benefits and risks before signing up to a virtual power plant agreement.
The warning comes at a time when home batteries are helping many households slash their electricity bills, but there has also been a substantial spike in the number of complaints about battery systems.
According to the ACCC's latest Electricity Market Inquiry report, the number of home batteries installed across Australia has surged, with more than 400,000 batteries added in the past 12 months alone.
The report found that households with solar panels and battery systems enjoyed annual electricity bills that were between $329 and $909 lower than those relying solely on grid power.
For the 24% of solar-and-battery households participating in virtual power plants, the savings were often even greater, with bills typically between $762 and $1,093 lower each year.
A virtual power plant, or VPP, links together home batteries and other energy resources, allowing them to be controlled by a central operator.
Batteries can be charged, discharged, or used to send electricity back into the grid when it is most valuable. The arrangement can help households earn additional benefits from their battery systems while supporting the broader electricity network.
“Households that have invested in batteries are achieving significant savings, particularly when their battery is connected to a virtual power plant,” ACCC Commissioner, Anna Brakey, said.
“Virtual power plants can help households get more from their battery by shifting energy use away from peak periods and sending it back to the grid when it is most valuable. This can help customers lower bills and pay off their system faster.”
However, the ACCC says consumers should not assume that a VPP is automatically the best option.
The report points out that VPPs are complex arrangements and that the promised benefits may not be achieved.
“When customers join a virtual power plant, they hand over control of their battery to an operator and are rewarded for its use to support the broader system,” Ms Brakey said.
“It is important customers understand this when signing up to participate in a virtual power plant.”
She added that “depending on their circumstances, some households may be better off with solar and a battery alone” and urged people to ensure they understand both the benefits and risks before committing to any offer.
The warning comes amid growing concern about consumer experiences in the rapidly expanding battery market.
The ACCC reported that complaints about household batteries and new energy services increased by 107% over the past year.
Consumers have reported being sold systems that did not suit their needs, experiencing faulty installations, poor battery performance, and difficulties obtaining repairs or having issues resolved.
The regulator has also heard from consumers who struggled to compare different offers or switch providers because of complicated contracts and limited compatibility between some battery systems and VPP products.
“As more Australians invest in batteries and participate in virtual power plants, it’s critical that consumer protections keep pace,” Ms Brakey said.
“Consumers should be able to easily compare offers, switch providers, and fix issues if things go wrong, but gaps in the current suite of consumer protections are preventing people from being able to do so.”
The ACCC’s message is particularly relevant for seniors, who are often targeted by sales promotions promising large savings.
While batteries and VPPs can deliver impressive reductions in power bills, consumers should take the time to understand exactly how an agreement works, how their battery will be used, what savings are realistic, and what options are available if things do not go as planned.
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