NSW VPP Battery Incentive: Is It Worth The Wait?

An incentive for connecting a home or business battery to a Virtual Power Plant will be made available in New South Wales towards the end of the year. Find out how much it is and whether it makes joining a VPP worth it.

—
UPDATE 30 October 2024: – read the latest about this initiative on our NSW VPP battery incentive information page.
—-

In late May, the NSW Government announced a subsidy to make installing solar batteries more affordable for the state’s households and businesses – up to thousands off the up-front cost. But the NSW battery rebate isn’t available until November. The initial announcement created confusion due to missing detail, and made some installers cranky as it is impacting sales in the interim while many wait for the rebate.

The battery subsidy is one aspect of the NSW government’s initiative. The other is a ~$250 to ~$400 incentive for connecting an eligible battery to an eligible Virtual Power Plant (VPP). This can also be claimed a second time, 3 years later. As with the battery subsidy, this scheme kicks off in November.

So, What’s A VPP?

A VPP generally consists of a network of distributed solar power and battery systems, but it may also include other energy resources and controlled loads. These resources are coordinated by a central operator, which decides when to charge/discharge a battery from/to the grid.

Virtual power plants can soak up solar energy from the grid when levels become too high compared to demand. They also enable the stored energy to be exported into the grid very rapidly to help manage peak demand or address disturbances. This helps to keep an electricity network stable. How hard or often a Virtual Power Plant operator will hit a battery and how much energy they’ll leave for the owner when they do varies between VPPs.

In exchange for giving a third-party control, participants may receive a discount on purchasing an energy storage system, higher feed in tariffs, lower mains grid consumption rates, or lump sum bonuses or electricity bill credits. These are all separate from the new NSW government incentives and vary between VPP programs.

On a related note, you can compare VPP offers here.

Ronald’s NSW VPP Incentive Verdict

How the VPP incentive aspect of the NSW initiative will work is yet to be finalised, but SolarQuotes’ devilishly handsome fact-checker Ronald Brakels has poked and prodded the rather scant information currently available.

Ronald says due to the high standards currently required for home batteries to get the incentive, it seems likely to him many households will only receive the minimum of $250 or close to it. If a household can receive two payments for being part of a VPP and are free to then quit participation after 3 years or so, then it may come to a $500 payment for the duration.

“Generally, joining a VPP is marginal. But I’m a little more optimistic about their value than some people because while some VPPs may hammer your battery, I expect that in 10 years’ time when your hammered battery will need to be replaced, a replacement will be much cheaper.

 

So, I’d say that – unless you have a well-above-average desire for independence – $500 for three years, or $167 a year, is worth it for joining a VPP. Particularly when you’ll be getting a subsidised battery to join with, which means any hammering won’t cost you as much as if you had to pay full price.”

Bear in mind the rules around this incentive are not clear yet and may change in the months ahead. It may be a requirement that you can’t skedaddle immediately after getting the second VPP payment – it could turn out to be a commitment of 6 years to receive that.

“If it’s 6 years then the yearly benefit is halved,” says Ronald. “But it’s still enough to make it worth considering since joining a VPP is often marginal. As in it’s very ‘meh’, but a little extra can make at least some of them worthwhile.”

Ronald also notes VPPs may improve if separate metering is brought in and they are unbundled from electricity retailers. This was supposed to have been brought in this year, but has been delayed because some electricity retailers didn’t like it (no surprises there).