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Project overview
  • Lead Organisation

    Australian Energy Market Operator Limited



    ARENA Program

    Advancing Renewables Program

  • Start date

    29 March 2019

    End date

    31 January 2022

  • Project Partners
    This DER project was completed on 31 January 2022.


A Virtual Power Plant (VPP) broadly refers to a group of resources that are coordinated using software and communications technology to deliver services traditionally performed by a conventional power plant. In Australia, grid-connected VPPs focus on coordinating rooftop photovoltaic (PV), battery storage and controllable load devices.

The Australian Energy Market Operator (AEMO) anticipates a rapid uptake of residential battery storage systems in the National Electricity Market (NEM), driven by a number of government incentives schemes announced in South Australia, Victoria, New South Wales and Queensland.

As AEMO currently has no visibility of how VPPs operate, this project will test a new technical specification for VPPs to deliver Frequency Control Ancillary Services (FCAS) in the NEM, enabling VPPs to capture new value streams that could be shared with their customers.

AEMO will also augment its systems to receive operational data from VPPs to observe their behaviour, including how VPPs respond to wholesale energy market prices or deliver local network support services.

AEMO will use this data to improve its operational forecasting of VPPs, and identify further changes required to integrate VPPs into market frameworks at large-scale, including potential regulatory reforms.

Key results

  1. VPP market participation and value stacking – This trial has observed VPPs delivering contingency FCAS, responding to energy price signals, and delivering local network services, at times delivering more than one service simultaneously. Small battery VPPs, like utility-scale batteries, have proven to be highly effective at providing contingency FCAS through various response methods.
  2. Develop systems that provide AEMO with operational visibility of VPPs – AEMO established a number of Application Programming Interfaces (APIs) to receive large amounts of continuous data, allowing deep, insightful analysis as shared in the various knowledge sharing reports. AEMO’s analysis of this data verified the ongoing need for operational visibility of VPPs as they reach material thresholds.
  3. Assess current regulatory and operational arrangements affecting VPPs – Insights from the VPP Demonstrations has informed the MASS Consultation , which is reviewing the appropriate measurement and verification arrangements for DER provision of FCAS, and will continue to inform other initiatives such as Scheduled Lite, the Data Communication Standard Consultation and the ESB DER Implementation Plan.
  4. Understand how to improve consumers’ experience of VPPs in future – A detailed Customer Insights Study was undertaken which identified that consumers’ ongoing satisfaction with, and advocacy of, VPPs will be further enhanced with improvements in initial and ongoing communications and transparency in the operation and earning potential of the VPP.
  5. Understand suitability of cyber security measures VPPs currently implement – VPPs are encouraged to engage in the Australian Energy Sector Cyber Security Framework (AESCSF) voluntary assessments and the ESB reforms that relate to cyber security, and to implement best practice cyber security frameworks in their system architectures.

How the project works

The AEMO Virtual Power Plant Demonstrations project involves accelerating upgrades to AEMO’s systems and processes to obtain operational visibility of VPPs.

AEMO is engaging with existing pilot scale VPPs to participate in the VPP Demonstrations, which will start in June/July 2019 and run for at least 12 months.

The AEMO Virtual Power Plant Demonstrations project aims to:

  • Test a new technical specification for portfolios of distributed energy resources to deliver FCAS
  • Observe VPPs stacking multiple value streams to improve their commercial viability (by delivering FCAS, network support services and responding to energy price signals)
  • Provide an evidence base to inform changes to regulatory settings or AEMO’s operational processes

Area of innovation

The areas of innovation in this project relate to AEMO:

  • Test a new technical specification for Distributed Energy Resources (DER) to deliver FCAS, potentially facilitating more competition to deliver these services at a lower cost to consumers,
  • Develop systems to receive operation data from VPPs so that AEMO can observe VPP behaviour and learn what changes are required (either to regulatory setting or operational processes) to integrate VPPs into the NEM at large-scale.


ARENA’s funding will accelerate updates to AEMO’s systems and processes to receive operational data from VPPs so that AEMO can learn about how VPPs operate.

Insights from these demonstrations will inform necessary regulatory or operational changes to facilitate a smooth integration of VPPs into the NEM before they become widespread.

Last updated 01 February 2022


Plotting next steps in distributed energy transformation

As Australians embrace rooftop solar at world-leading rates, work is underway to create a modern, fairer electricity system for the future.

What are virtual power plants and why do they matter?

Thousands of household solar and battery installations are being aggregated into virtual power plants to help stabilise the electricity grid.

What are distributed energy resources and how do they work?

According to the twentieth century model of energy distribution, large power plants fuelled by coal, hydro or gas, generated electricity that was distributed via a centralised grid.

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