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Glossary

VPP (Virtual Power Plant)

A VPP (virtual power plant) is a network of home batteries and other distributed energy devices that a provider controls together, so they can supply electricity or grid services at peak times as if they were one power station.

Written and checked by the Energy Merchants desk · Reviewed 2 October 2026

VPP stands for virtual power plant. It is not a building. It is software that links many home batteries (and sometimes solar and smart appliances) and tells them when to charge, hold or discharge. Pooled together, hundreds or thousands of small batteries can behave like one power station, supplying electricity or stabilising the grid at the moments it is needed most.

Customers usually join through a retailer or specialist provider, which may pay a sign-up credit or an ongoing amount for allowing control of the battery within agreed limits.

In practice

The term matters to installers because of eligibility. Under the Cheaper Home Batteries Program, a battery must be CEC-approved, VPP-capable and installed by an accredited installer to create STCs. VPP-capable means the battery and its inverter can be controlled remotely by a provider. It does not oblige the customer to join a VPP, but the capability has to be there and shown on the product’s listing.

In NSW there is also a PDRS incentive for connecting a battery to a VPP. That is separate from the federal STCs and comes with the provider’s own conditions. See PDRS definition for how it fits.

A practical tip: talk to the customer about VPP at the quote stage. If they will join one, check that the provider supports the battery model. If they will not, confirm that the model still meets the VPP-capable condition on the listing. The Cheaper Home Batteries Program installer guide goes through the checklist.

Common confusion

VPP-capable and VPP-enrolled are not the same. Capable is a property of the product and a condition for the STCs. Enrolled is a commercial decision by the customer. Either way, joining a VPP does not change the number of STCs the battery creates.

A VPP is also different from a feed-in tariff. A feed-in tariff pays for exported solar. A VPP pays for flexibility from the battery. See feed-in tariff.

From the desk. Record the battery's VPP-capability evidence in the job file. It is one of the items reviewers look for on a battery claim.

For the claim, see battery STCs, and for related vocabulary the certificate trading glossary.

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