February 9, 2023
Virtual Power Plants (VPPs) and Small Generation Aggregators (SGAs) are two innovative concepts being utilised within the energy industry in Australia. Here we'll briefly explore what these are and how they are advancing the energy landscape across the National Electricity Market (NEM).
A VPP is a virtual entity that brings together multiple decentralised energy sources such as solar panels, wind turbines, fossil fuel generators, and energy storage systems. These generation sources are connected through a digital platform that coordinates and optimises the output of the individual systems to form a collective power plant. The VPP can then sell that combined energy to the NEM or directly to customers.
SGAs, on the other hand, are entities that pool together multiple smaller-scale energy generators (i.e. aggregates small generating units), and sell the combined energy output to the NEM at the spot price. This allows smaller energy producers to participatein the energy market and earn revenue from their excess energy production. It's not uncommon to find these SGA configurations on blocks of land in regional areas, on the rooftops of large warehouses, backup generators, or anywhere there is significant generation.
The future of VPPs and SGAs in the energy market looks very promising. With the growth of renewable energy and the increasing adoption of decentralized energy systems,the demand for VPPs and SGAs is set to rise. These entities can help to reduce the dependency on fossil fuels, lower greenhouse gas emissions, and provide for a more sustainable energy future. A key distinction between these two offerings in the market, is the ability of the VPP to sell to a customer, where SGAs must sell their output to the Australian Energy Market Operator (AEMO).
One key area where VPPs and SGAs are being utilised more and more is through the implementation of Embedded Networks. An Embedded Network is a small-scale energy network such as,traditionally, an apartment or housing complex, commercial building, or industrial park. When configured as an SGA or VPP, these networks are typically managed by an accredited Market Small Generation Aggregator (MSGA), which aggregates the energy produced by the individual systems within the network and sells the combined energy to the NEM. For more information on SGAs within Embedded Networks, check out our helpful web article HERE.
VPPs and SGAs are becoming prominent configurations within the energy industry, helping to coordinate and optimise the output of decentralised energy sources. As the demand for renewable energy continues to grow, the role of VPPs and SGAs is set to become even more important. Utilising Embedded Networks configurations, both models provide a means by which to help to create a more sustainable energy future and innovative product options for savvy consumers.
