On sweltering summer evenings, with millions of air conditioners running simultaneously, grid stress rises fast, heightening the risk of outages. Increasingly today, the solution to those rolling blackouts is not larger power plants. It’s the humble home battery in someone’s home.
Across neighborhoods, home batteries can be connected through software to form a virtual power plant (VPP). That network can discharge stored electricity that instantly eases grid stress when demand spikes. This marks a meaningful transformation beyond home resiliency and savings. Home batteries are flexibly integrated with grid resources, capable of generating new value for both the households that own them and the grid.
The Payment Models
While VPP programs are rapidly being rolled out across the Australia and Newzeland, homeowners who enroll their home batteries in a VPP don’t get paid the same way in every program. The payouts can come in either bill credits or real cash, depending on the program.
- Upfront incentive (or rebate): A one-time payment when the battery is installed or committed to the VPP. This helps offset the cost of the battery and lowers the entry barrier for households. Under the WA Residential Battery Scheme, customers in Horizon Power’s service area can receive a rebate of A$380 per kWh (capped at 10 kWh), meaning an eligible 10 kWh home battery can qualify for up to A$3,800 in upfront support.
- Capacity-based payment: Homeowners receive a recurring payment (monthly, seasonal, or annual) simply for making a certain amount of battery capacity (often measured in kW) available to the grid, even if the battery isn’t regularly discharged. EnergyAustralia’s Battery Ease program offers participating homeowners a fixed bill credit of about A$15 per month in return for keeping their battery available to support the grid during peak periods.
- Performance-based payment: Performance-based payments are an increasingly common form of compensation, with homeowner earnings linked to verified battery performance during grid events. Payouts may be based on the actual power a battery delivers or reduces (measured in kW) or the actual energy it contributes over time (measured in kWh). In the service area of Synergy (SWIS) under the WA Residential Battery Scheme, customers receive a payout of A$0.70 per kWh of energy exported from their eligible battery during a grid event.
Today, VPPs are increasingly offering a layered compensation structure that combines different payment types, making economics much more robust for homeowners.
The Participation Models
The way homeowners participate in VPP programs varies. In most programs, homeowners enroll on the VPP program through an OEM app, but in some cases, enrollment may also be completed through an external link by a third party.
Bring-Your-Own-Device (BYOD) programs allow customers to enroll batteries they already own or buy a battery and opt into a program in exchange for upfront incentives, monthly capacity payments, or event-based performance payouts. BYOD scales quickly because it leverages existing customer assets rather than requiring utilities to install hardware. The majority of the VPP programs in AU/NZ today are BYOD models.
Aggregator-led VPPs are run by third-party companies often referred to as Distributed Energy Resource Management Systems (DERMS) that pool thousands of customer-owned batteries and offer their combined resources or grid-stabilizing services to utilities, retailers, and grid operators. The aggregators capture revenues and share a portion with homeowners as seasonal or per-event payments.
A typical aggregator-led VPP in Australia is operated by Evergen, a company which aggregates thousands of customer-owned home batteries through a software platform and offers their combined capacity to utilities and energy markets, sharing the resulting revenues with participating households.
Understanding the Types of Grid Support the Battery Provides
When a home battery joins a VPP, it can play very different roles depending on what the grid needs. Some of the most common use cases today are described as follows.
Frequency Regulation
The electric grid must keep its alternating-current frequency within tight limits (in AU, around 50 Hz). If demand suddenly rises or a generator trips, frequency may drop. A battery participating in frequency regulation can respond within milliseconds or seconds, charging or discharging quickly to restore balance. Frequency regulation often commands relatively high compensation per unit of energy or service provided.
Demand Response (DR) via Storage
Demand response in AU/NZ refers to any action that reduces net demand on the grid during tight supply conditions or high-price periods, either by curtailing or shifting flexible loads, or by using behind-the-meter resources such as batteries so a site draws less electricity from the grid when called upon.
Depending on the programs, homeowners get predictable compensation for simply being available, or the payment to homeowners in DR-type programs is typically linked to how much energy is saved or how much load power is reduced.
Technologies That Make Participation Easy
A few years ago, joining a residential VPP often meant paper forms, phone calls, and long waits. Today, many VPPs enable homeowners to join in through an online portal or toggling a setting in their energy storage system app.
Behind the scene, advanced software is doing the heavy lifting. VPPs depend on specialized platforms that connect many distributed energy resources (DERs). These platforms serve as the brain that monitors each device’s status, sends dispatch signals during grid events, and then automatically measures performance once the event ends.
Final Thoughts
Residential VPPs are poised to be a game-changer for clean energy and grid stability. For homeowners, the shift allows them to receive real value in return for delivering stored energy or flexible capacity, creating a new source of income by supporting the grid.
However, this opportunity comes with real challenges. VPPs rely on complex software, communications protocols, and coordination. Scaling VPPs also requires alignment across many stakeholders. Therefore, standardized interoperability protocols, transparent compensation mechanisms, consumer protections, and robust regulatory frameworks are critical to building trust.
Residential VPPs are changing home battery use and emerging as a foundational pillar for the clean-energy transition. For homeowners and regulators alike, the promise is real, as long as we don’t ignore the challenges.
