The commercial battery in your premises may earn your company additional income by joining a virtual power plant. But it has to be the right type of setup before it can take part.
Read on to find out what a virtual power plant is, whether it’s worth joining one, and what battery setup you need to qualify.
What is a virtual power plant?
A virtual power plant (VPP) is a group of batteries and other electrical equipment spread across different sites that one operator manages as a whole through a software platform.
There is no physical connection between any of these assets. Each battery and piece of equipment stays on its company’s premises, as would yours. You may be able to keep your existing electricity supplier, although the VPP provider will need to check that your tariff and contract allow the arrangement.
The VPP’s software receives information from each connected site and sends instructions back to the equipment it controls. For example, it might tell your site and other sites in its network to:
- Discharge its battery so the site takes less electricity from the grid
- Charge up its battery so the site takes more electricity from the grid
- Change when equipment like EV chargers and heat pumps operate so the site takes more or less electricity from the grid when needed
VPPs are important for sites with smaller batteries or flexible equipment that might not be able to provide enough power to join an electricity market on their own. VPPs pool these sites so that, together, they can meet the minimum amount required to take part.
How does a virtual power plant work?
A commercial VPP normally follows four basic steps:
- A controller collects information from your battery and site.
- The software works out how much battery power is available after protecting your site’s needs.
- The provider combines that power with capacity from other sites and offers it into an electricity market or flexibility service.
- The meter records how much electricity your site takes from or sends to the grid. The provider uses that data to work out what the VPP delivered and how much your business should be paid.
2 ways your battery setup can make and save money through a VPP
There are two main ways a commercial battery setup can make and save money for businesses.
1. Charges related to when and how much electricity you buy
The software controlling your battery can reduce your electricity costs and, through the VPP, earn additional income by choosing when the battery charges and discharges.
Here’s how your VPP’s actions deliver a return:
| Action | Benefit |
|---|---|
| Charge the battery when electricity is cheaper and use it when prices are higher | Buy less electricity during expensive periods |
| Store surplus solar electricity and use it later | Buy less electricity from the grid |
| Use spare battery power for VPP trading | Earn an agreed share of the trading income |
Example one - save money: Your battery already has 100 kWh stored up when electricity prices go up. Right now, your site needs 50 kW to power operations.
Instead of buying that electricity from the grid, the VPP tells the battery to supply the site for one hour. During that hour, the site uses 50 kWh from the battery.
The battery charged earlier when electricity cost 15p per kWh. Grid electricity now costs 40p per kWh, so the business saves 25p on every kWh it uses from the battery:
50 kWh × 25p = £12.50 saved
Example two – make money from flexibility trading: Sometimes, there is too much or too little electricity on the grid. The National Energy System Operator (NESO), which runs Great Britain’s electricity system, constantly works to keep supply and demand as close as possible.
NESO and local electricity network operators sometimes pay businesses to change how much electricity they take from or send to the grid. This is often called flexibility trading.
Here’s how it works. Your site has a baseline, or an estimate of how much electricity it would normally take from the grid at that time.
Suppose your site would normally take 100 kWh from the grid during the event. The event is the period when the electricity system asks businesses to change how much electricity they take from or send to the grid.
The VPP tells your battery to supply 50 kWh, reducing the amount your site takes from the grid to 50 kWh.
Before the event, your provider agreed to pay your business £25 for delivering that reduction. Because the battery delivers the full 50 kWh reduction, your business earns the £25 payment.
2. Charges related to capacity
Many commercial sites have an agreed maximum amount of power they can take from the grid. If they go above it, they may pay an extra capacity-related charge.
During times when it looks like your site might breach that limit, your battery can step in to supply the difference. You still get all the power you need but from a mix of grid and stored electricity.
Other than saving you money because you didn’t go over the limit, other benefits include:
- Supporting an application for a lower capacity limit which means lower non-commodity charges like TNUoS and DUoS
- Making more room within your existing grid connection for equipment such as EV chargers, as long as the battery can reliably cover the extra demand so you do not have to pay for a larger grid connection
How does my site join a VPP?
VPP providers first need to do a number of checks to make sure they can connect to and control your battery, as well as measure what it does.
Expect to be asked for:
- Your battery and inverter make and model
- How much electricity the battery can store
- How quickly it can charge and discharge
- Your meter and electricity tariff
- Your import and export limits
- Any backup power you need to keep in reserve
If you’re not sure about any of these, ask the company that installed or maintains your battery and inverter.
The VPP provider will then check whether your equipment, meter, contracts, and grid connection are suitable for its system. In some cases, you may need an extra controller or gateway.
Before joining, check how the provider calculates your income, which fees it takes, when it pays you, and how you can leave the agreement.
Will a VPP put my site’s needs first?
It should, but this depends on how the provider sets up its control software.
After joining, its software should follow the rules agreed for your site, such as keeping enough electricity in reserve for backup and making the battery available when grid electricity is most expensive.
So, if your site needs 50 kWh from the battery at 5pm, the VPP should not use up that stored electricity in an earlier trade.
Your battery must have enough power and stored electricity to carry out the site uses you have protected. The software must reserve that amount before offering anything left to the VPP.
When signing up with a VPP provider, you need to agree on:
- How much electricity must stay in the battery
- When the battery must remain available for the site
- Which uses take priority
- Whether someone at the site can stop a trade
Most importantly, the VPP should only use the battery power and stored electricity left after your site’s needs have been covered.
Connect to a VPP through GridVolt
To reduce your energy bills and find out whether your battery could earn additional income through a VPP, contact GridVolt.
We’ll first examine your site’s electricity use, tariff, solar generation, battery and inverter controls, meter setup, and import and export limits. This helps us confirm whether your equipment is suitable and what it can safely do.
From there, there are two routes:
- Energy Manager: Ideal if your main aim is a lower bill. It controls the battery around your electricity use, solar generation, and tariff, so you buy less electricity at the most expensive times. It also follows the rules you set for backup power and other site needs.
- GridTrade: A companion to Energy Manager for suitable GB sites. It uses only the battery power and stored electricity left after your site’s needs have been covered to take part in wholesale and flexibility trading. GridTrade is not currently available in Ireland.
We’ll also explain how your income is calculated, which fees apply, when you’ll be paid, and how you can leave the agreement.
Get in touch with GridVolt today for a bespoke proposal for your site. To find out more, fill in the form on the right or get in touch via the contact page.
Virtual power plants: frequently asked questions
What will a VPP provider check before my site can join?
Before deciding whether your battery setup can join a VPP and trade, your provider will want to check the following:
| Check | What it means |
|---|---|
| Metering | The provider needs suitable meter data to show how much electricity your site took from or sent to the grid and how this changed during a trade or event. |
| Battery size and controls | The battery must have enough usable power and stored electricity after covering the site’s needs. Its controls must also accept supported external instructions. |
| Controller and communications | The controller or gateway must send reliable information to the VPP and pass instructions back to the inverter. |
| Export limit | If the VPP plans to export electricity, your connection agreement must allow it and the battery must stay within the agreed export limit. |
| Contract and supplier | Your supply contract needs to allow battery trading. Not all contracts do. |
| Site limits | Your own rules on how much charge stays back, when the battery is off-limits, and who can override. |
| Battery warranty | The proposed charging and discharging must stay within the battery manufacturer’s warranty conditions. |
Do I need solar panels to join a VPP?
No. A suitable commercial battery may be enough on its own.
Solar panels can provide surplus electricity for the battery to store, but the battery may also charge from the grid. The provider will check which approach works with your tariff, contracts, and intended battery use.
Do I need a half-hourly electricity meter?
The provider needs suitable meter data to measure what your site did and calculate any payment. Many commercial VPP arrangements use half-hourly data from the site’s main electricity meter.
However, this is not the only possible route. P483 removed the general requirement for a customer to be half-hourly settled in some arrangements where an approved meter connected to the asset measures its response. Individual VPP providers may still have their own narrower metering requirements.
Can my battery join a VPP if my site cannot export electricity?
Possibly. The battery may still help the electricity system by supplying your site so that it takes less electricity from the grid.
However, it cannot take part in a trade that requires electricity to go back to the grid unless your connection agreement allows export. Where an export limitation scheme applies, it stops the site exceeding its agreed export capacity. These systems commonly follow the G100 engineering requirements.
Do I have to change electricity supplier to join a VPP?
Not necessarily. Some commercial VPP arrangements can work alongside your existing electricity supplier.
The VPP provider still needs to check your tariff, supply contract, export agreement, and any other flexibility or trading agreement. These contracts must not give different companies conflicting instructions for the same battery power.
Will joining a VPP affect my battery warranty?
It may increase how often the battery charges and discharges. This is called battery cycling.
Your provider should check the manufacturer’s rules on the number of cycles, charging and discharging rates, minimum charge levels, and other warranty conditions. The VPP should operate the battery within those limits.
How much can my commercial battery earn through a VPP?
There is no standard payment for joining a VPP. The amount depends on:
- How much battery power remains after your site’s needs
- How often that power is available
- The electricity markets and flexibility services the provider uses
- Market prices
- Whether the battery reduces grid imports or exports electricity
- Provider fees or revenue share
- The electricity needed to recharge the battery
- Electricity losses during charging and discharging
- Any additional battery use
Ask the provider to show you the expected gross income, every deduction, and the estimated amount your business would receive.
Is a VPP the same as P415?
P415 is a rule change that came into effect in November 2024. It lets independent aggregators sell your site’s flexibility into the wholesale market on your behalf. Before then, most businesses could only do this through their electricity supplier, and many suppliers did not offer that route.
On its own, one commercial battery may be too small to make battery energy trading worth the effort for aggregators. VPPs group sites like these together, giving the aggregator enough battery capacity to trade, while each site still sets limits on how its equipment can be used.
Is a VPP the same as a microgrid?
A microgrid is a local power system that can run on its own, like many hospitals have. This means they have their own generators and batteries, so when the grid goes down, they can keep their theatres, wards and equipment running without a break. Microgrids are there to keep a site powered if there is a failure in the wider grid.
VPPs are different in that they join equipment up across many separate sites and work with the grid to take part in the wider market.
Is a VPP the same as an energy aggregator?
While a VPP is batteries and equipment, an energy aggregator sends the instructions to control how they operate at each site. They work together rather than compete against each other.
Commercial VPP versus home VPP
Home VPPs pool thousands of home batteries at the same time while the focus of commercial VPPs is on fewer, larger batteries on business sites.
The main differences between the two systems are:
| Home battery | Commercial battery | |
|---|---|---|
| How to join | Usually through the household’s electricity supplier or a home battery tariff | Usually through a site assessment and a commercial VPP provider or energy aggregator |
| What you can earn | Export payments, tariff credits, or rewards for changing when the household uses electricity | Lower site electricity costs and, if the site qualifies, trading or flexibility income |
| Any limitations? | The household may need enough charge left for its own use. The supplier or scheme operator can only use the battery at the times and in the ways the household agreed to. | The business may need the battery for normal work, such as machinery, fridges, heating, EV charging or backup. So the VPP can only use the part of the battery the site agrees to make available. |
| Meter and contract | A domestic meter and household supply contract | A commercial meter, a commercial supply contract, and where exports are involved, an agreed export limit |
What a commercial VPP connects to on your site
The equipment a VPP uses is behind the meter on your side of the electricity meter. That means it can power your site, store electricity, or change when your site uses grid power.
Your site’s power needs come first. A VPP can only use the part you agree to make available, within the limits you set. It will not use battery charge you have reserved for your own site, or control equipment outside the rules you agree.
Where your site has a battery energy storage system, or BESS, the VPP can use it as one of the most flexible assets on site. The software can decide when the battery charges, when it powers the site, and when it sends power back to the grid, where your export setup and contract allow it.
A VPP can also use other flexible equipment, each within its own limit, like:
- Solar panels can generate electricity for the site or battery. Any surplus may go back to the grid where the setup allows it
- EV chargers can charge vehicles sooner or more slowly, but they need to be ready when customers or staff want to use them
- Heat pumps can warm or cool a building before prices go up, then ease off while conditions are comfortable.
- Cold-store compressors can chill harder before costs rise, then ease off while the store stays in its safe range.
- Non-critical pumps can come on earlier or operate more slowly, but they must not hold up or slow production
Battery capacity, measured in kWh, tells the VPP how much electricity the battery can store. Its power rating, measured in kW, tells the VPP how quickly it can charge or discharge. Both matter, but neither alone decides whether your site can join.
Many kinds of sites can work well with a VPP, including farms, hotels, warehouses, factories and EV charging sites.
Note: Battery cycling is how often a battery charges and discharges, and some battery makers limit the number of cycles as part of their warranty.