Virtual power plants offer path to replace Eraring coal capacity in Australia

Virtual power plants aggregating rooftop solar, batteries and electric vehicles could provide a cost-effective alternative to utility-scale generation as Australia's Eraring coal power station moves toward closure. Origin Energy, owner of the 2,880 MW Eraring plant, has grown its VPP to 815 MW across more than 276,000 connected services in less than 18 months.

Australia's largest coal-fired power station, Eraring in New South Wales, has a peak output of 2,880 MW. Origin Energy, which owns the plant, has expanded its Loop VPP to 815 MW — including more than 200 MW of large business demand and more than 400 EVs under management — at a fraction of the cost of conventional generation. Origin has simultaneously taken a final investment decision on a 460 MW battery storage system with two-hour dispatch, extendable to 700 MW and four hours. The company originally announced plans to expand its VPP to 2,000 MW — equivalent to 70% of Eraring's peak capacity — within four years.

Australian households have collectively invested an estimated A$25 billion in rooftop solar and distributed energy resources, with 3.5 million homes already equipped. The Australian Energy Market Operator has highlighted in its Electricity Statement of Opportunities that high consumer participation in coordinated distributed energy assets could substantially reduce the need for utility-scale solutions. Commercial and industrial rooftops across Australia are estimated to hold more than 28 GW of solar potential — approximately ten times Eraring's capacity — which, if paired with batteries and managed EV charging, could provide significant grid services at low capital cost to utilities.

Analysts argue that governments seeking fast and cheap new electricity capacity should offer incentives for battery and EV fleet installations in warehouses, factories and offices integrated into VPP networks, which can be dispatched during peak demand periods such as heatwaves. Ensuring households and businesses are paid appropriately for participating in the sharing energy economy would accelerate distributed energy resource uptake without requiring large public subsidies to established energy companies. The VPP model demonstrates that the replacement of large coal assets need not depend on equivalent utility-scale generation projects.

Key figure — 815 MW — Origin Energy VPP capacity across more than 276,000 connected services as of mid-2023