By energy reporter Daniel Mercer
Peter Anderson likes to joke that he has an aversion to paying power bills.
It’s what drove him to install solar panels at his home in Sydney in 2019.
And it’s what convinced him to go one step further and get a battery in 2022.
“The funny thing about it was that our solar installer, when I first spoke to her, she’s like, ‘Oh, you don’t need a battery,'” Mr Anderson recalls with a laugh.
“I said, ‘It’s not about needing a battery, it’s about spite, taking money away from the power companies.'”
‘All seemed reasonable’
Like a growing number of consumers, Mr Anderson was enticed into buying a battery by the lure of a deal.
In his case, it was from one of the key energy retailers in Australia, AGL, which was offering about $1,000 off the up-front costs of installing a system.
In exchange, Mr Anderson says he agreed to participate in a so-called virtual power plant, or VPP.
As part of a VPP, companies which are co-ordinating — or aggregating — households’ batteries and other clean tech can use those devices according to the needs of the grid.
Mr Anderson says that in the first year after joining the scheme and getting the battery, he barely noticed a thing.
“It was all very gentle and easy going,” he says.
“It was, ‘Hey, this is what it is, we promise we won’t do these things, we promise we will do these things, we knock a thousand bucks off the battery, we put you on a five-year deal to stay on the program for five years.’
“The idea of it was to help stabilise the grid in times of drama.
“So it all seemed very reasonable.
“And for the first year, I don’t even think they touched the battery.”
That all changed after a year or so when Mr Anderson says he started noticing some dramatic shifts.
A shocking surprise
For starters, he claims AGL placed him without proper warning on a complicated type of dynamic charge known as a demand tariff.
Under a demand tariff, consumers are charged according to their single greatest half-hourly period of electricity use from the grid across an entire month.
The charges are designed to discourage people from using power from the grid at peak times but consumer advocates and even some regulators say they are incomprehensible, ineffective and unfair.
AGL denied it did not provide adequate notification, stressing Mr Anderson was given written communication flagging the change ahead of time.
On top of this, Mr Anderson asserts AGL also started “draining” his battery at times, forcing him to buy power from the grid at peak prices.
To compound his frustrations, he says the changes amounted to a double whammy — by forcing him to buy power from the grid at peak times, he claims he was driving up his costs under a demand tariff.
AGL has disputed this claim.
“They changed the way they use the battery,” he says.
“It went from these little bites every now and again to just full on sucking the thing down to its 5 per cent reserve level, just dragging everything out of it.
“And you could map when they were doing that to when the price on the (national electricity market) had skyrocketed.”
Gabrielle Kuiper is a consultant who specialises in the adoption and integration of solar panels and batteries.
She says virtual power plants hold huge potential as the energy transition gathers pace and the number of households and businesses participating in them could eventually number in the millions.
And she reckons policies such as the pledge by the federal Labor government to subsidise the cost of household batteries is only likely to supercharge this trend.
“We’ve got about over a third of households across Australia now have rooftop solar, but less than 10 per cent have batteries,” Ms Kuiper explains.
“Once we have a lot of batteries and also a lot of electric vehicles with the capacity to feed back into people’s homes or the grid, we will see this become a really significant part of the electricity system.”
In whom to trust?
However, Ms Kuiper says experiences such as Mr Anderson’s should serve as a warning about the dangers of poorly designed or managed VPPs.
For such schemes to work, she says, consumers have to be able to trust them.
“We know that there’s been issues for decades now around trust in electricity, full stop,” Ms Kuiper says.
“You know, the big energy retail companies, I think, are rated below banks even in terms of consumer trustworthiness.
“So, yeah, there are real challenges there.”
Ms Kuiper says regulators need to ensure consumers are getting the right advice and being properly protected.
To that end, she reckons there’s too little information that can help the average householder navigate and make sense of the market.
She worries that unless this happens, consumers could end up missing out on many of the benefits of their own investments.
“This is a new and emerging issue,” she says.
“We really need the Australian Energy Regulator to get on top of it and to improve transparency and provide more information to consumers.
“I think the risk is that the aggregators, particularly the large ones, like the four main retailers, earn a very high proportion of the profits from household and businesses’ energy technologies, particularly batteries, and households and businesses don’t end up with good value from participating in those VPPs.”
Energy giant steadfast
AGL, which is Australia’s biggest energy retailer with more than 4 million customers, defended its actions in relation to Mr Anderson and its management of the VPP.
A spokeswoman rejected claims AGL ever entirely depleted the batteries of participating households, saying it was the company’s policy to always leave at least 20 per cent of a charge remaining.
The spokeswoman also rebuffed suggestions Mr Anderson’s tariff had been changed as part of his participation in the VPP scheme.
She said the change in tariff was a separate matter.
The spokeswoman acknowledged that some customers were transferred to demand tariffs in areas where they applied, including much of New South Wales.
However, the spokeswoman pointed out that it was the poles-and-wires companies — and not the retailers — that instigated the tariff changes in the first place.
Retailers, by contrast, merely passed on those changes to consumers and always tried to ensure they provided the correct notifications.
Amid a backlash to the spread of demand tariffs, it is understood AGL is no longer applying the charge.
Instead, the company has said it is “endeavouring to maintain” customers on their existing tariffs such as flat-rates and time-of-use charges when their meters are replaced.
“AGL proudly has one of the largest growing virtual power plants in Australia,” the spokeswoman said.
“Customer participation in the VPP is entirely voluntary, and by enrolling in our VPP, customers receive payment for allowing us to use their battery in this way.
“A VPP participant’s battery is never fully discharged.”
Reality versus rhetoric
For Mr Anderson, his own experience was bad enough to leave the VPP scheme.
In future, he says he’ll manage his own energy needs.
“This is an obvious misuse of the virtual power plant solution,” he believes.
“They’re draining the battery to service other clients and you’re left in the lurch.
“Now, I bet if you go through the fine print … there’s no guarantees around that.
“But there’s the way they sell it and the spirit in which they sell it, which is very much against how they behaved.”
