NSW recruits 21 businesses to first VPPs designed to help keep lights on, and prices down
Sophie Vorrath
Jun 17, 2025
Policy & Planning
Three virtual power plants made up of 21 businesses at 108 sites have been recruited to help New South Wales kick its coal habit and make a smooth transition to renewables, as part of the state’s first firming tender.
NSW energy minister Penny Sharpe said on Tuesday that the three large-scale virtual power plants, or VPPs, are among four being underwritten by the state Labor government through the Electricity Infrastructure Roadmap.
The VPPs, operated by Enel X, will orchestrate the loads of major power users ranging from heavy industry to data centres and food producers, to use less energy at times of peak electricity demand, or major grid events, to help avoid blackouts and price spikes.
In return, the businesses involved in the VPPs will be compensated to adjust their energy use when the grid needs it most, which is anticipated to be no more than a few times a year.
The first of the three VPPs was launched by Sharpe on Tuesday at the site of one of the participants, Visy Recycling in Western Sydney. But the minister says that when all three are operational by summer, they will have a combined capacity of 95 megawatts (MW) of demand response.
This means they will free up enough electricity to power more than 30,000 homes for two hours during times of peak demand, at short notice if needed, to keep the lights on and the grid stable.
It’s like bringing a physical power plant online, Sharpe says, but at a much lower cost than building more large-scale generation projects that would rarely be used.
The minister might add that it’s also a much cheaper and more palatable option than paying to keep a clunky old coal plant open, just in case.
“The launch of this virtual power plant marks a major milestone in the state’s clean energy transformation,” Sharpe said on Tuesday.
“It’s another innovative resource to keep the lights on and put downward pressure on energy prices for all homes and businesses as coal-fired power stations exit the system.
“Through initiatives like this, industry, businesses and our major cities are stepping up to play a vital role in shaping our renewable energy future.”
Enel X’s three VPPs were among six projects representing 1,075 MW and almost 3 gigawatt hours (GWh) of energy to be selected in the first tender for firming services for NSW, held by the Australian Energy Market Operator, roughly a year ago. The other successful bidders all being big batteries.
For Enel X, the contract with the NSW government follows up on its two-year deal back in October of 2023 to supply 120MW of flexible demand capacity to the main Western Australia grid, the South West Interconnected System.
The WA contract, also awarded by the Australian Energy Market Operator, also used a commercial and industrial VPP to participate in the Non-Co-optimised Essential System Services (NCESS) program.
Also in 2023, Enel X Australia was awarded $3.7 million from Arena to launch a demonstrator project using commercial refrigeration systems around the country to provide flexible demand to the grid.
“We’re proud to deliver the latest tool for the state to protect homes and businesses from blackouts and high prices during periods of peak demand,” Enel X Australia country manager Carl Hutchinson said on Tuesday.
“This isn’t just a win for the grid, it’s a win for NSW businesses that are stepping up to play a critical role in keeping our grid secure while earning revenue for doing so.”
reneweconomy.com.au |
