Inside the shed at her property in Cowaramup, a rural town about 3 hours south of Perth in Western Australia, a small battery is fixed to the wall.

On the roof above, an array of solar panels entirely covers one side, feeding power back to the battery and ensuring it’s filled for later in the day.

What isn’t used in the house or stored in the battery is almost invariably exported to the grid.

It is, between the panels and the batteries, an arrangement that more than meets the needs of her household and has drastically slashed her power bills.

“Like, we’ve got a small child. She doesn’t use that much energy — just a lot of iPad if we’re not looking,” Ms Buchanan quips.

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Ms Buchanan and her husband are like millions of Australians who have taken the plunge and shelled out for solar panels, in their case four years ago.

But, unlike most of those consumers, they’ve followed an unconventional path.

Batteries in exchange for control

They are part of what’s known as a virtual power plant (VPP), a term that refers to the coordination of solar panels, batteries and other smart tech among hundreds or even thousands of homes.

virtual power plant (VPP)

The Buchanans are leasing the equipment, allowing them to afford a battery when they might not have been able to otherwise.

Up-front, a battery of that size would have cost about $10,000, but the leasing costs are less than the power bills they would have paid without it.

In return, there’s a catch.

The company that operates the Buchanans’ VPP — Perth-based firm Plico — can control their battery, putting energy in there when it’s abundant and withdrawing it when it’s scarce.

A major boon for Plico is selling the surplus solar back into the system when electricity prices are high, such as in the evenings.

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What’s more, the company can also turn down — or switch off — the output from their panels at times when the system is being swamped with solar.

Perhaps surprisingly, this latter condition does not bother Ms Buchanan, a student of permaculture, or the study of sustainable agricultural ecosystems.

“This was actually one of the big selling points for me,” she says.

“Through my background and training, I’m very aware of how vulnerable energy systems are.

Solar glut sparks extraordinary measures

Across Australia, the rise and rise of rooftop solar is reshaping electricity systems and forcing regulators and the incumbent industry to adapt.

There are now more than 4 million homes and small businesses with solar panels, which collectively generated about 13 per cent of all the electricity used in Australia’s biggest grids last year.

At times, however, generation from rooftop solar is far higher still — supplying all of South Australia’s needs and then some.

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In Western Australia, the world’s biggest isolated grid, rooftop solar is having a similarly outsized effect.

Such is the abundance of solar during these periods, which typically fall on sunny, mild days when demand for power is modest, authorities are eyeing extraordinary measures.

Late last year, the Australian Energy Market Operator (AEMO) said “emergency” powers were urgently needed in every state to ensure rooftop solar could be turned down or switched off in extreme circumstances.

Those circumstances would arise when there was so much rooftop solar in the system that it was threatening to overload the grid.

Plico chief executive George Martin says the challenges posed by the growth of rooftop solar are hardly a bad thing.

On the contrary, he says, they show how the technology is maturing into a dominant force that will — and is — squeezing out fossil fuels such as coal and gas.

However, he says it is still a force that needs to be controlled.

And he argues this is where VPPs come into their own.

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“Basically, when you install solar and battery in people’s homes, they all individually have a power plant that can provide that exact same service,” Mr Martin says.

“But they’re too small individually.

Micro plants harness excess solar

According to Mr Martin, VPPs could take progressive steps to pare back rooftop solar at times of over-supply.

As a first step, he says companies like his could simply restrict solar exports while ensuring the panels continue to supply power to the household “behind the meter”.

Beyond that, he explains the solar panels could be turned off entirely, requiring the customer to buy their power from the grid.

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Finally, there is a third option: turning off the solar panels and emptying the battery in order to soak up some of the excess generation periodically washing over the system.

In both of these latter cases, Mr Martin insists affected customers are compensated to reward them for their service.

“On a mild spring day where there is a lot of energy being pumped into the grid … there isn’t enough demand on the grid to use all that amazing energy.

“That results in grid instability not too dissimilar to cases when there isn’t enough energy going to the grid.”

Energy experts say schemes that encourage households to willingly reduce their solar output at times of extreme supply should be welcomed.

Bruce Mountain from the Victoria Energy Policy Centre reckons VPPs will become an increasingly important part of the power system.

Mr Mountain also says referring to them as “virtual” plants is silly because households with solar panels and batteries are, in effect, real generators.

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He says the major practical difference is their small size and the fact they are connected to the low-voltage distribution network rather than the high-voltage transmission one.

“Typically, there can be an advantage in companies aggregating up lots of small producers to be able to target bigger markets,” Mr Mountain says.

“The second-biggest source of our clean electricity supply is on the roofs of homes and businesses, and it’ll soon be our biggest.

“So it really matters that this part of the electricity picture thrives and is treated suitably.”

Undermining runaway solar ‘futile’

For all the merits of VPPs, Mr Mountain says there’s an important distinction between those who sign up for them and those who don’t.

Mr Mountain says it’s one thing to curtail the solar output of a willing VPP customer but another thing entirely to restrict the generation of someone who was never asked.

To that extent, he says, the measures canvassed by the AEMO seem extreme and would do little to fix another problem — limitations on the small-scale poles-and-wires network.

“You can see an argument there for spill as an economically sensible part of the equation,” he acknowledges.

“On the other hand — and this is where it gets really tricky — the network operators themselves, many of them, see distributed production as a commercial threat.

“No longer are they getting paid to ship electricity from central producers.

“Instead, customers are making the electricity themselves, which decreases their own sales.

Mr Mountain argues that resisting rooftop solar — or trying to undermine it — would be futile given its popularity among millions of consumers and its inexorable rise as a source of power.

Instead, he says politicians, regulators and industry should focus on accommodating it effectively.

“We’re seeing big central generators struggling, whether they are large new wind and solar farms or nuclear plants, which lie much further into the future.

“Our central system is struggling against cheaper, more flexible, distributed production, rooftop solar, and now also batteries, whose costs and functionality are improving drastically over time.”

Mr Martin, the boss of VPP operator Plico, shares the sentiment.

He says the runaway demand for rooftop solar shows few signs of stopping, especially as the technology becomes ever cheaper.

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Given the trend, Mr Martin says it would be much better to coordinate the combined capacity of that generation and the batteries and smart tech that would go alongside it.

Whether that’s stashing the excess solar away in batteries for use later in the day or spilling some of it when there’s simply too much, he says the benefits are obvious and huge.

“Right now we’re in the thousands [of customers],” Mr Martin says.

“Ideally, eventually we get to hundreds of thousands, millions.

“The energy market operator, the Australian Energy Market Operator, has forecast that there will be hundreds of thousands, millions in the decade to come and the decades after that.

Solar householder Pippa Buchanan, for one, is comfortable with the trade-offs.

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She says that so long as her quality of life isn’t diminished and her bills are lower than with the alternative — and that’s been the case so far — any sacrifices are worth it.

“It’s a real privilege to be able to have solar panels to take advantage of the technology,” Ms Buchanan says.

“It’s great to benefit from this way of capturing solar energy, but there’s also a responsibility to the greater health of the grid.”