South Korea’s LG Energy Solution has announced a partnership with financier Humm Group to provide its customers with virtual power plant (VPP) platform, which the company expects to become dominant vehicle for solar and battery sales in Australia in the medium term.
LG Energy Solution, one of Australia’s most popular residential battery manufacturers, was already part of Discover Energy’s VPP platform, though today’s announcement seems to mark its progression to a more exclusive offering.
Humm Group, one of Australia’s largest ‘Buy Now Pay Later’ finance providers, is following a similar model in this foray. It claims customers who sign up for its VPP program will receive an “energy credit” matched to the monthly instalment to Humm, effectively offsetting the cost of the system.
To be eligible for the VPP, customers need to purchase and install solar and an LG Energy Solution VPP battery and finance the purchase through Humm – which is expected to carry a price tag of around $17,200.
Nonetheless, LG Energy Solution’s General Manager of Residential Sales, Philip Crotty, says it is aiming to create the “largest residential VPP network in Australia.”
The VPP will be rollout initially in Victoria, before being made available to other eastern states.
LG Energy Solution and Humm Group expect solar and battery adoption in Australia to more than double to become a $5 billion market by 2025, up from $2.2 billion this year. This growth, it says, will be powered by Virtual Power Plants. Using software, VPPs essentially aggregate the capacity of the residential batteries in their networks. By combining the storage capacities, VPPs are able to trade on Frequency Control Ancillary Services (FCAS) markets which can be lucrative. This is expected to decrease the buyback time of home batteries – which remain a prohibitively costly solution for most households.
VPPs have also piqued the interest of Australian state governments, many of which have trials or pilot programs underway. This is because through aggregation, residential batteries are able to provide more grid stabilisation, potentially smoothing out the notorious duck curve caused by the influx of solar energy into the grid around midday.
LG and Humm say they want to have 10,000 VPP-linked energy storage systems installed by end of financial year in 2023.
Alongside Australia’s residential solar boom, the number of companies offering to finance renewable energy solutions has grown.
Humm Group says it has financed over $2.2 billion of rooftop solar in Australia, helping deliver 1 GW of clean energy into the grid. “VPP is a natural progression for us with 265,000 solar systems financed since 2010. This new channel advances humm’s leadership position by adding to our existing in home sales and corporate energy finance channels as green energy continues to evolve,” Humm Group CEO Rebecca James said.
LG Battery recall
Earlier this year, LG Energy Solution issued a recall notice for some of its battery energy storage systems (ESS) due to potential defects which can cause overheating and fire, following issues in the United States.
This recall included earlier models of the home battery to be used in the VPP – that is, its Residential Energy Storage Unit (RESU). The model range has been on market since 2016, with the recall affecting batteries manufactured between March 2017 and September 2018
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