NSW plans social housing VPP pilot for Illawarra urban renewable zone

The New South Wales (NSW) government is investigating a pilot virtual power plant (VPP) project in the Illawarra Renewable Energy Zone (REZ) that will enable the installation and coordination of rooftop solar and battery energy storage systems in social housing properties in the region.

EnergyCo, the NSW government authority responsible for leading the delivery of the state’s REZs, said the $11 million (USD 7.72 million) project provides an opportunity to improve coordination of consumer energy resources, such as solar and batteries, to increase the stability of the electricity network in the Illawarra region and provide direct benefits to social housing tenants.

The Social Housing VPP pilot project will support the rollout of rooftop solar panels and batteries for selected social housing properties in the Illawarra REZ. It will then connect them through a VPP, allowing stored power to be used or exported when it is most valuable to households and the electricity grid.

“We’re testing how a VPP model on social housing works best in the REZ,” EnergyCo said. “This includes investigating how system installers and VPP operators can best work together to support a more reliable electricity network for all.” 

EnergyCo is now seeking feedback from industry representatives to help shape the project’s design and delivery.

“We’re seeking input from VPP operators and solar and battery installers to help inform design choices for the program, based on real-world experience,” the authority said, adding that the outcomes of the market sounding will be used to identify the locations, housing characteristics and areas that may be appropriate to target during program delivery.

The Australian government will provide $10 million and the NSW government will contribute $1 million towards the cost of the project. The funding will be distributed through the NSW Social Housing Energy Performance Initiative which has already provided upgrades to about 400 homes in the Illawarra REZ, including the installation of 136 rooftop solar systems.

The Illawarra REZ is recognised as the state’s first urban renewable energy zone, integrating energy resources such as rooftop solar systems, home batteries and community-scale batteries. The government said the intended network capacity for the Illawarra REZ is 1 GW but this may be increased as demand grows.

Submissions for the market sounding can be made through EnergyCo NSW before 5pm on 25 October 2026.