Battery Storage
VPP vs Feed-in Tariff: Why Your Battery Earns 5x More Than Exporting
VPPs pay 15-25c/kWh during grid events vs 3-8c from standard FITs. Here's the real comparison with actual numbers.
Your battery rebate, checked before you sign
By Bec Ramirez
10 min read
The federal rebate takes about $3,610 off a 14 kWh battery installed before 1 January 2027, when it steps down.
Current battery rates end 1 January 2027 · 80 days remaining
Solar feed-in tariffs in 2026 are heading towards zero. Across most of Australia, retailers are paying 3-8 cents per kWh for your solar exports. A decade ago it was 20-60 cents. The maths is simple: there's so much rooftop solar now that daytime electricity is practically free on the wholesale market, with prices regularly going negative.
If you have a battery, though, you have a much more valuable option than accepting a low feed-in tariff. It's called a Virtual Power Plant (VPP), and it can pay you 3-5x more per kWh for the energy your battery exports.
What Is a Virtual Power Plant?
A VPP is a network of home batteries that are coordinated to act like a single power station. When the grid is under stress (hot summer evenings when air conditioning peaks, cold winter nights, or when a coal plant trips), the VPP operator sends a signal to your battery. It discharges stored energy to the grid, and you get paid for it.
The key difference from a feed-in tariff: VPP exports happen when electricity is most valuable (peak demand, high wholesale prices), while standard solar exports happen when electricity is cheapest (middle of the day, when every other solar home is also exporting).
The Numbers: FIT vs VPP vs Self-Consumption
| What You Do | Rate Per kWh | When It Happens |
|---|---|---|
| Export solar (standard FIT) | 3-8c | Daytime, when wholesale prices are lowest |
| Export via VPP | 12-25c | Peak demand events (10-30x per year) |
| VPP extreme events | $1.00+ | Rare grid stress events (heatwaves, outages) |
| Self-consume with battery | ✓ 25-35c saved | Evening, when you'd otherwise buy from grid |
The hierarchy is clear: self-consumption saves the most (25-35c/kWh avoided), VPP exports pay second-best (12-25c/kWh earned), and standard FIT exports pay the least (3-8c/kWh earned). A battery lets you access all three: self-consume first, VPP export second, and standard export for anything left over. For more on the maths, see our guide to battery arbitrage in Australia.
Your battery rebate, checked before you sign
The federal rebate takes about $3,610 off a 14 kWh battery installed before 1 January 2027, when it steps down. One Why Solar Approved installer near you, and fifteen minutes with a solar expert before you sign.
Current battery rates end 1 January 2027 · 80 days remaining
Real Example: 10kWh Battery in Sydney
Scenario: Household with 6.6kW solar + 10kWh battery
Without VPP (FIT only)
- Self-consumption savings
- ~$900/year
- ~8 kWh/day @ 30c
- FIT export earnings
- ~$110/year
- ~5 kWh/day @ 6c
- Total battery value
- ~$1,010/year
With VPP (Origin Loop)
- Self-consumption savings
- ~$850/year
- Slightly less (VPP uses some capacity)
- VPP credits + FIT
- ~$450/year
- ~20 events @ 15-20c + daily FIT
- Total battery value
- ~$1,300/year
VPP adds ~$290/year in value in this scenario. Over a 10-year battery warranty period, that's an extra $2,900, offsetting a significant chunk of the battery cost.
These numbers are conservative. A household with a larger battery (13-15 kWh), a more aggressive VPP program like Reposit, or in a state with more grid events (like SA) could see VPP earnings of $600-$1,000+ per year.
Top VPP Programs at a Glance
Tesla Energy Plan
Powerwall required
Tesla manages your Powerwall exports during grid events. No lock-in contract, earnings credited to your electricity bill.
Origin Loop
Origin Energy VPP
Origin dispatches your battery during peak demand. Compatible with several battery brands. 12-month lock-in applies.
AGL VPP
AGL virtual power plant
AGL coordinates battery dispatch across their VPP network. 24-month lock-in but competitive rates and reliable earnings.
Simply Energy VPP
Higher rates, no lock-in
Higher export rates with no lock-in contract. Good option if you want flexibility to switch providers while earning from your battery.
Reposit Power
Highest earning potential
AI-driven platform that bids your battery into the wholesale market during price spikes. Highest potential earnings but more variable returns.
Amber Electric
Wholesale market access
Passes through wholesale electricity prices directly. You earn more when prices spike and pay less when demand is low. Variable but transparent.
For a full comparison with battery compatibility, pros/cons, and requirements, see our VPP Programs guide.
The Catch: Battery Degradation and Grid Charging
VPPs aren't free money. There are two costs to be aware of:
Battery cycle usage
Every VPP discharge uses a cycle. Most programs dispatch 10-30 times per year. If your battery is rated for 6,000 cycles over 10 years (roughly 1.6 cycles/day), VPP adds about 2-5% more cycle usage annually. At a battery cost of ~$10,000, that's roughly $20-$50/year in degradation cost, well below VPP earnings. That said, extreme heat can accelerate degradation, so factor in your local climate.
Grid charging risk
Some VPP programs may charge your battery from the grid before an event, costing you at your usage rate. A well-designed VPP uses your stored solar instead. Check your program's settings. Most let you set a minimum reserve and control whether grid charging is allowed.
For most households, VPP earnings comfortably exceed the marginal degradation cost. But read the fine print on grid charging. Some programs import grid electricity to fill your battery before events, which can eat into your savings.
See the battery rebate your quote should show
The federal rebate takes about $3,610 off a 14 kWh battery installed before 1 January 2027, when it steps down. Then a solar expert goes through it with you, and your quote, before you sign.
Current battery rates end 1 January 2027 · 80 days remaining
Your Three Options (and When to Use Each)
Standard Feed-in Tariff Only
Your solar panels export surplus energy during the day. Your retailer pays you 3-8c/kWh.
Best for: Households without a battery, or those still deciding on a battery. It's passive income with no setup and no management, but the lowest returns.
Battery + Self-Consumption
Store your solar in a battery and use it in the evening instead of buying from the grid. Saves you 25-35c per kWh.
Best for: Every battery owner as the baseline strategy. Self-consumption should always be your priority because it has the highest per-kWh value.
Battery + VPP + Self-Consumption
Self-consume first, then let your VPP program export excess battery capacity during grid events at 15-25c/kWh. Any remaining surplus goes to standard FIT.
Best for: Battery owners who want maximum value. This is the optimal strategy. It stacks self-consumption savings with VPP earnings and still collects FIT on any leftover exports.
VPP vs FIT: State-by-State Snapshot
| State | Typical FIT | VPP Opportunity | Notes |
|---|---|---|---|
| NSW | 3-8c | Strong | Large grid, frequent events. NSW VPP rebate of up to $1,500 available. |
| VIC | 3-8c | Strong | No ESC minimum FIT since 1 July 2025, which makes a VPP even more attractive by comparison. |
| QLD | 3-8c (SE) | Good | Not for 44c Solar Bonus Scheme holders. Wait until July 2028. |
| SA | 3-10c | Excellent | Highest grid stress in Australia. SA VPP program offers free batteries to some homes. |
| TAS | Variable | Limited | Fewer VPP programs available. Hydro-dominated grid means fewer peak events. |
| ACT | Variable | Moderate | Small market but ACT government actively supports battery and VPP programs. |
Check your state's current FIT rates: NSW | VIC | QLD | SA | TAS | ACT
The Export Charge Factor (Sun Tax)
Several states are introducing or considering solar export charges, sometimes called the "sun tax". These charges apply when you export solar during times of grid congestion (typically middle of the day). While the details vary by network, the direction is clear: exporting solar is going to cost you money in some cases.
This makes VPPs even more attractive. VPP exports happen during peak demand periods (evenings, not midday), when the grid actively needs your energy. You're not subject to export charges, and you're getting paid premium rates. A battery with a VPP effectively turns the sun tax problem into a revenue opportunity.
Quick Decision Guide
You have solar but no battery
Stick with the best FIT you can find (compare rates here). Then seriously consider adding a battery. Compare battery options and note that the federal Cheaper Home Batteries program covers about 30% of the cost.
You have solar + battery, no VPP
Join a VPP. It's largely free to join, most have no lock-in, and you'll earn $200-$600+/year on top of your existing self-consumption savings. Start with our VPP comparison.
You're buying a new battery
Factor VPP compatibility into your purchase decision. Tesla Powerwall has its own VPP plan, while BYD, Sungrow, and Alpha ESS work with Origin, AGL, and others. Check battery compatibility before committing.
You're on QLD's 44c Solar Bonus Scheme
Don't add a battery yet. It will void your 44c rate. Wait until the scheme expires in July 2028, then add a battery and join a VPP. Read our full QLD guide.
The next step
If you're considering a home battery system, Bec and the team can match you with one Why Solar Approved installer near you for a free written quote, and fifteen minutes with a solar expert before you sign.
Written by
Aussie Mum & Energy Expert
Helps families switch to solar with practical, real-world advice. Bec focuses on the financial side: rebates, bill savings and financing options, so everyday Australians can see real value from going solar.
If you have any questions about the information in this guide, email hello@whysolar.com.au or call +61 2 5657 6527.