Social housing batteries to test new role in Illawarra energy grid
An $11 million Australian and NSW government pilot will combine solar and batteries at selected Illawarra social housing properties into a virtual power plant, testing how household energy systems can reduce tenants' electricity costs while supporting the regional grid.
Solar panels and home batteries installed at selected social housing properties in the Illawarra will be connected and coordinated as part of a new virtual power plant pilot.
The Australian Government will provide $10 million towards the $11 million program, with the NSW Government contributing $1 million.
Rather than operating solely as individual household systems, participating solar and battery installations will be connected through a virtual power plant, allowing stored electricity across multiple properties to be coordinated and used or exported when it is most useful to households and the electricity network.
The pilot is being developed within the Illawarra Renewable Energy Zone (REZ), Australia's first urban REZ, where EnergyCo is exploring how existing and new rooftop solar, batteries and other distributed energy resources can form part of the region's electricity system.
NSW Energy Minister Penny Sharpe said the program would examine whether the technology could provide direct benefits to social housing tenants.
“We want more social housing tenants to share in the benefits of cheaper, cleaner energy, and this $11 million pilot will show how rooftop solar, batteries and virtual power plant technology can help lower their bills.”
Testing how the model will work
While funding for the pilot has been announced, its commercial and technical design is still being developed.
EnergyCo and the NSW Department of Climate Change, Energy, the Environment and Water have opened a market sounding seeking input from virtual power plant operators and solar and battery installers.
The process will examine issues including the number of households needed to make an Illawarra VPP viable, equipment and metering requirements, integration with the electricity network, commercial arrangements and how much involvement would be required from participating tenants.
EnergyCo has made clear the market sounding itself is exploratory and non-binding and is not a procurement process. Social housing tenants are also not being sought to participate at this stage.
Information gathered from industry will instead help determine suitable locations, housing characteristics and areas that could be targeted when the program is delivered.
Submissions to the market sounding close at 5pm on Sunday 25 October 2026.
Building on existing social housing upgrades
The Commonwealth's $10 million contribution to the VPP pilot forms part of a recent $145 million expansion of the NSW Social Housing Energy Performance Initiative.
The initiative has already supported energy upgrades to about 400 homes within the Illawarra REZ, including 136 rooftop solar installations.
Federal Assistant Minister for Climate Change and Energy Josh Wilson said the investment was intended to extend access to solar and battery technology to people living in social housing.
“People living in social housing should share in the benefits of cheaper, cleaner energy.”
An urban approach to a Renewable Energy Zone
The Illawarra REZ was formally declared in February 2023 and has an intended network capacity of one gigawatt.
Unlike a model based solely on large renewable generation projects, EnergyCo's plans for the Illawarra include integrating consumer energy resources such as rooftop solar, home batteries and community-scale batteries.
The social housing pilot will test one way those smaller systems could be coordinated. EnergyCo says a virtual power plant can allow consumer energy resources to support the grid in a similar way to a power station, while improving coordination of home batteries and providing benefits to participating households.
