Why you should be able to buy your neighbour’s solar output, without paying interstate prices

In a sun-drenched nation like Australia, rooftop solar has boomed, but the benefits haven’t always been evenly distributed.

A new study at Deakin University is looking to change that by testing a concept that could revolutionise how we generate, trade, and use electricity: virtual energy networks (VENs).

A virtual energy network is an online platform that lets everyday consumers—households and businesses—buy and sell solar energy between themselves.

Funded by Energy Consumers Australia and powered by the Powertracer software platform, the Deakin-led trial is exploring how households and small businesses across the National Electricity Market (NEM) can trade solar energy directly with one another—buying and selling electricity like they might swap vegetables over the back fence.

Whether it’s selling excess rooftop solar to a neighbour, a local café, or even your own second property across town, VENs offer a more democratic, decentralised energy market. They also introduce a new level of flexibility in how consumers interact with the grid—though outdated tariff structures may still stand in the way.

Not only do VENs give households without solar the opportunity to access solar power, they can also provide cheaper power for buyers and better prices for rooftop solar producers than standard retailer feed-in tariffs.

“It makes sense that you’re looking to get a better deal than what you would be buying under your usual contract,” Associate Professor Dr Andrea La Nauze, the lead researcher on the Deakin trial, says in the latest episode of the SwitchedOn Australia podcast, published on our sister site, One Step Off the Grid.

While some councils, schools, and multi-site businesses currently use VENs to share solar energy, La Nauze says most energy retailers haven’t yet extended the model to the broader residential market.

Currently recruiting up to 400 households and businesses, the Deakin trial is open to customers of Energy Locals, a retailer with a transparent business model. Rather than profiting from energy usage, Energy Locals charges a flat subscription fee and passes energy costs on at wholesale rates.

Participants must have a smart meter and reside in one of the NEM states: Queensland, New South Wales, ACT, Victoria, Tasmania, or South Australia.

They can choose between peer-to-peer trades – selling to a neighbour, family member, or even another of their own sites – or community trades – buying from or selling into a state-based pool at a price they nominate.

Once trade preferences are set—say, agreeing to sell solar to a neighbour for 8 cents per kWh—the system runs automatically.

“It will work very well as a set-and-forget option,” La Nauze says.

As well as helping consumers get a better deal and support local energy supplies, La Nauze hopes the trial will show how VENs can unlock system-wide benefits for the electricity grid.

By giving non-solar households a financial incentive to shift energy use to the middle of the day, when rooftop solar is abundant and cheap, VENs could help soak up excess solar and reduce stress on the grid.

“It’d be really interesting if we’re able to demonstrate that access to this type of trading platform increases the consumption of people buying energy in the middle of the day,” says La Nauze. “[That] they’re boosting their consumption of electricity when there’s all that cheap solar availability.”

This midday consumption shift could mean lower energy prices for everyone, as it helps avoid peak load issues and makes better use of existing solar that might otherwise be curtailed.

“Those benefits eventually flow through to all of us in terms of cheaper network prices,” La Nauze explains.

Tariff trap: why VENs need smarter pricing

But there’s a catch. Under current pricing rules, network tariffs—the fees paid to transport electricity—are the same whether you’re trading with your next-door neighbour or someone interstate.

Participants in a virtual energy network currently pay full network charges, regardless of how close their trading partner is. This undermines the local efficiency that VENs are designed to capitalise on.

“If you are connected to [the low voltage network],” says Ezra Beeman, CEO of Empower Energy and Managing Consultant at Energeia, “and you import 1 kWh from the grid, potentially from your neighbour who is selling you excess PV, you will pay for the high voltage, sub-transmission and transmission networks as well, even if not using them for this service.”

“Whether that is the optimal design of those network tariffs is the big question,” acknowledges La Nauze.

Without tariff reform to reward local energy use, the economic case for virtual energy trading is significantly weakened.

“I would say this is the most important change needed, as it unlocks the economics of decentralized energy. The rest will follow,” argues Beeman, who formerly designed prices for Ausgrid, one of Australia’s largest electricity distribution network providers.

“Without the economics, nothing significant will happen.”

Reforming tariffs to reflect the true cost savings of local consumption could unlock the full potential of VENs, reducing reliance on long-distance transmission and making better use of existing infrastructure.

“If I am rewarded for consuming locally, I might be much more likely to consume based on local resource availability, and that has benefits to the system,” says La Nauze.

The Deakin study builds on a successful pilot led by community group Winzero in the Wingecarribee region of NSW, where around 40 sites have been trading solar for over a year. A local café is powered through the network, and residents unable to install rooftop panels due to heritage restrictions are finally benefitting from clean energy.

“That’s been a fantastic trial to demonstrate that the technology is usable, accessible, and successful for a community,” La Nauze reflects.

One of the strengths of VENs is their flexibility and user autonomy. Unlike virtual power plants (VPPs), which require centralised coordination, VENs let participants set their own terms and retain control over their assets.

“This system has the potential to solve a lot of the problems we want to solve in order to keep increasing the amount of rooftop solar in our grid, without necessarily having to give up autonomy from the individuals who own these assets.”

There’s even potential for donating excess solar to local charities or not-for-profits, giving those without solar the chance to benefit from clean, community-driven energy.

La Nauze and her team are especially eager to recruit non-solar households and businesses to create a robust and balanced marketplace.

To express interest in the Deakin virtual energy network trial, email ven@deakin.edu.au, or find more information here.