20th April 2023
A Virtual Power Plant (VPP) is a system that integrates multiple decentralized power generation sources, such as solar panels, wind turbines, and batteries, into a single network. The network is managed by advanced software that can optimize the performance of each power source to provide reliable and cost-effective electricity to the grid.
In a VPP, the electricity generated by each distributed energy resource (DER) is aggregated and treated as a single power plant. The VPP can then respond to changes in the grid's electricity demand and supply by dispatching power from the most appropriate DERs at the right time, allowing for more efficient and flexible energy system management.
The VPP model enables greater integration of renewable energy sources into the grid and greater control over energy supply and demand. It also allows for more efficient use of existing infrastructure, reducing the need for costly upgrades and new investments in traditional power plants.
The Global Virtual Power Plant Market size by revenue in 2022 was 0.71 billion USD. It is projected to reach 8.77 billion USD by 2030 with a CAGR of 32.23% in the forecast period of 2023-2030. There are several drivers behind the growth of the Virtual Power Plant (VPP) market:
Renewable energy integration: As more renewable energy sources such as solar and wind power are integrated into the grid, VPPs offer a solution to manage the variability and intermittency of these sources, helping to stabilize the grid.
Demand response programs: VPPs can help utilities and energy aggregators to participate in demand response programs by adjusting energy demand in response to grid conditions, reducing peak demand, and avoiding the need for new power plants.
Energy storage: VPPs can integrate energy storage systems such as batteries to store excess renewable energy during low-demand periods and dispatch it during peak-demand periods, increasing grid stability and reducing the need for fossil fuel backup.
Cost reduction: VPPs can reduce energy costs by allowing utilities to access cheaper energy sources, and by optimizing the dispatch of DERs to reduce grid congestion and transmission losses.
Government policies: Many governments around the world have introduced policies to promote the adoption of renewable energy and energy efficiency, which have driven the growth of the VPP market.
The Virtual Power Plant (VPP) market is highly competitive and fragmented, with a large number of players operating in different regions and segments of the market. Here are some of the key players in the Virtual Power Plant Market: ABB LTD., AGL ENERGY LIMITED, AUTOGRID SYSTEMS, INC., ENBALA POWER NETWORKS, Enel x, INC., General Electric Company, Limejump Energy Ltd., SCHNEIDER ELECTRIC SE, SIEMENS AG, SUNVERGE ENERGY INC.
Tesla revealed that almost 4,000 households with Powerwalls and solar connected to the system will be connected to the system in September 2020 when it announced intentions to startup phase 3 of its enormous virtual power plant in South Australia.
Siemens has created a business plan to help the energy optimization for the international Carlsberg Group subsidiary Sinebrychoff, a Finnish brewery, in November 2020. At Sinebrychoff's facility in greater Helsinki, these solutions—a VPP and the most recent energy storage technology—will be put into place with the help of financing options. It makes use of digitization to generate the possibility for cost-saving and power supply quality improvement.
The Global Virtual Power Plant Market is bifurcated based on Technology type And End-User.
Demand response, distributed generation, and mixed assets are the three categories into which the worldwide virtual power plant market is divided based on technology. Due to rising investments in demand-response solutions, the demand-response category is anticipated to have the biggest market share. Due to its long-lasting advantages for end users and capacity to raise the energy efficiency of the grid, its demand is rising quickly. Additionally, it offers advantages like peak load management and the chance to receive rewards for taking part in demand response initiatives.
The market is divided into residential, commercial, and industrial segments based on end users. Due to the widespread use of smart meters, smart home appliances, and compatibility with home energy management systems (HEMS), the residential segment currently maintains the biggest market share. Due to the adoption of VPP systems in business complexes, hospitals, universities, shopping malls, and other end-use applications, the commercial market is also anticipated to expand gradually.
Due to the numerous projects authorized in the U.S. and Canada to deploy VPPs, North America is predicted to hold a significant market share. For example, SimpliPhi Power set up a VPP demonstration project in Louisiana in May 2020.
The need for VPPs is being driven by Europe's significant investments in energy storage and renewable sources. The largest and first of its sort in Europe, for instance, is Statkraft's VPP in Germany. It produces 10 nuclear reactors' worth of electricity or more than 10,000 MW. As a result, Europe's increasing use of renewable energy is increasing the need for VPPs there.
In the upcoming years, the APAC virtual power plant market is anticipated to expand significantly. This will be caused by the significant investments made in smart energy management technologies by regional nations like China, South Korea, and Japan, as well as the growing demand for a dependable and consistent supply of electricity for commercial and industrial uses.
The Virtual Power Plant (VPP) market is a rapidly growing and highly competitive sector that is driven by the need for a more flexible, efficient, and sustainable energy system. VPPs offer a solution to the challenges of integrating renewable energy sources into the grid, managing peak demand, reducing energy costs, and improving grid stability. The market is characterized by a large number of players operating in different regions and segments, including energy companies, technology providers, and service providers. As the market continues to grow, we can expect to see further innovation, consolidation, and expansion by existing players, as well as the emergence of new players with new technologies and business models. Overall, the VPP market is poised to play a critical role in the transition to a cleaner, more sustainable energy system.