Virtual Power Plant Market Analysis, Market Size, In-Depth Insights, Growth and Forecast 2031
Today’s energy landscape is evolving from a rigid, centralized system of coal and gas plants owned by a few to a decentralized system of diverse, clean, and distributed energy resources owned by many. This transformation is epitomized by the virtual power plant (VPP) – a network of independent distributed energy resources (DER) systems.
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Rise of Virtual Power Plants
An increasingly relevant new energy management concept, VPPs intertwine several energy sources into a single electricity flow of demand, managed through technology like the Internet of Things (IoT). Blockchain technology may further accelerate the growth of the virtual power plant market and distributed resources (DR). VPPs represent a simple, automated Energy-as-a-Service technology solution and IT structure that integrates different types of distributed energy sources, flexible consumers, and energy storage with each other and other market segments in real-time via a smart grid.
The rise of the virtual power plant market has ensured energy security, improved grid stability and reliability, assured optimum utilization of energy resources, lowered loaddemand response, regulated frequency, utilized operational reserves, and managed peak demand. Players in the global virtual power plant market have truly taken off in the last decade, not just as a concept but as a practical solution that a growing number of energy companies are creating, using, and commercializing.
Global Virtual Power Plant Market to Enable Better Control and Distribution
Renewables have been garnering the spotlight in the world of energy. A large number of small DERs are about to replace conventional power plants, banking on strong support from virtual power plants. VPPs allow the aggregation of thousands of electricity producers, consumers, and storage units and utilize a cloud-based control system to perform like a single large-capacity energy source. By intelligently controlling their feed-in and consumption, their
power and flexibility can be valorized in different markets. The conventional method of electric supply, which seeks last-mile connectivity to every home, office, and factory, is fraught with inefficiencies. With VPPs and DERs, it is now possible to move power generation resources closer to the point of consumption.
Future of Energy Distribution with Virtual Power Plant Market Solutions
A network of decentralized generation sources such as wind farms, solar arrays, and combined heat and power units works in coordination with storage systems and flexible energy consumers. VPPs operate with one goal: to relieve demand on the grid by distributing the power generated by individual units during peak hours. They provide end users with data to make informed decisions, react quickly to ever-changing loads, and manage their energy in a way that suits their needs. This enables end users to save money through the avoidance of peak tariff periods or make money through energy arbitrage while supporting the wider needs of the energy network. The business model is perceived as a method of increasing and exploiting the company’s resources for preparing new products or services for customers to achieve an added value in terms of competitive advantage and improved profitability.
Digital Control Room for Distributed Energy Resources
The increased penetration of renewables in the energy mix means balancing supply and demand in real-time is becoming more of a challenge for grid operators. With the rapid growth of distributed generation, commonly from rooftop solar PVs and on- and offshore wind turbines, balancing supply and demand becomes even more challenging. During periods of excess renewable generation, prices in the wholesale market plunge or occasionally go negative. In many places, some excess solar and/or wind generation must be curtailed simply because there is no easy way to use it, and not enough transmission capacity is available to transport and/or store it for later use.
Virtual Power Plant Market Represents a Networked Marketplace
The advantages of virtual plants are undeniable. They allow energy to be produced at a more affordable price in localized areas, decrease environmental impact, reduce network failure due to demand peaks, and provide customers with more flexibility. They can replace fossil fuel-based power plants, make grids more resilient to disasters due to climate change, distribute energy generation over a wider area to reduce vulnerability to localized calamities, enhance power generation, and enable trading or selling power on the electricity market. However, the requirement for unprecedented levels of electrification, digitization, and interconnectivity remains a challenge for many in the industry. Robust cybersecurity protocols are imperative to meet future energy needs safely and securely, especially in the wake of incidents like the Colonial Pipeline cyber-attack.
Recent Key Developments in Global Virtual Power Plant Market
The global virtual power plant market is expected to grow quickly, supported by the consistently falling costs of renewables. Across North America, Europe, and Asia, the market looks attractive as the use of renewables expands. Goal 7 of the Sustainable Development Goals of the UN (SDGs) aims for ensuring everyone has access to affordable, reliable, and modern energy services by 2030. Expanding energy access requires enhancing energy efficiency and investing in renewable energy. In Europe, many programs are increasing
distributed network supply capacity, and companies are participating in strategies to reduce the conventional system's onus. South Australia has the world’s largest VPP, with a network of 50,000 solar and Tesla Powerwall home battery systems working together as a single power plant.
Global Virtual Power Plant Market: Key Players
Prominent players in the global virtual power plant market include Portland General Electric, Green Mountain Power, Swell Energy, AceOn Group, Amp Energy, Ampard, AutoGrid, EnBW, Encorp, energy & meteo systems, Enel X, Geli, Greensmith Energy, Gridwiz, Leap, Limejump, Moixa, Nebras Power, Next Kraftwerke, OhmConnect, Piclo, Powerstar, Siemens AG, Generac Power Systems, Inc., Sonnen, Stem, Sunverge, SwitchDin, Sympower, Tesla Inc., Toshiba Energy, and Wärtsilä. In July 2020, Portland General Electric Company (PGE) announced plans to run a pilot program to incentivize the installation and connection of 525 residential energy storage batteries to form a 4MW virtual power plant.