Virtual Power Plant Market Analysis

Global Virtual Power Plant Market Overview:

Virtual Power Plant Market Size was valued at USD 0.2 billion in 2021. The VPP Market industry is projected to grow from USD 0.25 Billion in 2022 to USD 1.5 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 29.6% during the forecast period (2024–2030). The rising share of renewable energy, a shift from centralized to distributed generation and reducing costs for solar and energy storage are the key market drivers enhancing the market growth.

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Virtual Power Plant Market Trends

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  Growing Prevalence of renewable energy in power generation to boost the market growth

  
  

The market for virtual power plants is anticipated to develop as renewable energy sources become more prevalent in power generation and as the dynamics of power grids shift from centralized to distributed. Demand will increase due to further energy cost reductions and the accessibility of energy storage. VPP is also more effective and adaptable to offer peak load electricity on short notice than conventional power plant configuration, which will further propel market expansion. Due to price volatility, numerous additional participants were drawn in by the flexibility of trading with virtual power plants. Flexibility in trading with virtual power plants attracted many new participants. At the trade market, customers can sell excess energy and purchase energy at a discount. Such virtual power plant features are anticipated to increase demand. However, exposure to high-frequency electromagnetic and radio waves poses health risks to children and the elderly, which could impede this expansion. The market for renewable energy will be further boosted by strict government laws pertaining to environmentally friendly power generation, which would increase demand for virtual power plants.

For instance, according to the International Energy Agency (IEA) report, the global demand for electricity climbed by 4%, or 900 TWh, in 2020, expanding almost twice as quickly as the demand for all other forms of energy. 2020 saw a 4% increase in renewable energy, which accounted for close to 25% of the rise in worldwide energy consumption. Over 25% of the world's power output is currently produced by renewable sources, which accounted for nearly 45% of the expansion in global electricity generation.

November 2020 - Siemens For the next phase of energy optimization for the Finnish brewery Sinebrychoff, a division of the global Carlsberg Group, Siemens has built a novel business model, creating new market opportunities for industrial participants. The solution, which will be implemented at Sinebrychoff's factory in greater Helsinki and supported by financing options to create one of the first instances of power flexibility on an industrial site, is based on a virtual power plant (VPP) and the most recent energy storage technology.

Virtual Power Plant Market Segment Insights:

Virtual Power Plant Technology Insights

Based on technology, the Virtual Power Plant Market segmentation includes distribution generation, demand response and mixed asset. The virtual power plant market's biggest revenue share was accounted for by demand response. The demand for demand response will rise due to grid modernization and the burgeoning virtual power plant business. Because smart devices are being used more frequently to control customer-sited loads, the mixed asset market is anticipated to increase faster.

For Instance: To provide demand response resources to FirstEnergy's electric plants, the EnerNOC signed a deal (U.S.). This would make it easier and more affordable for the utilities to reach their demand reduction goals. Minimizing energy usage would assist EnerNOC in expanding its demand response program business in the commercial and industrial energy sectors.

In December 2020, ABB and AFC Energy, a provider of technologies for hydrogen generation, agreed to strategic cooperation. The alliance was established to produce the next generation of grid-compatible, high-power electric vehicle charging solutions.

Virtual Power Plant End User Insights

Based on End Users, the global Virtual Power Plant industry has been segmented into Commercial, Industrial, and Residential. The industrial segment held the highest growing share in 2021, owing to the small and medium-sized virtual power plants. Moreover, energy efficiency and high reliability during peak load made Virtual power plants worthy for the industrial segment.

In 2019, the residential segment held the fastest-growing market share, with 61.4%. Virtual power plants are expanding in the domestic market as new technologies like smart grids, smart grid-enabled products and smart meters have become more widely adopted.

Virtual Power Plant Regional Insights

By Region, the study provides market insights into North America, Europe, Asia-Pacific and the Rest of the World. The Asia-Pacific Virtual Power Plant market accounted for USD 0.08 billion in 2021 and is expected to exhibit a significant CAGR growth during the study period.

Further, the major countries studied in the market report are The U.S., Canada, Germany, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: Virtual Power Plant Market Share By Region 2021 (%)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Europe's Virtual Power Plant market accounts for the second-largest market share due to the availability of many industry players and government initiatives towards 100% green energy. For Instance: In Germany, Statkraft’s is the biggest and first-of-its-kind virtual power plant in Europe. Further, the Germany Virtual Power Plant market held the largest market share, and the UK Virtual Power Plant market was the fastest-growing market in the European region.

The Asia-Pacific Virtual Power Plant Market is expected to grow at the fastest CAGR from 2022 to 2030. This is due to the increasing energy demand in countries such as India and China with growing industrialization. Moreover, the China Virtual Power Plant market held the largest market share, and the India Virtual Power Plant market was the fastest-growing market in the Asia-Pacific region.

Virtual Power Plant Key Market Players & Competitive Insights

Major market players are spending much money on R&D to increase their product lines, which will help the Virtual Power Plant market grow even more. Market participants are also taking various strategic initiatives to grow their worldwide footprint, with key market developments such as new product launches, contractual agreements, mergers and acquisitions, increased investments, and collaboration with other organizations. Competitors in the Virtual Power Plant industry must offer cost-effective items to expand and survive in an increasingly competitive and rising market environment.

• One of the primary business strategies manufacturers adopt in the global Virtual Power Plant industry to benefit clients and expand the market sector is manufacturing locally to reduce operating costs. In recent years, the Virtual Power Plant industry has provided green energy with some of the most significant benefits. The Virtual Power Plant markets major players such as ABB Ltd., Autogrid systems inc., Blue Pillar Inc., Cisco Systems Inc., Comverge, Cpower Energy Management, Enernoc Inc., Enabala Power Networks Inc., Flexitricity Limited (U.K.), Hitachi Ltd.(Japan), Robert Bosch GmbH(Germany), International Business Machines Corporation(U.S.), Schneider Electric SE(France), and Siemens AG(Germany) and others are working on expanding the market demand by investing in research and development activities.

ABB is a top global technology company that drives social and industrial change for a sustainable future. The company's virtual power plant (VPP) is a network of renewable energy generation and storage systems rather than a conventional physical power plant. It is an integrated virtual platform that controls power generation through a distributed power-management system.

Power players may thrive in the face of new opportunities presented by the bidirectional flow of energy and information thanks to ABB's AbilityTM OPTIMAX® Energy Management package. A virtual power plant is created by combining and optimizing decentralized energy resources using this management software for virtual power plants. Then, users can buy or sell energy profitably on wholesale markets or get energy as a subscription service.

Also, Edinburgh-based Flexitricity is currently in charge of a 500MW fully flexible virtual power station. The VPP supports National Grid ESO and Distribution Network Operators in maintaining supply security and balancing variations in renewable energy.

Flexibility from diverse assets owned by consumers around the United Kingdom makes up the 500MW virtual power plant. This includes district heating programs, supermarkets, universities, local governments, NHS hospitals, commercial farmers, and manufacturers.

Flexitricity and Gore Street Capital, the first publicly traded energy storage fund in London, partnered in June 2022 to maximize the performance of 155MW battery energy storage devices (BESS). The six-site arrangement expands on the recently formed partnership between Flexitricity and Gore Street Capital.

Key Companies in the Virtual Power Plant market include

• ABB Ltd. (Switzerland)


• Autogrid Systems Inc.(U.S.)


• Blue Pillar Inc. (U.S.)


• Cisco Systems Inc. (U.S.)


• Comverge (U.S.)


• Cpower Energy Management (U.S.)


• Enabala Power Networks Inc. (Canada)


• Enernoc Inc. (U.S.)


• Flexitricity Limited(U.K.)


• General Electric Company(U.S.)


• Hitachi Limited(Japan)


• International Business Machines Corporation(U.S.)


• Robert Bosch GmbH(Germany)


• Schneider Electric SE(France)


• Siemens AG(Germany)

Virtual Power Plant Industry Developments

• In 2020:  Evergreen Energy grew by acquiring Homely Energy, a start-up specializing in sustainable home heating. A smart thermostat made especially for heat pumps was developed by Homely Energy. Both cost-saving optimization and app-based heating management are advantageous to customers.


• November 2020:To help the energy optimization for the finished brewery Sinebrychoff, a division of the global Carlsberg Group, Siemens has created a business model. At Sinebrychoff's facility in the wider Helsinki area, these solutions—which include a virtual power plant and the newest energy storage technology—will be put into practice. Digitalization is employed to create opportunities for cost-saving and power supply quality improvement.

Virtual Power Plant Market Segmentation

Virtual Power Station Technology Outlook

• Distribution Generation


• Demand Response


• Mixed Asset

Virtual Power Station Offering Outlook

• Hardware


• Software


• Services

Virtual Power Station Source Outlook

• Renewable Energy


• Storage


• Cogeneration

VPP Market End User Outlook

• Commercial


• Industrial


• Residential

Virtual Power Plant Regional Outlook

• North America
  
  
  
  • US
  
  
  • Canada
  
  
  
  


• Europe
  
  
  
  • Germany
  
  
  • France
  
  
  • UK
  
  
  • Italy
  
  
  • Spain
  
  
  • Rest of Europe
  
  
  
  


• Asia-Pacific
  
  
  
  • China
  
  
  • Japan
  
  
  • India
  
  
  • Australia
  
  
  • South Korea
  
  
  • Australia
  
  
  • Rest of Asia-Pacific
  
  
  
  


• Rest of the World
  
  
  
  • Middle East
  
  
  • Africa
  
  
  • Latin America