A Virtual Power Plant is a cloud-based network of decentralized power generation units like solar plants, wind farms, and storage systems, among others, used for releasing the lad from the grid by swiftly dispensing off the power generated by the units during peak load. These power production units are governed in their process & possession through the virtual power plant.
Besides, the VPP sells off the combined energy generation & consumption of different units across the energy interchange platforms. It also intends to integrate large non-conventional energy units into one existing central energy system, creating fresh growth opportunities within the virtual power plant industry.
Market Insights & Analysis: Global Virtual Power Plant Market (2023-28)
The Global Virtual Power Plant Market is projected to grow at a CAGR of around 27.68% during the forecast period, i.e., 2023-28. The market is driven primarily by the mounting demand for power generation from renewable energy sources, coupled with an essential concern for decentralized power generators in the electricity distribution supply chain to balance energy production & consumption levels.
As the generation of renewable energy largely relies on the weather, even a bit of fluctuation in the electricity supply may result in instability of the power supply. In a bid to ensure the constant electric supply as necessitated by rapid urbanization, the concept of virtual power plants has gained recognition as a viable solution, compelling the market players to turn to VPPs by leveraging advanced technologies like artificial intelligence, the internet of things, and more. With the integration of such technologies & cloud-based networks, scattered VPP energy sources, such as distributed power sources & storage batteries, can be remotely controlled by IoT equipment and function as if they were one power plant.
|Study Period||Historical Data: 2018-21|
|Base Year: 2022|
|Forecast Period: 2023-28|
|Regions Covered||North America: US, Canada, Mexico|
|Europe: UK, Germany,France, Italy, Denmark, Others|
|Asia-Pacific: China, Japan, Australia, South Korea, Others|
|South America: Brazil, Argentina|
|Middle East & Africa: UAE, Saudi Arabia, South Africa|
|Key Companies Profiled||ABB Ltd, AutoGrid Systems, Advanced Microgrid Solutions, Inc., CISCO Systems Inc., Enbala Power Networks Inc., Enel X North America Inc., General Electric Itron Inc., Hitachi Ltd, Mitsubishi Electric Corporation, Next Kraftwerke, Siemens AG, Schneider Electric, Tesla Inc., and other|
|Unit Denominations||USD Million/Billion|
Moreover, remote controlling with virtual power plants may accurately predict electricity demand and solar power generation facilitating the balance between supply and demand, thereby ensuring the stability of renewable energy power. Thus, more deployment of virtual power plants may encourage the introduction and expansion of renewable energy and contribute to decarbonization of the sector. Backed by these benefits, the market is all set to embrace the speedy deployment of these power plants, promoting its market expansion in the coming years.
Global Virtual Power Plant Market Driver:
Growing Inclination Toward Distributed Power Generation - The surging demand for virtual power plants with distributed generation technology owing to its cost-effectiveness, coupled with favorable government regulations & policies toward encouraging the deployment of renewable technologies, are the prime aspects driving the global market through 2028. Further, decentralized power generation helps provide electricity when there are power outages & high-energy requirements. Hence, several countries, ambitious to reach clean energy targets, are increasingly investing in & installing virtual power plants powered with this technology.
Moreover, the mounting focus of various countries on reducing carbon emissions & promoting electrification, entwined with numerous advancements in power generation & storage technologies, is also propelling the adoption of distributed generation.
Global Virtual Power Plant Market Possible Restraint:
Insufficient Infrastructure Available for Virtual Power Plants - Setting up a Virtual Power Plant requires advanced communication systems like the Energy Management System to enable efficient monitoring, controlling, & managing of different energy units. The sufficient unavailability of these systems can restrain the operational efficiency of power plants and, as a result, hamper the overall market growth during 2023-28.
Moreover, Virtual Power Plants function with advanced technologies like Artificial Intelligence (AI) & Machine Learning (ML) enabled tools for different business operations, including collecting & monitoring large data volumes. Hence, there's a need for highly skilled professionals & investments to integrate these tools into Virtual Power Plants. However, the unavailability of these assets is another significant growth challenge for the global market.
Global Virtual Power Plant Market (2023-28): Segmentation Analysis
The Global Virtual Power Plant Market study from MarkNtel Advisors evaluates & highlights the major trends & influencing factors in each segment & includes predictions for the period 2023–2028 at the global, regional, and national levels. Based on the analysis, the market has been further classified.
Based on Models:
Of all the models, the Demand Response (DR) acquired the highest share of the Global Virtual Power Plant Market in the historical period owing to the large influx of investments in demand-response solutions, backed by their remarkable ability to enhance the grid’s overall energy efficiency while offering peak load management and incentive opportunity for end-users.
However, the Mixed Asset Model, a relatively new hybrid VPP, has recently gained recognition and is estimated to lead the market through 2028. Its growth projections are primarily based on the growth of DER penetration, partnerships, strategic investments, and acquisitions, falling energy storage prices, paired with Europe’s covid-19 stimulus packages and green deal. With its ability to facilitate a synergistic sharing of grid resources by integrating optimized generation, load, and energy storage, the market for Mixed Asset VPPs is expected to gain momentum in the coming years, spurring the overall market growth.
Based on the End-User:
Here, the residential sector dominates the market with the largest share, principally due to the extensive demand for renewable energy in different home applications. Besides, with the rising prevalence of smart meters to monitor energy consumption levels accurately, coupled with the increasing adoption of smart home appliances and the utilization of several home energy management services, the demand for virtual power plants is significantly soaring across the residential sector.
Hence, with a greater focus on developing smart cities, several homeowners are investing in solar power generation & storage to exercise various benefits like cost efficiency, consistent power flow, etc., and strongly contributing toward reducing carbon emissions. Virtual Power Plants enable homeowners to bring more resilience to the power grid by offering new & dispatchable utility resources.
On the other hand, the Industrial & Commercial sector is anticipated to demonstrate significant market growth during the forecast period. It owes to the mounting inclination of this sector toward virtual power plants to acquire benefits like lower emissions, efficiency in energy consumption, and power costs. Besides, stringent government regulations associated with Green House Gas (GHG) emissions are driving the use of renewable energy resources and, as a result, promoting the virtual power plant market growth across industrial & commercial sectors.
Global Virtual Power Plant Market (2023-28) Regional Projection:
Geographically, the Global Virtual Power Plant Market expands across:
Of them all, North America is anticipated to dominate the Virtual Power Plant Market with the largest share during the forecast period. It owes principally to the increasing number of sanctioned projects for deploying Virtual Power Plants in the US & Canada. The market growth across the US is expected to rise owing to the greater focus on adopting renewable energy & addressing several concerns associated with the depleting environment.
Besides, the region is witnessing an active deployment of Virtual Power Plants across the residential & industrial sectors. Moreover, the governments of different countries across North America are laying out favorable policies to encourage the leading market players to adopt Virtual Power Plants, thereby fueling the regional market growth.
On the other hand, Europe is projected to attain the second-largest market share during the forecast period. It owes primarily to the rapidly increasing investments by the leading players in the Virtual Power Plant industry and stringent regulations by several countries in Europe to curb carbon emissions across the region. Besides, the extensive presence & participation of prominent market players are also contributing substantially to the market growth.
Furthermore, across Asia-Pacific, the market is anticipated to observe rapid growth during 2023-28, mainly due to the rapidly expanding residential & commercial sectors entwined with the incredible potential for renewable resources, thereby soaring the demand for virtual power plants across Asia-Pacific. Countries like China & India are among the prominent energy consumers in the region and, in turn, are propelling the demand for renewable power sources. Moreover, the increasing deployment of smart metering systems, massive investments in energy generation & storage, and mounting adoption of demand response technologies are other crucial factors surging the demand for Virtual Power Plants across Asia-Pacific.
On the other hand, the Middle East & Africa is projected to witness steady market growth in the coming years. It owes primarily to substantial investments by the governments of various regional countries in several virtual power plant projects toward increasing the capabilities of renewable energy generators while reducing dependency on fossil fuels. For instance:
Global Virtual Power Plant Industry Recent Developments:
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Frequently Asked Questions
A. The Global Virtual Power Plant Market is projected to grow at a CAGR of around 27.68% during the forecast period, i.e., 2023-28.
A. Growing inclination toward distributed power generation is the prime aspect projected to drive the Global Virtual Power Plant Market during the projected time frame.
A. The prominent players anticipated to stiffen the competition globally are ABB Ltd, AutoGrid Systems, Advanced Microgrid Solutions, Inc., CISCO Systems Inc., Enbala Power Networks Inc., Enel X North America Inc., General Electric, Itron Inc., Hitachi Ltd, Mitsubishi Electric Corporation, Next Kraftwerke, Siemens AG, Schneider Electric, and Tesla Inc.
A. Demand Response (DR) solutions are anticipated to emerge as an area of remunerative opportunities for the leading players in the Global Virtual Power Plant Market during the forecast period.
A. Globally, North America would provide lucrative prospects for the virtual power plant market in the years ahead.
A. Insufficient infrastructure available for virtual power plants is the major growth restraint for the Global Virtual Power Plant Market.