Virtual Power Plant Market Synopsis

The Virtual Power Plant Market size is estimated at 4.17 billion USD in 2023 and is expected to reach 25.15 billion USD by 2032, growing at a CAGR of 22.1% during the forecast period (2024-2032)

A virtual power plant is a cloud-based distributed power plant that aggregates the capacities of heterogeneous distributed energy resources for the purposes of enhancing power generation, trading or selling power on the electricity market, and demand side options for load reduction.

• Depending on the particular market environment, a virtual power plant (VPP) can accomplish a whole range of tasks. In general, the objective is to network distributed energy resources such as wind farms, solar parks, and Combined Heat and Power (CHP) units, in order to monitor, forecast, optimize, and trade their power.
• This way, fluctuations in the generation of renewables can be balanced by ramping up and down power generation and power consumption of controllable units.
• The control system is the technological core of the Virtual Power Plant. All assets that are networked in the VPP can be efficiently monitored, coordinated, and controlled by the central control system. Control commands and data are transmitted via secured data connections which are shielded from other data traffic due to encryption protocols. The control system stores all the data needed to calculate the optimal operation schedules for electricity producers and consumers.
• The growth of distributed energy sources (renewable energy) and fluctuations in demand for electricity has led to the development of Virtual Power Plant (VPP) systems. A VPP is a cloud-based system that uses software and algorithms to integrate and manage distributed energy resources

The Virtual Power Plant Market Trend Analysis

Growing Consciousness about Increased Emission from Large Units

• Virtual power plants reduce the need to build very large units by collecting the capacity of smaller units and therefore play an important role in reducing emissions from large units. Paying attention to the issue of emissions in a virtual power plant can affect its profit.
• VPPs accelerate power sector decarbonization by decreasing the dispatch of highly polluting power plants, driving the build-out of lower-carbon power supply, and accelerating electrification. ?VPPs enable economy-wide electrification. They provide revenue streams to incentivize electrification and help avoid grid bottlenecks that would otherwise constrain electrification.
• There are some limits to the virtual power plant market. because VPP can replace a conventional power plant while providing higher efficiency and more flexibility, which allows the system to react better to load fluctuations. The drawback is the higher complexity of the system, which requires complicated optimization, control, and secure communication.
•  VPPs help to balance the supply and demand of energy. They connect households and their batteries through networks, to help manage energy flow and reduce reliance on the grid in times of higher demand. Therefore, the emission from large units is responsible for driving the virtual power plant market.

Increasing Investments in Energy Storage to Foster Growing

• Energy storage is a new arena for many investors. Investments in energy storage provide inflation protection by the nature of the asset class.
• Institutional investors typically like to see an established track record before allocating to investment opportunities, but energy storage is a space where things will quickly develop.
• The growth of distributed energy sources (renewable energy) and fluctuations in demand for electricity has led to the development of Virtual Power Plant (VPP) systems. A VPP is a cloud-based system that uses software and algorithms to integrate and manage distributed energy resources.
• A virtual power plant (VPP) aggregated from household solar and storage systems, it will improve the efficiency of electricity generated by roof solar or other renewable power sources and it can bring extra revenue to the home owners by participating grid services.

Segmentation Analysis of The Virtual Power Plant Market

Virtual Power Plant market segments cover the Technology Type, Source and end-users. By End-Users, the Industrial segment is Anticipated to Dominate the Market Over the Forecast period.

• Smart energy factories are crucial for the development of upcoming energy markets in which emissions, energy use, and network congestions are to be decreased. The virtual power plant (VPP) is implemented in an industrial site to minimize costs, emissions, and total energy usage.
• A VPP considers the future situation forecasting and the situation of all energy assets, including renewable energy generation units and energy storage systems, to optimize the total cost of the plant, considering the possibility to trade with the energy market.
• One of the most important goals of a virtual power plant for presenting in the energy market is to achieve profit, and it can reach the highest possible profit with proper scheduling and selection of the desired strategy.
• The VPP would be a power prosumer, meeting the local demand, and profit its energy assets to trade energy with the external grid. Nowadays, smart microgrids and prosumer concepts are being developed and tested in the tertiary sector.

Regional Analysis of The Virtual Power Plant Market

Europe is Expected to Dominate the Market Over the Forecast period.

• Europe, considered the birthplace of virtual power plants (VPPs), is pushing the envelope on the concept. The continent is adapting platforms to provide new and more sophisticated capabilities to maximize the value of flexibility resources while opening doors to new value streams linked to creative ancillary service markets and real-time energy trading.
• Europe lags the US—another major VPP market—in demand response (DR), largely due to the intense efficiency built into residential and commercial, and industrial buildings. However, large fluctuations in solar and wind generation are providing incentives for aggregators, utilities, and grid operators to search more intensely for new balancing resources.
• The focus on Europe has leaned on supply-side resources. Given the enormous growth in renewable power generation, most of which flows directly into wholesale markets under feed-in tariff contracts, the VPP market is quickly shifting to tap more diverse assets as these contracts expire. While structural reforms are enabling crcross-borderrades and ushering in potentially the largest VPPs in the world by the likes of Next Kraftwerke and Statkraft, there is important work still to be done.
• Next Kraftwerke from Cologne, Germany operates a virtual power plant in seven European countries providing peak-load operation, power trading, and grid balancing services. The company aggregates distributed energy resources from biogas, solar, and wind as well as large-scale power consumers
• Furthermore, the layer-by-layer deposition process in 3D printing allows sensors, antennas, and other functional electronics to be printed directly onto plastic components, metal surfaces, and even glass panels and ceramic materials.

Covid-19 Impact Analysis On Virtual Power Plant Market

Almost every industry was impacted by the unprecedented global public health crisis known as COVID-19. Businesses in nations like China and India have been negatively impacted by COVID-19's widespread effects, which has decreased energy demand. Investments in utilities and grid projects have fallen at an unprecedented rate as more nations implement lockdowns to stop the virus's spread. The market's expansion has also been hampered by sluggish demand brought on by consumers spending less on various applications. The ongoing Covid-19 pandemic has resulted in a substantial reduction in load and electricity prices for many grids across the globe.

Top Key Players Covered in The Virtual Power Plant Market

• ABB (Switzerland)
• Siemens (Germany)
• General Electric (U.S.)
• AGL Energy (Australia)
• Schneider Electric (France)
• Cisco Systems Inc. (U.S.)
• Bosch (Germany)
• Autogrid Systems Inc. (U.S.)
• Enel X Inc. (U.S.)
• Next Kraftwerke (Germany), and Other Major Players.
• Tesla(US)
• Blue Pillar, Inc. (U.S.)
• Enbala Power Networks, Inc. (U.S.)
• Hitachi, Ltd. (Japan)
• Mitsubishi Heavy Industries (Japan)

Key Industry Developments in the Virtual Power Plant Market

• In January 2023, Ford unveiled the establishment of the Virtual Power Plant Partnership (VP3), a collaborative initiative spearheaded by the Rocky Mountain Institute (RMI). The primary objective of VP3 is to expand the market, fostering the progression of cost-effective and dependable decarbonization within the electric sector while bolstering grid resilience. VP3 includes founding members Ford, General Motors, SPAN, OhmConnect, Google Nest, Olivine, SunPower, SwitchDin, Sunrun, and Virtual Peaker.
• In September 2022, Virtual Power Plant (VPP) provider, AutoGrid announced to launch of one of several VPP projects in collaboration with Canadian manufacturer Mysa, whose line of innovative smart thermostats for electric heating and cooling systems offers robust home energy management capabilities for both consumers and utilities. The initial VPP project with a US utility serving 1 million customers supports a targeted demand side program to postpone the buildout of a new substation in their region.
• In September 2020, AGL’s Virtual Power Plant (VPP) is set for an expansion, as the company launches solar battery sales and installations for residential customers in Queensland, New South Wales, and Victoria