Virtual Power Plant Market Size and Share Analysis by Technology (Demand Response, Supply Side, Mixed Asset), Consumer (Industrial, Commercial, Residential, Electric Vehicles) – Global Industry Demand Forecast to 2030

Market Overview

The global virtual power plant market was valued at $3,367.7 million in 2022, and it is expected to display a CAGR of 16.9% during the forecast period, reaching $12,273.3 million by 2030. This is ascribed to the rising adoption of advanced technologies such as internet of things (IoT) and cloud platforms in the power industry, the growing awareness toward the benefits of renewable power, the ease of availability of power via virtual power plant (VPP) platforms, and the increasing focus on cost-efficiency in power generation.

Demand Response Contributes the Majority of Revenue

The demand response category accounted for the largest revenue share, around 65%, in 2022, and it is further expected to maintain its dominance during the forecast period. This is attributed to the higher adoption of this technology in developed nations, due to direct benefits offered to end customers in the form of incentives for altering their power consumption; a rise in the need for energy consumption; and it allows users to participate in the energy load reduction during peak demand periods by using VPP software and solutions.

Whereas, the mixed asset category will witness the fastest growth during the predicted period, advancing at a substantial CAGR. This growth can be ascribed to the higher application of smart devices to control customer-site loads and can be easy to handle.

High Investment in VPP Setups Is a Key Industry Trend

The increasing investments in setting up new virtual power plants are being witnessed as a major trend in the market. Conventional power plants require huge capital for construction as well as management. Whereas, VPP is a centralized control system, connected to power generating and transmitting units, which is why it requires less capital and can integrate various distributed energy resources. Global players, such as Tesla Inc., have announced large-scale investment plans for setting up virtual power plants.

Electric Vehicles Category To Show Fastest Growth

The electric vehicles category will register the fastest growth during the predicted period, advancing at a CAGR of over 20%. This can be due to the high production and sales of electric vehicles, the increasing demand for EVs owing to the rising price of fuel, and the surging R&D spending by industry giants.

On the other hand, the industrial category accounted for the highest revenue in 2022, and it is further expected to maintain its dominance in the coming years. This is ascribed to the high sales of electricity to industrial customers; the rapid industrialization in developing countries such as China, India, Brazil, and Indonesia; and favorable policies proposed by several governments regarding energy consumption.

Aging and Inadequate Power Evacuation Infrastructure Drives the Industry Growth

Across the world, power evacuation infrastructure, which is characterized by power transmission and distribution networks, is either obsolete or inadequate. In the majority of advanced countries, power transmission networks are obsolete and not capable of accommodating the intermittent flow of electricity supplied by renewable power projects. Moreover, frequent network failure and high transmission and distribution losses result in revenue loss to power utilities. In developing countries, the power transmission network is highly inadequate to cater to the surging demand for power.

In both scenarios, the result could be a failure of the entire power transmission network. The above-mentioned challenges faced by power transmission networks offer growth opportunities for players operating in the VPP market. Through accurate estimation of electricity demand and supply scenarios, virtual power plants can regulate the power generated by renewable power projects and ensure a consistent flow of electricity to power transmission networks, thereby ensuring the stability of entire power systems.

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North America Dominates the Market

North America accounted for the largest revenue share, over 40%, in 2022, and it is further expected to lead the market during the forecast period. This is mainly due to the expanding capacity of renewable power projects, along with the development of smart grid networks that are equipped with VPP technology, and the growing adoption rate of grid balancing solutions for residential, commercial, and industrial consumers. Moreover, the rising usage of virtual energy units for optimal energy distribution boosts the industry growth in the region.

On the other hand, the APAC virtual power plant market will witness healthy growth during the predicted period, advancing at a CAGR of around 20%. This can be because regional nations such as Japan, China, and South Korea are heavily investing in smart energy management solutions such as smart grids, smart meters, and virtual power plants; and the mounting need for reliable and consistent power supply for industrial and commercial purposes. Furthermore, several governments offer financial incentives to VPP developers, as these plants are effective, compatible with distributed energy resources, and require less capital investment, which further boosts the market expansion in the region.

Additionally, during the forecast period, the market is expected to witness significant growth in the MEA region, mainly on account of the development of new renewable power projects in countries, such as Saudi Arabia, the U.A.E., and South Africa, which are presently primarily dependent upon conventional sources of energy, such as coal, oil, and gas.

Transition from Centralized to Decentralized Power Systems

The surging integration of renewable energy projects, such as solar power plants and wind power projects, in overall power infrastructure, has resulted in new technical challenges for power transmission networks or power grids. Due to the intermittent nature of renewable power projects, the power generated from these sources is highly unpredictable, making it less viable for conventional power grid networks.

VPP addresses this problem, as it ensures a balance between the demand and supply of electricity. Such plants facilitate power balancing to and from grids through the injection or absorption of power into power systems. Balancing power is carried out through a primary balancing power source, a secondary balancing power source, and a minute reserve source, which ensure a reliable power supply to the grid. Power balancing also ensures stability in power grid operations, as the intermittent nature of the power supply is eliminated through the implementation of VPPs. As a result, power grids are transforming from a rigid and centralized controlled power evacuation network to an adaptive and decentralized power system, capable of accommodating renewable sources of energy.

Key Players in the Virtual Power Plant Market Are:

• Generac Holdings Inc.
• AutoGrid Systems Inc.
• Sunverge Energy Inc.
• AGL Energy Ltd.
• Siemens AG
• Enel X North America Inc.
• ENGIE North America Inc.

Virtual Power Plant Market Size Breakdown by Segment

This report offers deep insights into the market, with size estimation for 2017 to 2030, the major drivers, restraints, trends and opportunities, and competitor analysis.

Based on Technology

• Demand Response
• Supply Side
• Mixed Asset

Based on Consumer

• Industrial
• Commercial
• Residential
• Electric Vehicles

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Italy
• Asia-Pacific
  •  China
  • Japan
  • India
  • Australia
  • South Korea
• Latin America
  • Brazil
  • Mexico
• Middle East & Africa
  • Saudi Arabia
  • South Africa
  • U.A.E.