Published: May 2017
Report Code: PE11013
Category : Unconventional & Renewable Energy
Virtual power plant (VPP) can be described as a network of decentralized, medium-scale generating units/distributed energy resources, flexible power consumers and batteries. These medium-scale generating units include combined heat and power (CHP) units, wind farms and solar parks. The interconnected units are then connected through a remote-control unit, which establishes a data transfer between all the participating units and central control system. This allows the central control system to monitor, forecast and dispatch all the participating/networked units. The global virtual power plant market is segmented into two types: centralized controlled VPP, decentralized controlled VPP.
NORTH AMERICA VIRTUAL POWER PLANT MARKET, BY END-USE, MW (2013-2023)
Virtual power plant finds application in residential, commercial and industrial sectors. Virtual power plant is being widely deployed in residential homes as they help in delivering energy during peak hours. Additionally, with the increasing use of virtual power plant technology, consumers or end-users could save surplus power in energy storage devices including solar panels and batteries.
During peak hours, virtual power plant relieves the load on the grid by distributing the power generated by individual generating units. Additionally, the virtual power plant allows the combined power generation and power consumption of networked units to be traded on the energy exchange. The main objective of VPP is to integrate a large number of renewable energy units into existing energy systems by offering flexibility from all the networked units. Virtual power plant stores surplus power and delivers the required energy during peak hours that offers the energy aggregator more options than what would exist in a single power plant. Additionally, VPP improves efficiency and security of the power network, ensures cost and risk savings in the transmission system, reduces emission levels from peaking power plants and ensures increased value from existing infrastructure assets.
The global market for virtual power plant is expected to witness a CAGR of 30.3% during the forecast period due to the increasing demand from industrial, commercial and residential sectors. Based on type, centralized-controlled VPP is expected to be the largest segment in the global virtual power plant market during the forecast period. Demand response is expected to be the largest segment in the global virtual power plant market, by technology during the forecast period. Industrial sector emanated the largest demand in the global virtual power plant market.
The key trend observed in the global virtual power plant market is growing investments in R&D activities from various players including ABB Ltd and EnerNOC, Inc. and focusing on strategic partnerships and other expansion plans to broaden their market presence worldwide.
The factors driving the growth of global virtual power plant market are growing penetration of smart grid technologies, increasing demand for energy storage systems in the residential sector and rising government initiatives in various countries to reduce the carbon footprint. Additionally, the increasing shift from centralized to distributed (decentralized) generation and the decreasing costs of solar generation and energy storage is likely to further spike the demand for virtual power plant during the forecast period.
The increasing awareness towards the benefits of renewable energy sources and the corresponding increase in the share of renewable energy sources in the primary energy mix is expected to boost the demand for virtual power plant during the forecast period. Additionally, the increasing adoption of electric vehicles and rising development of smart grid infrastructure would significantly favor the growth of global virtual power plant market during the forecast period.
Growing demand from residential homes is expected to drive the market for virtual power plant during the forecast period. Additionally, the increasing government mandates and incentive programs is likely to further boost the demand for virtual power plant in the residential sector.
North America would contribute significantly to the global virtual power plant market, with the U.S. being the major contributor, on account of the increasing and extensive demand for these solutions in the industrial, commercial and residential sectors. The government of Japan, China and India are increasingly focusing on reducing the carbon footprint by producing clean energy through renewable sources such as hydro energy, wind energy and solar energy generation. This is expected to propel the demand for virtual power plant in Asia-Pacific region. Additionally, the growing infrastructure and industrial activities in the Asia-Pacific region is expected to further spur the demand for virtual power plant during the forecast period.
Some of the major factor hindering the growth of the global virtual power plant market include the health safety concerns related to radio frequency response and the uncertainties associated with smart meters. Some campaign groups in the U.K. and the U.S., such as stop smart meters, believe that smart meters can cause health and security risks as these meters emit radio frequency (RF) emissions. Another factor that is likely to hamper the growth of global virtual power plant market include the cybersecurity issues related to energy sector. This is expected to have a negative impact on the overall market.
Some of the key players in the global market for virtual power plant include ABB, Ltd., Enernoc, Inc, Schneider Electric, General Electric, Comverge, Inc., Limejump Ltd., Cisco Systems, Inc., Blue Pillar, Cpower Energy Management and Open Access Technology International, Inc.
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