Virtual Power Plant Market Sees Stellar Growth

  • North America will be the leading market for virtual power plant.
  • Commercial & Industrial application the largest Segment of virtual power plant.
  • The demand response widespread technology in virtual power plant.

The global virtual power plant market is projected to grow at a CAGR of 29.68% from 2016 to 2021, to reach a market size of $709.2 million by 2021. North America is estimated to be the largest market for virtual power plant, followed by Europe in 2016. This trend is expected to continue till 2021. The growth of the virtual power plant market is driven by increasing share of renewable energy in the power generation mix as well as shift from centralized to distributed generation and lowering costs for solar and energy storage.

Virtual Power Plant is a combination of various distributed electricity generation entities which are controlled and operated by a central unit using integrated software systems. This technology has the capability to stretch supplies from existing power generation sources (both renewable and non-renewable energy sources) as well as through utility demand reduction programs.  Virtual power plant solutions can be associated with various concepts such as smart grid, micro grid, distributed generation, demand response, and advanced energy storage, among others.

North America: The leading market for virtual power plant

North America is currently the largest market for virtual power plant, closely followed by Europe. The North American market is primarily driven by countries such as the U.S. and Canada. The U.S. is expected to dominate the virtual power plant market. Decline in the costs of solar PV and battery based energy storage system are the factors which would drive the virtual power plant solution market in North America.

Asia-Pacific is projected to be the fastest growing market. The region is the largest market for the infrastructure sector & industrial sector and is taking various steps to reduce carbon footprint and produce renewable energy, resulting in the growth opportunities for the virtual power plant market in this region.

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Some of the leading players in the virtual power plant market include ABB Ltd. (Switzerland), Siemens AG (Germany), Schneider Electric SE (France), General Electric Company (U.S.), EnerNOC, Inc. (U.S.), Comverge, Inc. (U.S.), Limejump Ltd. (U.K.), among others.

Commercial & Industrial application the largest Segment of virtual power plant

Based on end-user, commercial & industrial have larger market for virtual power plant solutions compared to residential end-user segment. Industrial end-users are among the highest adopters of virtual power plant solutions and services and hence provide major contribution to the market growth. The peak load of electricity is highest in the petroleum refining industry, followed closely by the chemical industry. This growth is attributed to rapidly increasing industrial activities especially in Asia-Pacific & rising focus on renewable energy in developed countries like the U.S.

Virtual power plants are implemented in residential homes as well as commercial buildings such as hospitals, educational institutions, office towers, universities, municipal projects, among others in order to save energy, reduce life cycle costs and increase efficiency. Hence, the virtual power plant is experiencing huge demand for clean power generation and less environmental damage along with maintaining energy costs. Market players such as EnerNOC, Comverge, Flexitricity Ltd, among others can expand their customer base by gaining contracts from utilities, residential, industrial, and commercial customers to provide solutions such as demand response management programs and services, energy efficiency programs and energy intelligence software.

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The demand response widespread technology in virtual power plant

Demand response virtual power plant technology has become more popular due to its various benefits such as end-users earn incentives by managing power usage and also save electricity on a large scale. The U.S. is the world’s first country to implement demand response and thus North America is the largest market for this technology as well as for virtual power plant solutions as a whole. Demand response can be defined as managing of electricity usage based on a change in the price of power. It enables customers to contribute to energy load reduction during times of peak demand by cutting consumption during peak hours with the help of virtual power plant solutions and software.

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Siddhant Patil

Energy & Power Consultant


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