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Virtual Power Plant market forecast to hit USD $1.10 billion by 2030
Tue, 7th Nov 2023

The size of the Virtual Power Plant (VPP) market is expected to reach USD $ 1.10 billion by 2030, growing at a compound annual growth rate (CAGR) of 29.9%, according to Adroit Market Research. The market for virtual power plants, previously valued at USD $ 0.28 billion, is set to significantly expand as the utility of VPPs in managing and integrating renewable energy sources becomes even more critical.

A Virtual Power Plant entwines a wide array of decentralised energy resources to function together as an integrated power plant. The VPP essentially acts as a bridge, linking several distributed energy resources, such as solar cells, wind turbines, battery storage systems, electric vehicles, and small-scale generators, allowing them to operate as one harmonised energy system. Driven by cutting-edge smart grid technologies and software platforms, VPPs leverage real-time monitoring and control systems to optimise the generation, usage, and storage of power.

The growing reliance on renewable energy sources, such as solar and wind power, necessitates the integration of these intermittent energy sources into the grid. Virtual Power Plants play a vital role in facilitating this integration and reducing dependency on traditional power plants by controlling and optimising the generation and consumption of renewable energy.

Demand response initiatives, which balance power supply and demand, have gained popularity, and VPPs provide a framework for managing such programmes. By aggregating and regulating power usage and storage across various resources, VPPs can dynamically adjust power consumption, facilitate grid stabilisation during high-demand periods, and alleviate systemic stress.

Virtual Power Plants not only enhance the flexibility and resilience of the electrical grid through the coordination of diverse resources, but they also guarantee a reliable power supply by mitigating power fluctuations and swiftly reacting to grid changes. Advancements in energy management systems, IoT devices, communication networks, and data analytics have propelled the proliferation of the VPP industry.

Beyond participating in the energy market, Virtual Power Plants can offer beneficial grid services like frequency regulation, demand response, and capacity reserves. Thus opening up new revenue potential as the demand for grid support services increases. VPP operators can also supply ancillary services such as voltage control, reactive power support, and congestion management, thereby contributing to grid stability.

The majority of the VPP market share was held by North America in 2022, a trend driven by technological advancements, regulations aimed at curbing greenhouse gas emissions, and the widespread usage of grid-balancing technologies. Cornerstones of the development in this region, especially in the United States, are attributed to the extensive utilisation of virtual energy units for efficient energy distribution and the country's diverse energy production portfolio.

An example of VPP growth came in July 2020, when the Portland General Electric Company initiated a pilot program to encourage the installation and connection of 525 household energy storage batteries. Electricity generated from this project could fulfil up to four megawatts, creating a virtual power plant that can support the grid singularly or in coordination with other elements.