Virtual Power Plant Market Size, Share, By Technology (Distribution Generation, Demand Response, and Mixed Asset), By Source (Renewable Energy, Energy Storage, and Cogeneration), By End-User (Utilities, Commercial, Industrial, and Residential), and Region (North America, Europe, Asia Pacific, Middle East and Africa, and South America) - Trends, Analysis and Forecast till 2034

Report Code: PMI540924 | Publish Date: July 2024 | No. of Pages: 197

Virtual Power Plant Market Overview

Virtual Power Plant Market Size was valued at USD 2.1 Billion in 2024 and is expected to reach USD 15.8 Billion by 2034 growing at a CAGR of 24.8%.

A virtual power plant, or VPP, is a network of interconnected dispersed medium-sized power-producing units, flexible power consumers, and storage devices. Depending on the market conditions, VPPs can perform various tasks. The objective is to network distributed energy resources to predict, sell, and monitor their electricity. These resources include solar parks, wind farms, and combined heat and power (CHP) units. To counteract fluctuations in the production of renewable energy, the power output and consumption of controlled units can be adjusted in this way. However, the VPP Market is not limited to promoting power grid stability. It also lays forth the requirements for the market integration of renewable energy. Small plants operating alone are typically unable to offer flexibility in power exchanges or balancing services.

The increasing demand for renewable energy sources worldwide has made virtual power plants necessary. Furthermore, the role of decentralized power producers in the electricity distribution network is becoming increasingly important in reducing the electricity demand.  Positive government initiatives to lessen power outages, increased demand for renewable energy sources, and an increasing requirement for decentralized power generation are all projected to drive market growth. It is anticipated that in the near future, the fast expansion will be fueled by growing government awareness of the need to minimize power disruptions while also seeking to safeguard the environment. The market's growing awareness of these capabilities has led to significant investments over the past 10 years in the battery storage systems and renewable energy industries.

Virtual Power Plant Market

Virtual Power Plant Market Dynamics

Key Drivers of Target Market:

Growing adoption of distributed energy resources

  • A complicated, decentralized energy environment has been created by the emergence of distributed energy resources (DERs), including smart appliances, rooftop solar panels, electric cars, and energy storage devices. Through the use of this dispersed infrastructure, VPPs can successfully combine and manage resources to create a single, centralized organization that can take part in grid operations and energy markets. This integration allows for the more effective utilization of renewable energy sources, less strain on the grid during times of high demand, and more cash generation for DER owners.

Adoption of renewable energy sources:

  • The shift to renewable energy has posed new challenges to grid operators as solar and wind power are intermittent renewable sources, which can create a supply and demand imbalance. Virtual power plants (VPPs) are an approach to solving this issue, providing grid stability and flexibility services.
  • VPPs can react quickly to electricity supply and demand changes and help keep the grid balanced while regulating frequency and providing ancillary services typically provided by conventional power plants. As variable renewable energy is being integrated into grids worldwide, VPPs' capabilities become increasingly valuable, and they will become critical tools for maintaining strong and reliable systems.

Restrains:

Complexities surrounding the DERs:

  • The market for virtual power plants (VPPs) are significantly challenged by the barriers of incorporating diverse distributed energy resources (DERs) and technical issues. VPPs, to effectively coordinate and optimize a diverse array of solar, battery, electric vehicle, and smart appliance resources, each with unique attributes and communication protocols, require complex software-developed platforms.
  • In particular, real-time data management, predictive analytics, and fast response capabilities are all closely linked to a VPP's ability to participate effectively in electricity markets and provide/receive grid services with a high degree of complex coordination. The complexity is further heightened by the above items and the scaling challenges in managing vast amounts of data and orders for millions, even billions of devices in linear time.

Opportunities:

Rising demand for grid services:

  • The rising demand for Grid ancillary services and VPPs' ability to compete in the capacity and ancillary services markets offer significant promise in the VPP Market. The ongoing global transformation of power networks towards more significant proportions of Renewable energy is creating an escalating need for flexible assets that can respond quickly to supply-demand imbalances and provide stability services for the grid. VPPs can meet this requirement by combining and managing dispersed energy resources and offering services such as Frequency Control, Voltage regulation, Demand Response, and so on; for VPP Markets, it is a golden moment. Grid ancillary services require VPPs to participate fully in the wholesale electricity, capacity, and ancillary services markets.
  • VPP operators now have opportunities to engage in wholesale energy, capacity, and ancillary service markets, all of which were historically dominated by large generation power plants. Also, advances in artificial intelligence and machine learning technologies can help VPPs operate automatically in real time, which will increase financial returns and provide grid benefits.

Virtual Power Plant Market Segmentation

The market is segmented based on Technology, Source, End-User, and Region.

Technology Insights:

  • Distribution Generation: The main objective of the distributed generating sector is to integrate small-scale renewable energy sources into virtual power plants. Solar photovoltaic (PV) panels, wind turbines, and micro combined heat and power (CHP) systems are a few examples of these sources. The benefits of distributed generation-based virtual power plants include enhanced grid resilience, decreased transmission losses, and localized energy output.
  • Demand Response: Demand-side management systems are integrated into virtual power plants as part of the demand response sector. Thanks to demand response systems, customers can modify their power use in response to price signals or grid circumstances. The growing requirement for grid flexibility and optimization will likely drive significant growth in the demand response category.
  • Mixed Asset: This strategy combines DG and DR technologies into a single VPP. This method offers the highest degree of flexibility for maximising grid performance since it allows for electricity generation and consumption management. Hybrid VPPs can adjust dynamically to grid conditions by increasing generation from distributed sources or decreasing demand through demand response programs.

Source Insights:

  • Renewable Energy: Even though solar and wind energy significantly impact the environment, their output varies. VPPs with renewable energy sources can lessen oscillations and provide a more dependable power source by combining various resources.
  • Energy Storage: VPPs with energy storage can store extra renewable energy during periods of high production and release it during periods of peak demand. This increases grid stability by even supply.
  • Cogeneration: These clever machines produce both heat and electricity simultaneously. They are referred to as cogeneration (Combined Heat and Power). VPPs can incorporate CHP systems to enhance waste heat utilization and improve overall energy efficiency.

End-User Insights:

  • Utilities: VPPs are driving change in the utility industry. By integrating dispersed energy resources and improving system dependability, VPPs can delay investments in new power plants, freeing up money for other crucial projects like grid renovation.
  • Commercial: VPPs are very advantageous to businesses. They might participate in DR programmes to potentially lower their electricity expenses and actively contribute to the shift to sustainable energy.
  • Industrial: VPPs can significantly improve the energy consumption of industrial facilities, which are often the most significant users of the grid. Industrial facilities participating in VPPs can optimize their energy use patterns and potentially save a lot of money. VPPs can also provide new revenue streams for companies by enabling industrial facilities to participate in auxiliary service markets or supply excess capacity.
  • Residential: The increasing popularity of smart home devices and the heightened consciousness of environmental responsibility provide residential customers with compelling opportunities to participate in VPPs through DR initiatives. People now have the chance to enhance grid stability, lower their electricity costs, and get incentives for their participation.

Regional Insights

  • North America: The North American VPP market is propelled by modern energy infrastructure, favorable policies, and a significant emphasis on grid stability. The United States and Canada are the leaders in adoption, focusing on demand response programs, EV charging network integration, and the use of AI in VPP administration.
  • Asia Pacific: The Asia Pacific area is poised for solid expansion in the VPP market, owing to rising energy consumption, rapid urbanization, and increased renewable energy use. Government measures to modernize electrical systems and increase dependability are critical.
  • Europe: Europe is on track to become the world’s largest VPP market, powered by ambitious renewable energy objectives and severe decarbonization aspirations. The region's strong, smart grid infrastructure and supportive legislative framework, such as the EU's Clean Energy Package, allow for rapid VPP implementation.
  • Latin America: The VPP market in Latin America is predicted to rise gradually, driven by increased renewable energy usage, particularly hydropower and solar, as well as initiatives to modernize aging grid infrastructure. The region aims to improve grid stability, reduce power outages, and increase energy efficiency through demand-side management.
  • Middle East and Africa: This region is seeing increased interest in VPPs, particularly in countries with high renewable energy objectives and needing greater grid stability. VPPs are viewed as a solution for managing peak demand in fast-developing urban regions while supporting rural electrification efforts

Virtual Power Plant Market Report Scope:

Attribute

Details

Market Size 2024

USD 2.1 Billion 

Projected Market Size 2034

USD 15.8 Billion

CAGR Growth Rate

24.8%

Base year for estimation

2023

Forecast period

2024 – 2034

Market representation

Revenue in USD Billion & CAGR from 2024 to 2034

Market Segmentation

By Technology - Distribution Generation, Demand Response, and Mixed Asset.

By Source - Renewable Energy, Energy Storage, and Cogeneration.

By End-User - Utilities, Commercial, Industrial, and Residential.

Regional scope

North America - U.S., Canada

Europe - UK, Germany, Spain, France, Italy, Russia, Rest of Europe

Asia Pacific - Japan, India, China, South Korea, Australia, Rest of Asia-Pacific

Latin America - Brazil, Mexico, Argentina, Rest of Latin America

Middle East & Africa - South Africa, Saudi Arabia, UAE, Rest of Middle East & Africa

Report coverage

Revenue forecast, company share, competitive landscape, growth factors, and trends

Segments Covered in the Report:

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2024 to 2034. For the purpose of this study segmented the target market report based on Technology, Source, End-User, and Region.

By Technology:

  • Distribution Generation
  • Demand Response
  • Mixed Asset

By Source:

  • Renewable Energy
  • Energy Storage
  • Cogeneration

By End-User:

  • Utilities
  • Commercial
  • Industrial
  • Residential

By Region:

  • North America
    • U.S.
    • Canada
  • Europe
    • Germany
    • UK
    • France
    • Russia
    • Italy
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • South Korea
    • Rest of Asia Pacific
  • Latin America
    • Brazil
    • Mexico
    • Rest of Latin America
  • Middle East & Africa
    • GCC
    • Israel
    • South Africa
    • Rest of Middle East & Africa

Virtual Power Plant Market Key Players

The key players operating the Virtual Power Plant Market include Siemens, General Electric, Tesla, Sunverge Energy, Inc., ABB, Next Kraftwerke, AGL Energy, Open Access Technology International, Inc., Flexitricity Limited, Limejump Limited, Toshiba Energy Systems & Solutions, Hitachi, Ltd., Olivene, Inc., AutoGrid Systems, Inc, and Centrica.

Virtual Power Plant Market Size, Share

Virtual Power Plant Market Key Issues Addressed

  • In January 2023, GM, Ford, Google, and solar energy suppliers established a working group to develop standards for expanding the use of virtual power plants (VPPs), devices that lessen demand on electricity networks during periods of shortage.
  • In February 2021, Hitachi ABB Power Grids will deliver battery energy storage and intelligent controls to Singapore's first virtual power plant (VPP), as part of a study to validate ways for integrating more renewable energy into the city-state's electrical networks. The initiative will assist in integrating power from various distributed energy resources (DERs), such as solar power, to mimic the operation of a utility-scale power system, according to the business. Hitachi ABB Power Grids will supply its Powerstore battery storage technology along with e-mesh, the company's digital controls platform.

Virtual Power Plant Market Company Profile

  • Siemens*
    • Company Overview
    • Product Portfolio
    • Key Highlights
    • Financial Performance
    • Business Strategies
  • General Electric
  • Tesla
  • Sunverge Energy, Inc.
  • ABB
  • Next Kraftwerke
  • AGL Energy
  • Open Access Technology International, Inc.
  • Flexitricity Limited
  • Limejump Limited
  • Toshiba Energy Systems & Solutions
  • Hitachi, Ltd.
  • Olivene, Inc.
  • AutoGrid Systems, Inc
  • Centrica

“*” marked represents similar segmentation in other categories in the respective section

Virtual Power Plant Market Table of Contents

  1. Research Objective and Assumption
    • Research Objectives
    • Assumptions
    • Abbreviations
  2. Market Preview
    • Report Description
      • Market Definition and Scope
    • Executive Summary
      • Market Snippet, By Technology
      • Market Snippet, By Source
      • Market Snippet, By End-User
      • Market Snippet, By Region
    • Opportunity Map Analysis
  3. Market Dynamics, Regulations, and Trends Analysis
    • Market Dynamics
      • Drivers
      • Restraints
      • Market Opportunities
    • Market Trends
    • Product Launch
    • Merger and Acquisitions
    • Impact Analysis
    • PEST Analysis
    • Porter’s Analysis
  4. Market Segmentation, Technology, Forecast Period up to 10 Years, (US$ Bn)
    • Overview
      • Market Value and Forecast (US$ Bn), and Share Analysis (%), Forecast Period up to 10 Years
      • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
      • Segment Trends
    • Distribution Generation
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
    • Demand Response
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
      • Segment Trends
    • Mixed Asset
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
      • Segment Trends
  5. Market Segmentation, Source, Forecast Period up to 10 Years, (US$ Bn)
    • Overview
      • Market Value and Forecast (US$ Bn), and Share Analysis (%), Forecast Period up to 10 Years
      • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
      • Segment Trends
    • Renewable Energy
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
    • Energy Storage
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
    • Cogeneration
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
  6. Market Segmentation, End-User, Forecast Period up to 10 Years, (US$ Bn)
    • Overview
      • Market Value and Forecast (US$ Bn), and Share Analysis (%), Forecast Period up to 10 Years
      • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
      • Segment Trends
    • Utilities
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
    • Commercial
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
    • Industrial
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
    • Residential
      • Overview
      • Market Size and Forecast (US$ Bn), and Y-o-Y Growth (%), Forecast Period up to 10 Years
  7. Global Market, By Region, Forecast Period up to 10 Years, (US$ Bn)
    • Overview
      • Market Value and Forecast (US$ Bn), and Share Analysis (%), Forecast Period up to 10 Years
      • Y-o-Y Growth Analysis (%), Forecast Period up to 10 Years
      • Regional Trends
    • North America
      • Market Size and Forecast (US$ Bn), By Technology, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Source, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By End-User, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Country, Forecast Period up to 10 Years
        • U.S
        • Canada
    • Asia Pacific
      • Market Size and Forecast (US$ Bn), By Technology, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Source, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By End-User, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Country, Forecast Period up to 10 Years
        • India
        • Japan
        • South Korea
        • China
        • Rest of Asia Pacific
    • Europe
      • Market Size and Forecast (US$ Bn), By Technology, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Source, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By End-User, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Country, Forecast Period up to 10 Years
        • UK
        • Germany
        • France
        • Russia
        • Italy
        • Rest of Europe
    • Latin America
      • Market Size and Forecast (US$ Bn), By Technology, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Source, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By End-User, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Country, Forecast Period up to 10 Years
        • Brazil
        • Mexico
        • Rest of Latin America
    • Middle East and Africa
      • Market Size and Forecast (US$ Bn), By Technology, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Source, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By End-User, Forecast Period up to 10 Years
      • Market Size and Forecast (US$ Bn), By Country, Forecast Period up to 10 Years
        • GCC
        • Israel
        • South Africa
        • Rest of Middle East and Africa
  8. Competitive Landscape
  • Heat Map Analysis
  • Company Profiles
  • Siemens
  • General Electric
  • Tesla
  • Sunverge Energy, Inc.
  • ABB
  • Next Kraftwerke
  • AGL Energy
  • Open Access Technology International, Inc.
  • Flexitricity Limited
  • Limejump Limited
  • Toshiba Energy Systems & Solutions
  • Hitachi, Ltd.
  • Olivene, Inc.
  • AutoGrid Systems, Inc
  • Centrica

The Last Word

  • Future Impact
  • About Us
  • Contact

FAQs

Virtual Power Plant Market Size was valued at US$ 2.1 billion in 2024 and is expected to grow at a CAGR of 24.8% to reach US$ 15.8 billion by 2034

The Virtual Power Plant Market is segmented into Technology, Source, End-User, and Region.

Factors driving the market include the growing global need for electricity produced from renewable energy sources, necessitating the use of virtual power plants. In addition, in an attempt to lower the demand for electricity, the role of decentralized power producers in the distribution network is becoming increasingly significant.

The virtual Power Plant Market's restraints include the barriers to incorporating diverse distributed energy resources (DERs) and technical issues.

The Virtual Power Plant Market is segmented by region into North America, Asia Pacific, Europe, Latin America, and the Middle East and Africa. North America is expected to dominate the Market.

The key players operating the Virtual Power Plant Market include Siemens, General Electric, Tesla, Sunverge Energy, Inc., ABB, Next Kraftwerke, AGL Energy, Open Access Technology International, Inc., Flexitricity Limited, Limejump Limited, Toshiba Energy Systems & Solutions, Hitachi, Ltd., Olivene, Inc., AutoGrid Systems, Inc, and Centrica.