Virtual Power Plant Market to Experience Healthy Growth


The virtual power plant market is being positively impacted by the capacity expansion of renewable power projects across the world. In 2017, the market generated a revenue of $1,975.1 million, and it is expected to grow at an 18.6% CAGR during the forecast period (20182023). Virtual power plants (VPP) are system of energy generation and energy storage units, which are brought together via computer software and made into an integrated power plant. They are aimed at supplying power in times of high demand and reduce load on the power grid.

A shift toward low-cost energy generation is being observed as the trend in the virtual power plant market. These power plants require less capital and are able to integrate various energy sources unlike conventional power plants, which require huge investments for their construction. Countries such as the U.S., China, and Germany are either setting up such pilot projects or have started commercially-viable VPPs. In 2018, Tesla Inc. announced plans to set up a 250 MW VPP in South Australia, which, on completion, will cater to 50,000 households’ power needs.

The increasing reliance on renewable power projects is driving the virtual power plant market forward. The power generated using renewable energy sources is expected to grow to 20.0% by 2035 from just 7.0% in 2015. Emerging economies, such as India and China, are aiming to achieve tremendous growth in the renewable energy sector. By the end of 2022, India has set a goal of achieving 150 GW installed capacity of renewable power plants. Similarly, China is aiming at generating 150–200 GW of solar power by 2020. 

The segments of the virtual power plant market are region, technology, and consumer. On the basis of technology, the categories are mixed asset, demand response, and supply side. In 2017, the demand response category held the largest revenue share in the market, of more than 40.0%. This is ascribed to the highest adoption of these plants in North America, specifically the U.S., which is also the largest market in the world for VPPs.


Based on consumer, the virtual power plant market is classified into electric vehicles, industrial, commercial, and residential. The rapid industrialization in emerging economies, such as Brazil, India, and China, resulted in the heavy transmission of electricity through VPPs to the industrial sector, which is why this category led the market with a revenue generation share of more than 40.0% in 2017. However, the residential category is expected to experience the fastest growth.


Therefore, the market for virtual power plants is expected to flourish during the forecast period due to the growing focus on producing and using clean energy. 

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