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 (2018–2023). 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.
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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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