Global Virtual Power Plant Market Retains Robust Growth: Projected to Grow at a CAGR of 25.7% by 2027
Published | 10 November 2021
The increasing adoption of the IoT technology, and renewable energy in the power generation sector has enabled enormous opportunities for the growth of the global virtual power plant market. In addition this, the rising demand for electric vehicles are bolstering the future prospects for the demand for the virtual power plants, which is projected to solidify the growth of the global market in the coming years….
A study, recently conducted by the strategic consulting and market research firm BlueWeave Consulting, revealed that the global virtual power plant market was worth USD 560.2 million in 2020. The data yielded by the study revealed that the market is estimated to grow at a CAGR of 25.7%, earning revenue of around USD 2,593.1 million by the end of 2027. The rising demand for balancing voltage fluctuations amid the growing adoption of renewable energy in the power generation sector is propelling the demand for virtual power plants. The other factors contributing to the growth of the global virtual power plant market includes tighter restrictions on the emissions generated from the centralized power generation and government subsidies driven to enhance the penetration of clean energy.
Government initiatives for subsidizing cleaner energy is driving the global virtual power plant market
The government authorities and agencies around the world have initiated measures to enhance the penetration of renewable energy. The Department of Energy (DOE), United States announced that they are setting up a target for subsiding and dwindling the costs of solar power generation by more than 60% within the next decade. The government has set aside USD 128 million in funding to reduce costs, improve efficiency, and accelerate the deployment of such technologies. It is bolstering the demand for renewable power generation units, which is driving the growth of the global virtual power plant market. Compared to other conventional methods of centralized power generation, the virtual power plant serves the specific purpose of optimizing power generation and ensuring adequate electricity supply to end-users.
The growing demand for electric vehicles across the world are fuelling the global virtual power plant market
Growing environmental concerns, a shortage of fossil fuels, and favorable government subsidies have played important roles in driving the growth of electric vehicle consumption in recent years. Global EV Outlook Report of 2021 reports that despite the COVID-19 pandemic, 2020 was a very successful year for EV sales, resulting in 53% more EVs than in 2019. The facts demonstrate that the EV sector is projected to grow even further in the years to come. Electric vehicle batteries serve as the power source integrated into the main system for management purposes with virtual power plants. With the growth of the sector, the demand for such VPPs may also rise in the future.
Global Virtual Power Plant Market - Impact of COVID-19 in the Industry
Due to COVID-19, the energy & power industry experienced a decrease in demand for power, financial stress, and disruption. The demand for electricity witnessed a significant drop after the announcement of nationwide lockdowns. Some of the industries were shut down while others were operating at reduced capacity. Additionally, corporate and government offices were closed, and the world almost came to a standstill for a few months. In addition, the IoT technology, which is an essential component in delivering and monitoring electricity levels, has been impacted by the growing chip shortages. However, rising vaccination rollouts are expected to push supply chains, restoring desired demand for VPPs in the global virtual power plant market.
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The Demand Response technology garners the largest share in the global virtual power plant market
Based on technologies, the global virtual power plant market has been segmented into Demand Response, Distribution Generation, and Mixed Assets. The demand response segment acquired the largest market share in the global virtual power plant market in 2020. Demand response technology provides incentives to the customers if they lower their energy consumption during the peak demand hours. Demand response virtual power plants (DR-VPPs) developed in North America can be integrated into residential applications with relative ease. This is one of the major reasons for the segment’s growth in recent years, making them much more sustainable than their counterparts and enabling them to earn a higher share in the global virtual power plant.
North America accounted for the highest share in the global virtual power plant market
Based on regions, the global virtual power plant market is segmented into North America, European Union, Asia-Pacific, South America, and the Middle East & Africa. North America accumulated the biggest share in the global virtual power plant market in 2020. The growing number of projects associated with virtual power plants (VPPs) have already been completed in 2020 across North America, demonstrating the rising adoption of virtual power plants in the region. For instance, on 23rd December 2020, California utility PG&E announced contracts for 387 megawatts/1,548 megawatts-hours of new energy storage. A 27-megawatt/108-megawatt-hour fleet of customer-sited batteries would be developed by Nexus Renewables of Ontario, Canada, and the batteries will sit at commercial and industrial sites, supporting the growth of the virtual power plant market in the region.
Global Virtual power plant Market - Competitive Landscape
The key players in the global virtual power plant market are ABB Ltd., VIBECO (Virtual Buildings Ecosystem) Siemens AG, Schneider Electric SE, Enel X S.r.l, Comverge Inc. (Itron Inc.), Limejump Limited, Flexitricity Limited, Autogrid Systems, Inc., Cisco Systems, Inc., Enbala Power Networks, Inc. (Generac Grid Services), Hitachi Energy Ltd., IBM Corporation, Toshiba Corporation, Next Kraftwerke GmbH, and other prominent players. The global virtual power plant market has been witnessing rising competition amid rising mergers and acquisitions over the past few years, which has led to some fragmentation in the global market.
In August 2021, Generac Power Solutions announced that the company’s commercial and industrial generators, residential standby generators, and PWRcell solar + battery storage systems have now become a Smarter Grid Product, enabling the customers to sell off their power back to the grid and offset their energy expenses.
The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of the global virtual power plant market. It also highlights the factors driving forecasts of total market size. The report promises to provide recent technology trends of the global virtual power plant market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyzes the growth drivers, challenges, and competitive dynamics of the market.
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