Virtual Power Plant Market Size
| Study Period | 2019 - 2029 |
| Market Size (2024) | USD 5.31 Billion |
| Market Size (2029) | USD 16.38 Billion |
| CAGR (2024 - 2029) | 25.31 % |
| Fastest Growing Market | Asia Pacific |
| Largest Market | North America |
| Market Concentration | Medium |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Virtual Power Plant Market Analysis
The Virtual Power Plant Market size is estimated at USD 5.31 billion in 2024, and is expected to reach USD 16.38 billion by 2029, at a CAGR of 25.31% during the forecast period (2024-2029).
- The virtual power plant (VPP) market is witnessing robust growth, fueled by the rising integration of renewable energy sources and technological advancements. The global pivot towards sustainable energy, especially solar and wind, stands as a primary catalyst for the VPP surge. VPPs facilitate the aggregation of decentralized energy resources, bolstering grid stability and diminishing dependence on fossil fuels.
- Industry experts project that virtual power plants (VPPs) could avert 1.5 to 7.3 million metric tons of CO2 emissions in 2024. This insight comes from RMI (formerly Rocky Mountain Institute), an independent nonprofit dedicated to reshaping global energy systems, in collaboration with the Virtual Power Plant Partnership (VP3), a coalition of nonprofits and organizations aiming to unlock the market potential of VPPs.
- VPPs harness cutting-edge software and communication technologies to manage, optimize, and coordinate the output of distributed energy resources (DERs). These include rooftop solar panels, energy storage systems, electric vehicles, smart thermostats, and other smart home devices like appliances, televisions, and smart lights. DER owners participating in a VPP can expect incentive payments ranging from USD 500 to USD 1,000 annually, contingent on the specific program.
- Advancements in IoT, AI, and data analytics are revolutionizing VPP functionalities, enabling real-time management of distributed energy resources (DERs). This tech evolution not only streamlines energy dispatch but also ensures effective load balancing. Furthermore, with many governments championing clean energy initiatives and offering incentives for VPP adoption, the market is witnessing a pronounced uptick. For example, various regions are channeling substantial investments into renewable energy infrastructure.
- However, the digital-centric nature of VPPs brings forth challenges, notably in cybersecurity. Safeguarding data and ensuring system integrity is paramount to uphold consumer trust and ensure operational reliability.
- In the wake of COVID-19, the virtual power plant (VPP) market has seen notable shifts, largely due to evolving energy consumption trends. The pandemic-induced remote work surge led to heightened residential energy consumption, shifting the demand landscape. As the world rebounds from the pandemic, governments globally are amplifying their commitment to clean energy. This renewed focus includes policies that champion VPP development as integral to overarching sustainability objectives.
Virtual Power Plant Market Trends
Residential to Hold Significant Share
- A Virtual Power Plant (VPP) is a cutting-edge network that links various small-scale, decentralized power generation units, adaptable power consumers, and storage systems. By aggregating the capacities of diverse Distributed Energy Resources (DERs), a VPP operates as a cohesive entity, all managed through a centralized control system. It optimizes energy use by managing resources like Sol-Ark residential hybrid inverters.
- According to CBRE, in 2024, London, England, and Dallas, United States, emerged as the top global markets for multifamily investments. In the U.S., residential customers account for 40% of electricity consumption, outpacing shares from commercial, industrial, and transportation sectors. Moreover, residential customers significantly influence the grid. For instance, in many areas, the residential sector's summertime air-conditioning use notably drives peak demand.
- To effectively handle summer and winter peak events, especially under the strain of extreme weather, it's vital to leverage all available tools. This is particularly true for those that empower the residential sector to aggregate DERs and form VPPs.
- In May 2024, the launch of Renew Home, touted as North America's largest residential VPP, marked a significant milestone for Virtual Power Plants (VPPs). Born from the merger of Google Nest’s Renew and OhmConnect, Renew Home secured a USD 100 million backing from its majority owner, Sidewalk Infrastructure Partners (SIP).
- Participants in VPPs typically receive incentive payments ranging from USD 500 to USD 1,000 annually, as highlighted in a recent Brattle Group report. The same report projected that by 2035, VPPs could collectively save consumers over USD 550 million each year. With rising investments in residential areas, the market is poised for growth.
North America is Expected to Hold a Major Share of the Market
- In North America, the demand for virtual power plants (VPPs) is surging, fueled by rising energy demands, technological innovations, and favorable government policies.
- Smart grid technologies and demand response systems boost energy distribution and management efficiency, making VPPs appealing to both consumers and utilities. The recent Infrastructure Investment and Jobs Act earmarked around USD 15 billion to bolster the resilience of the U.S. power grid. The sector's automation focus is leaning towards investments in self-healing energy networks, capable of remotely diagnosing and rectifying system faults.
- Renewable energy sources, especially solar and wind, are pivotal to the expanding VPP landscape, as these plants optimize the management of distributed energy resources. In 2023, hydropower dominated Canada's renewable electricity generation, constituting over 60% of the total. With renewables making up more than two-thirds of its electricity generation, Canada boasts one of the world's cleanest electricity mixes.
- Further, there is strong governmental support for clean energy initiatives and policies aimed at reducing greenhouse gas emissions, which facilitate the adoption of VPP technologies across various sectors, including industrial, commercial, and residential markets. Overall, with above factors, the market is expected to grow significantly.
Virtual Power Plant Industry Overview
The Virtual Power Plant Market market is consolidated and is expected to grow towards fragmented nature due to increasing number of vendors. The key players are employing strategies such as mergers, acquisitions, and product innovations to maintain a competitive edge and broaden their global footprint. Key player include ABB, Ltd., AGL Energy, Autogrid Systems, Inc. and others.
The virtual power plant market is poised for significant growth driven by renewable energy integration, government support, and technological advancements. As VPPs play an increasingly critical role in modernizing the energy landscape, their demand is expected to continue rising in the coming years.
Virtual Power Plant Market Leaders
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ABB, Ltd.
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AGL Energy
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Autogrid Systems, Inc.
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Cpower Energy Management
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Enel X
*Disclaimer: Major Players sorted in no particular order
Virtual Power Plant Market News
- November 2024: LG CNS announced to launch a software solution for virtual power plant (VPP) businesses, to seize opportunities in the rapidly growing global energy systems market. It will initiate its solution business for VPPs by launching the artificial intelligence-driven (AI) software, Enerdict, designed to optimize energy management and forecasting within VPP frameworks.
- July 2024: Dubai Electricity and Water Authority (DEWA), announced the successful completion of DEWA’s pilot Virtual Power Plant (VPP) project, marking a pioneering achievement in the region. This innovative initiative is set to revolutionize the management of Distributed Energy Resources (DERs) and enhance energy sustainability, playing a crucial role in Dubai’s commitment to achieving net zero emissions by 2050.
Virtual Power Plant Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Consumers
4.2.3 Threat of New Entrants
4.2.4 Threat of Substitute Products
4.2.5 Intensity of Competitive Rivalry
4.3 Industry Value Chain Analysis
4.4 Assessment of Impact of macroeconomic trends
4.5 Technology Snapshots
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Increasing Share of Renewable Energy in the Power Generation Mix
5.1.2 Shift from Centralized to Distributed Generation
5.2 Market Restraints
5.2.1 Health Safety Concerns regarding Electromagnetic Frequency (EMF) & Radio Frequency (RF) Exposure
6. MARKET SEGMENTATION
6.1 By Technology
6.1.1 Demand Response
6.1.2 Distributed Generation
6.1.3 Mixed Asset
6.2 By End-user
6.2.1 Industrial
6.2.2 Commercial
6.2.3 Residential
6.3 By Geography***
6.3.1 North America
6.3.2 Europe
6.3.3 Asia
6.3.4 Latin America
6.3.5 Middle East and Africa
6.3.6 Australia and New Zealand
7. COMPETITIVE LANDSCAPE
7.1 Company Profiles
7.1.1 ABB, Ltd.
7.1.2 AGL Energy
7.1.3 Autogrid Systems, Inc.
7.1.4 Cpower Energy Management
7.1.5 Enel X
7.1.6 Flexitricity Limited
7.1.7 General Electric Company
7.1.8 Hitachi, Ltd.
7.1.9 Limejump Limited
7.1.10 Olivene, Inc.
- *List Not Exhaustive
8. INVESTMENT ANALYSIS
9. FUTURE OUTLOOK OF THE MARKET
Virtual Power Plant Industry Segmentation
A virtual power plant (VPP) is a system that integrates multiple, possibly heterogeneous, power sources to provide grid power. A VPP typically sells its output to an electric utility.
The virtual power plant market is segmented by technology (demand response, distributed generation, mixed asset), by end-user (industrial, commercial, residential), by geography (North America, Europe, Asia-Pacific, Latin America, Middle East and Africa). The market sizes and forecasts are provided in terms of value (USD) for all the above segments.
| By Technology | |
| Demand Response | |
| Distributed Generation | |
| Mixed Asset |
| By End-user | |
| Industrial | |
| Commercial | |
| Residential |
| By Geography*** | |
| North America | |
| Europe | |
| Asia | |
| Latin America | |
| Middle East and Africa | |
| Australia and New Zealand |
Virtual Power Plant Market Research FAQs
How big is the Virtual Power Plant Market?
The Virtual Power Plant Market size is expected to reach USD 5.31 billion in 2024 and grow at a CAGR of 25.31% to reach USD 16.38 billion by 2029.
What is the current Virtual Power Plant Market size?
In 2024, the Virtual Power Plant Market size is expected to reach USD 5.31 billion.
Who are the key players in Virtual Power Plant Market?
ABB, Ltd., AGL Energy, Autogrid Systems, Inc., Cpower Energy Management and Enel X are the major companies operating in the Virtual Power Plant Market.
Which is the fastest growing region in Virtual Power Plant Market?
Asia Pacific is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in Virtual Power Plant Market?
In 2024, the North America accounts for the largest market share in Virtual Power Plant Market.
What years does this Virtual Power Plant Market cover, and what was the market size in 2023?
In 2023, the Virtual Power Plant Market size was estimated at USD 3.97 billion. The report covers the Virtual Power Plant Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Virtual Power Plant Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Virtual Power Plant Industry Report
Statistics for the 2024 Virtual Power Plant market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Virtual Power Plant analysis includes a market forecast outlook for 2024 to 2029 and historical overview. Get a sample of this industry analysis as a free report PDF download.
