Today, we live in an increasingly virtual world. Everything can be hosted in virtual sectors, from playing virtual games to holding virtual meetings. The virtual power plant, or VPP, has become one of the hottest buzzwords in the energy industry in recent years.
Not just as a concept but also as something that an increasing number of energy firms are developing, utilizing, and commercializing. According to the report by Polaris Market Research, the global virtual power plant market was valued at USD 1,587.00 million in 2022 and is expected to grow to USD 11,631.30 million at a CAGR of 22.1% during the forecast period 2032.
What is a Virtual Power Plant?
A VPP comprises hundreds or thousands of homes and businesses that contribute to the grid by utilizing the latent potential of their solar panels, electric vehicles (EVs), appliances, batteries, and thermostats. These devices can be flexibly managed, discharged, or charged to fulfill grid needs. These devices can offer many of the same energy services (capacity, energy, auxiliary services) as a conventional power station when they are combined and coordinated.
Benefits of VPPs
Numerous advantages of a VPP power plant for people, businesses, and the environment include:
- Reliability
- Affordability
- Environmentally friendly
- Health and Equity
- Efficiency
Why is Virtual Power Plants Gaining in Popularity?
The market is benefiting greatly from the growing proportion of renewable energy in the electricity generation mix. Renewable energy sources like solar, hydropower, and wind are prioritized as nations and companies work to cut greenhouse gas emissions and combat climate change. VPPs are essential for integrating and utilizing these renewable energy sources to their full potential.
Moreover, favorable government regulations and incentives drive the virtual power plant market growth. Numerous governments have introduced renewable energy targets, subsidies, and feed-in tariffs to promote sustainable energy sources. These regulations provide a framework for integrating and encouraging renewable energy production, which fosters the deployment of VPPs.
The Demand Response Sector Dominates the Market
Due to increasing load management investments and the opportunity for end users to receive incentives for participating in demand response programs, the demand response segment is anticipated to dominate the market.
Furthermore, the distributed generation market expands as the need for renewable energy technology rises. Improving grid operations and incorporating the rising proportion of renewable energy sources require integrating distributed power generation resources. The grid stability, energy efficiency, and shift to a more sustainable energy environment are all considerably improved by both parts.
Which regions are Leading in the market?
The virtual power plant market in North America had the largest share in 2022. The development of the market is expected to be influenced by technological improvements, regulations aimed at reducing greenhouse gas emissions, and the broad adoption of grid-balancing technologies by customers in the residential, commercial, and industrial sectors.
Moreover, in 2022, the Asia Pacific region also saw a significant CAGR in the global market. The region has substantial potential for renewable energy, and the residential and commercial sectors are expanding quickly, which is anticipated to boost the virtual power plant market demand.
The Recent Developments
Tesla announced the beginning of phase 3 of its virtual power plant in South Australia in September 2020. This phase will connect 4,000 houses with Powerwalls and solar panels. The project seeks to improve grid dependability and sustainability through household solar energy generation and storage.
Siemens created a business plan to help energy optimization for the Carlsberg Group, a global brewing firm with headquarters in Finland, in November 2020. This solution was implemented at the Sinebrychoff facility in the wider Helsinki area. The project used digitization to streamline energy use, which could result in energy savings and better power quality.
The Closing Thoughts
Since virtual power plants provide so many advantages, it is simple to understand why traditional power plants give way to these more compact, intelligent, reliable, and efficient alternatives.