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The virtual power plant market size is valued to increase USD 11.13 billion, at a CAGR of 25.66% from 2023 to 2028. Rising integration of renewable energy sources with electric power systems will drive the virtual power plant market.
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The virtual power plant industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The mixed asset segment is estimated to witness significant growth during the forecast period.
In the dynamic the market, advanced metering infrastructure (AMI) plays a pivotal role in managing energy usage during peak demand or grid instability. AMI facilitates real-time monitoring of consumption patterns, enabling precise data collection for effective demand response management. Smart grid technologies, including power electronics converters and communication systems, facilitate seamless interaction between the central virtual power plant control system and distributed energy resources. These resources include smart appliances, batteries, renewable energy sources, and grid-scale energy storage. Automated controls and predictive analytics are essential components of virtual power plants, forecasting demand fluctuations and adjusting energy output accordingly.
IoT devices enable remote access and control, optimizing energy usage based on predefined parameters or real-time pricing signals. Energy management systems coordinate diverse energy assets within the virtual power plant, ensuring efficient utilization and response to grid signals or market conditions. Key market trends include frequency regulation through cybersecurity protocols, real-time pricing, and ancillary service provision. Capacity market participation and energy arbitrage strategies are also driving growth. Power quality monitoring, distribution network optimization, and peak demand shaving are essential for maintaining power system stability. Blockchain technology and AI-driven energy management are emerging trends, offering improved security, transparency, and predictive capabilities.
Renewable energy integration, fuel cell integration, power flow optimization, and distributed generation are crucial aspects of the evolving virtual power plant landscape. According to recent studies, approximately 25% of global electricity generation comes from renewable sources. Furthermore, industry experts anticipate that renewable energy integration will increase by 15% within the next five years. Energy storage optimization is projected to grow by 20% as grid modernization initiatives continue to unfold. Additionally, demand-side management is expected to expand by 18% as businesses and consumers seek to optimize energy usage and reduce costs.
The Mixed asset segment was valued at USD 1.18 billion in 2018 and showed a gradual increase during the forecast period.
Europe is estimated to contribute 55% to the growth of the global market during the forecast period.Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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The European energy landscape is witnessing a significant shift towards cleaner and more sustainable energy solutions, with Virtual Power Plants (VPPs) emerging as a key component. Governments, particularly in Germany and the UK, are actively promoting the growth of VPPs through various initiatives. In Germany, the Energiewende initiative, an energy transition policy, aims to adopt renewable energy sources and ensure sustainable development. VPPs, which enable the integration and coordination of distributed renewable energy sources, align perfectly with this objective. According to recent reports, the number of VPPs in operation in Germany has grown by over 30% in the last two years.
Similarly, the UK government's Smart Export Guarantee scheme encourages the deployment of small-scale renewable energy systems and VPPs. These initiatives underscore the potential of VPPs in facilitating a more decentralized and flexible energy system, thereby contributing to a more sustainable energy future.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The market is a dynamic and evolving sector that focuses on the aggregation of distributed energy resources to optimize battery energy storage, integration of renewable energy sources, and implementation of demand response strategies. This market is witnessing significant growth due to the prediction of power system events, management of distributed generation assets, and control of microgrid stability. Virtual power plants play a crucial role in enhancing grid stability by enabling the operation of distributed generation assets and the optimization of renewable energy usage. The deployment of advanced metering infrastructure and utilization of energy storage systems are key drivers in the market.
Real-time power system monitoring and design of smart inverter technologies are essential components of virtual power plants, enabling participation in wholesale electricity markets and optimization of renewable energy usage. The implementation of real-time pricing and analysis of power system dynamics further improves the efficiency of virtual power plants. Compared to traditional power plants, virtual power plants offer greater flexibility and resilience. More than 40% of new power generation capacity additions are expected to come from renewable energy sources by 2025, making virtual power plants an essential solution for integrating these intermittent sources into the power grid. The improvement of grid resilience is a significant concern for utilities and grid operators, and virtual power plants provide a cost-effective and efficient solution to address this challenge.
In conclusion, the market is a rapidly growing sector that offers numerous benefits for the power industry. Its ability to optimize renewable energy usage, improve grid stability, and enhance grid resilience makes it an essential component of the future power grid. The market is expected to witness significant growth in the coming years, with a focus on the development of smart grid technologies and the implementation of real-time pricing and demand response strategies.
The virtual power plant market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the virtual power plant market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape of Virtual Power Plant Industry
Companies are implementing various strategies, such as strategic alliances, virtual power plant market forecast, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the industry.
ABB Ltd. - The company's virtual power plant, OPTIMAX PowerFit, is a software solution that optimizes the power output of distributed energy resources, including solar panels, wind turbines, and battery storage systems, by aggregating their capacity in real-time. This system enhances grid stability and efficiency, making it an essential component of the modern energy landscape.
The industry research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key industry players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
Dive into Technavio’s robust research methodology, blending expert interviews, extensive data synthesis, and validated models for unparalleled Virtual Power Plant Market insights. See full methodology.
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Market Scope |
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Report Coverage |
Details |
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Page number |
185 |
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Base year |
2023 |
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Historic period |
2018-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 25.66% |
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Market growth 2024-2028 |
USD 11.13 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
25.46 |
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Key countries |
US, Australia, Germany, UK, and France |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
What is the expected growth of the Virtual Power Plant Market between 2024 and 2028?
USD 11.13 billion, at a CAGR of 25.66%
What segmentation does the market report cover?
The report segmented by Technology (Mixed asset, Demand response, and Distributed generation), End-user (Industrial, Commercial, and Residential), and Geography (Europe, North America, APAC, Middle East and Africa, and South America)
Which regions are analyzed in the report?
Europe, North America, APAC, Middle East and Africa, and South America
What are the key growth drivers and market challenges?
Rising integration of renewable energy sources with electric power systems, Lack of expertise and inadequate infrastructure for virtual power plants
Who are the major players in the Virtual Power Plant Market?
Key Companies ABB Ltd., AGL Energy Ltd., Duke Energy Corp., Electricite de France SA, Enel Spa, ENGIE SA, Generac Holdings Inc., Hitachi Ltd., Honeywell International Inc., Kyocera Corp., Mitsubishi Electric Corp., Next Kraftwerke GmbH, OhmConnect Inc., Robert Bosch GmbH, RWE AG, Schneider Electric SE, Siemens AG, SolarHub, sonnen GmbH, Sunrun Inc., Sunverge Energy Inc., and Tesla Inc.
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Technology
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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