Global Virtual Power Plant (VPP) Market Research Report 2023-Competitive Analysis, Status and Outlook by Type, Downstream Industry, and Geography, Forecast to 2029

Global Virtual Power Plant (VPP) Market Research Report 2023-Competitive Analysis, Status and Outlook by Type, Downstream Industry, and Geography, Forecast to 2029

A Virtual Power Plant is a pooled set of decentralized units in a power network. Virtual Power Plants are operated by a common, centralized control system. The networked units can be power producers (such as biogas, wind, solar, CHP, or hydro power plants), power consumers, power storage units, and power-to-X plants (power-to-gas, power-to-heat). The Virtual Power Plant’s purpose is to collectively forecast, dispatch, and trade the power and the flexibility of the aggregated assets. Any decentralized unit that produces, consumes, or stores electricity for the power exchanges can be part of a Virtual Power Plant. The cluster of individual assets is operated by a central control system. In addition to operating each individual asset in the Virtual Power Plant, the system uses a special algorithm to adjust to grid conditions and control reserve commands from transmission system operators – just like larger, conventional power plant. When it comes to trading electricity, the Virtual Power Plant can react quickly and efficiently to price signals from the power exchanges and adjust operations accordingly.

Market Overview:

The latest research study on the global Virtual Power Plant (VPP) market finds that the global Virtual Power Plant (VPP) market reached a value of USD 1127.76 million in 2022. It’s expected that the market will achieve USD 3783.81 million by 2028, exhibiting a CAGR of 22.35% during the forecast period.

The energy transformation in today's world can't be separated from close international cooperation. All countries need to take active external actions, or introduce external funds and technologies, or strengthen joint research and development of technologies and new standards, or open up overseas markets for their own products and engineering services. The COVID-19 epidemic has led to the delay or interruption of all kinds of cooperation, especially hindering some developing countries from striving for investment and assistance. In addition, related international governance activities have also been weakened. Since the global spread of the epidemic, international energy agency, international renewable energy agency and other organizations can only maintain business development through online forums, release research reports and other non-contact forms, and it is difficult to promote some activities with strong substantive impact, such as capacity-building for developing countries, promotion of clean energy project financing and assistance in project planning. Therefore, covid-19 makes it difficult to carry out relevant international cooperation.

However, from the current situation, most of the adverse effects caused by the COVID-19 epidemic are temporary, partial and reversible, and have not changed the upgrading trend of global energy transformation. On the contrary, this epidemic has created some rare opportunities that are not within the scope of industrial planning, and promoted the change of energy structure.

During the epidemic period, due to the suspension of a large number of industrial and commercial activities, the electricity consumption of various countries appeared a continuous Sunday mode, that is, the electricity consumption of small-scale residents was the mainstay, and the electricity consumption of the whole society generally dropped by more than 20%. In the case of oversupply of electricity, grid operators naturally turn to the cheapest energy type.

Market Drivers

The transition to low-carbon and environment-friendly energy is a hot spot all over the world. Therefore, the structure of electric power industry has also changed from centralized and unidirectional energy supply to distributed energy (DER) such as small-scale renewable energy and ESS. In order to manage the expanding renewable energy and distributed energy resources in a unified way, it is necessary to build VPP. VPP integrates small-scale new renewable energy power generation equipment and distributed energy such as ESS with cloud computing basic software, and manages it like a power station. Although it is not a physical power station, it has the same effect. Types of VPP can be divided into demand VPP, supply VPP and hybrid VPP based on the composition of resources.
In the process of collecting and analyzing dispersed energy, VPP predicts the variables of power demand and supply in advance, so as to realize effective power supply. Because it can remotely integrate various scattered resources and operate in an optimized mode, it can minimize the environmental impact of new renewable energy.
It is expected that through digital conversion technology, environmental factors that may affect the development of new renewable energy, such as weather, can be solved. Environmental factors are expected to be one of the main reasons for the rapid growth of VPP market.

Market Development Constraints

VPP integrates various elements such as physics, information and value, and realizes value increment on the basis of element reorganization. Physical system is the foundation of VPP operation, value system is the driving force of VPP operation, and information system is the medium and core connecting physics and value. Before the construction of the Internet, the development and application of VPP were limited to a certain extent by factors such as large granularity of data of energy-consuming terminals and limited information channels.
Due to the limitation of users' own load characteristics and its adjustability, there are inevitable deviations of individual VPP operators in the direct electricity trading and auxiliary service market.
In order to cope with the risk of deviation, it is necessary to further enhance the flexibility of the system through the joint operation of VPP and energy storage. The key to realize the joint operation lies in constructing the benefit distribution mechanism among multi-agents. For VPP operators, by signing cooperation agreements with other operators or energy storage equipment, forming VPP operation alliance will further optimize their own regulation and control capabilities. The benefit increase or cost reduction caused by the improvement of regulation and control ability can be reasonably distributed among all subjects. In this process, except the VPP operation entities, other entities bear the responsibility of standby and risk sharing, and at the same time get the corresponding standby income and risk compensation.

Region Overview:

Geographically, Europe held the largest market share – 51.23% in 2022.

Company Overview:

Statkraft is one of the major players operating in the Virtual Power Plant (VPP) market, holding a share of 25.96% in 2023.

Statkraft

Statkraft is a leading company in hydropower internationally and Europe’s largest generator of renewable energy. The Group produces hydropower, wind power, solar power, gas-fired power and supplies district heating. Statkraft is a global company in energy market operations.

Next Kraftwerke

Next Kraftwerke operates virtual power plants. The Company provides bio-energy, solar, wind, and combined heat, and power generation facilities.
Next Kraftwerke’s VPP interconnects different types of renewables and flexible power consumers so that each unit supports the other.

Segmentation Overview:

As for product types, the FM Model segment held the largest market share in 2022.

OC Model

Operational Control (OC) model focuses on direct operational control of single assets. The goal here is to simply control and manage assets.

FM Model

Functional Management (FM) model focuses on the management and aggregation of distributed energy sources. The goal here is to optimize the few connected assets while taking into consideration other factors such as cost, heat generation, and energy market prices.

Application Overview:

The market's largest segment by application is the segment Commercial, with a market share of 40.7% in 2022.

Key Companies in the global Virtual Power Plant (VPP) market covered in Chapter 3:

Sunverge Energy
Schneider Electric(AutoGrid)
Siemens
Ormat Technologies
Generac
Enel
Statkraft
Bosch
Next Kraftwerke
Shell

In Chapter 4 and Chapter 14.2, on the basis of types, the Virtual Power Plant (VPP) market from 2018 to 2029 is primarily split into:

OC Model
FM Model

In Chapter 5 and Chapter 14.3, on the basis of Downstream Industry, the Virtual Power Plant (VPP) market from 2018 to 2029 covers:

Commercial
Industrial
Residential

Geographically, the detailed analysis of consumption, revenue, market share and growth rate, historic and forecast (2018-2029) of the following regions are covered in Chapter 8 to Chapter 14:

North America (United States, Canada)
Europe (Germany, UK, France, Italy, Spain, Russia, Netherlands, Turkey, Switzerland, Sweden)
Asia Pacific (China, Japan, South Korea, Australia, India, Indonesia, Philippines, Malaysia)
Latin America (Brazil, Mexico, Argentina)
Middle East & Africa (Saudi Arabia, UAE, Egypt, South Africa)