With the demand for electricity rising at an exponential rate, 4.0% in 2018 as per the International Energy Agency (IEA), the requirement for fuels to generate this power is also increasing. The increased burning of fossil fuels, such as coal and crude oil, which are still the major sources of electricity generation, pushed the carbon emissions up by 2.5% that year, the IEA reported. As the electricity demand and carbon emissions continue to rise owing to rapid industrialization and urbanization, the need to save the environment is becoming more dire than ever. This has given birth to the novel concept of virtual power plants (VPP), which refers to an inter-connected network of power plants, not connected to the government grid, and power consumers. The power plants are generally small solar or wind farms with a maximum capacity of 10 MW. Such a model automatically distributes power across small distances, depending on the demand.
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P&S Intelligence said in a study that the worldwide virtual power plant market valued $1,975.1 million in 2017 and that it would grow rapidly at an 18.6% CAGR to ultimately reach $5,510.2 million. Supply side, demand response and mixed assets are the three technologies on which VPPs work. Among these, demand response VPPs supplied the most amount of electricity in 2017 as they are preferred by consumers. Such power plants offer several incentives to consumers, such as lower tariff, to encourage them to reduce their electricity consumption during periods of peak demand. This ensures that as many consumers who need electricity can get it, and the demand–supply gap doesn’t worsen. This is why such power plants will continue being the largest distributor of electricity among all VPPs in the years to come.
Fast growing power sector in developing countries is laying opportunities for market growth
Countries such as India, Brazil, and Indonesia witness frequent power shortages due to low quality of power infrastructure. The rapid economic growth in these countries has helped in promoting investment in the power sector to support industrial and commercial activities. The growing investment in the power sector has resulted in growth opportunities for innovative solutions such as virtual power plants, which are needed for long term sustainability of newly developed power projects. Thus, the expanding power sector in emerging countries is laying opportunities for the growth of the virtual power plant market.
Virtual Power Plant Market – Competitive Landscape
Some of the major players operating in the global virtual power plant market are Enbala Power Networks, AutoGrid Systems Inc., Sunverge Energy Inc., AGL Energy Limited (AGL), Limejump Ltd, EnerNoc Inc., ENGIE Storage Services NA LLC, ABB Ltd., Schneider Electric SE, and Siemens AG.
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GLOBAL VIRTUAL POWER PLANT MARKET SEGMENTATION
- Demand Response
- Supply Side
- Mixed Asset
- Electric Vehicles
- North America
- Rest of Europe
- Asia-Pacific (APAC)
- South Korea
- Rest of APAC
- Latin America (LATAM)
- Rest of LATAM
- Middle East and Africa (MEA)
- Saudi Arabia
- South Africa
- Rest of MEA