Virtual Power Plant Market: Size, Share, Trends & Forecast (2024-2029)
The report covers a comprehensive analysis segmented by Source (Renewable Energy, Cogeneration, Storage), By Technology (Demand Response, Supply Side, Mixed Asset), By Offering (Hardware, Software, Services), By Vertical (Commercial, Industrial, Residential), By Geography (North America, South America, Asia Pacific, Europe, the Middle East, Africa).
Virtual Power Plant Market Snapshot
Virtual Power Plant Market Overview
The global virtual power plant market (VPP) is estimated to be at $2.75 Bn in 2024 and is anticipated to reach $7.10 Bn in 2029. The global virtual power plant market is registering a CAGR (Compound Annual Growth Rate) of 20.89% during the forecast period 2024-2029. Virtual Power Plants are scalable here and will rapidly grow to become a substantial part of the energy system. It creates an efficient way to equip demand-side flexibility, which is widely perceived as a key factor to decarbonize the energy system. It’s distributed nature, cyber, and data security facet of VPPs require extra immersion. Virtual Power Plants (VPP) enables demand side flexibility, thus authorizing participators to accommodate their supply or demand in reaction to price signals/or grid conditions. This further helps to lower energy bills and reduces the need for expensive grid extensions or high-cost peak capacity. In addition, energy owners can generate additional income via bilateral over the counter (OTC), wholesale market or ancillary market deals. VPPs completely rely on decentralized assets, Internet of Things (IOT) and software, requiring new security technologies, innovations and secure system-oriented strategies and actions.
​Virtual Power Plant Market Coverage
| Historical & Forecast Period | 2018-2029 |
| Base Year | 2023 |
| Forecast Period | 2024-2029 |
| Units | Billion US$ |
| Segments | Source, Technology, Offering, Vertical |
| Geographies | North America, South America, Asia Pacific, Europe, The Middle East, Africa |
| Key Vendors | Siemens AG, Shell PLC, Tesla Inc., Schneider Electric SE, ABB Ltd. |
Key Geographies of Virtual Power Plant Market, 2023
Porter’s 5 Forces Analysis of Virtual Power Plant Market
Virtual Power Plant Market Trends
The market for virtual power plants is anticipated to develop as renewable energy resources becomes more prevalent in power generation. In addition, the dynamics of the power grid will shift from centralized to distributed sector. Demand will rise as it will further reduce energy costs and we will have accessibility of energy storage as well. VPPs are more effective in comparison with conventional power plant configuration as it’s adaptability to offer peak load electricity on short notice gives it an upper hand. Due to its price point, numerous additional participants will be drawn into this which will further give it an edge in the flexibility of trading with virtual power plants. It gives a further advantage to the buyer as well. In the trade market, they can sell excess energy and purchase energy at a discount. Hence, we can expect market expansion in the future.
Virtual Power Plant Market Driving Factors
The demand for virtual power plants is increasing rapidly due to their ability to reduce carbon emissions by optimizing decentralized energy resources. It can seamlessly integrate diverse renewable resources such as solar and wind, which aligns with the objective to move further away from fossil fuels. Investments are being made by governments, utilities and industries in VPPs to meet carbon reduction goals. Increased investment in distributed energy resources and an unparalleled rise in the market sector are expected as awareness of climate change develops. VPP market is primarily driven by the increasing cost effectiveness of generating power through solar energy and the widespread deployment of storage systems. Forecasts suggest that the total installation cost of renewable energy resources will decrease by 2030, further propelled by a decline in battery cell costs. Cost reduction, coupled with supportive regulatory standards, is enhancing the competitiveness and demand for renewable energy resources, thereby fostering the adoption of VPPs. In the changing energy landscape, the demand for VPPs is likely to groandgrow, it will result in a cleaner and more sustainable energy future.
Virtual Power Plant Market Challenges
The reliance on digital infrastructure and communication networks exposes VPPs to cyber and data security threats. Protecting the data generated by and commands transmitted to VPPs is essential to prevent unauthorized access, data breaches, and potential disruptions to the energy system. Additionally, concerns about data privacy must be addressed, especially when VPPs collect and analyze consumer-related energy consumption data.
Given the decentralized nature of a VPP, traditional security strategies like air-gapping cannot be applied. As pricing instability needs to be addressed at distinct stages, emerging VPPs will need to consider financial viability. To ensure the stable operation of VPPs, it is essential to comprehensively account for the diverse characteristics of renewable energy resources (RESs) during the design phase. One of the primary challenges lies in accurately forecasting the output of renewable resources. Despite advancements in forecasting techniques, the accuracy of predictions remains less than optimal. To address the issue, ongoing research and development efforts are focused on improving forecasting methodologies. It will enhance the integration of advanced technologies, such as machine learning and artificial intelligence.
Virtual Power Plant Market – Key Industry News
- In February 2024, Nokia Corp. announced the launch of the Nokia Virtual Power Plant (VPP) Controller Software. It is a unique near-real-time software-based end-to-end platform which helps monetize the existing back up batteries at base station sites. It generates revenues in grid frequency balancing markets and reduces their carbon emissions. Apart from that, it can seamlessly switch from grid power to back-up batteries, by which operators can lower their energy costs in electricity spot markets as well.
- In January 2023, Ford Ltd., General Motors Corp., Google LLC, and a few solar energy producers have decided to work together to establish standards for scaling up the use of virtual policy power plants (VPPs). This system will ease load on electricity grids when supply is short. Apart from that, energy transition non-profit RMI will host the initiative, the Virtual Power Plant Partnership (VP3). Its aim is to shape policies for promoting the shape of the system.
- In June 2022, Tesla Inc. launched a virtual power plant which will pay its Powerwall users to help keep electricity uninterrupted in their area during emergencies or energy shortages. The project is in partnership with California Pacific Gas and Electric Company (PG&E) to support the electricity grid. It will help them to earn compensation and alongside, maintain energy security users as well.
Virtual Power Plant Market Competitive Landscape
The participants in the global virtual power plant industry are always developing their strategies to preserve a competitive advantage. Companies primarily use acquisitions, R&D, partnerships, and technological launches. Several important entities in the virtual power plant market include Siemens AG, Shell PLC, Tesla Inc., Schneider Electric SE, ABB Ltd., and others. Traditional utility companies and energy service providers are also actively participating in the VPP market, recognizing the potential of distributed energy resources to enhance grid reliability and efficiency. Overall, the VPP market is characterized by a diverse ecosystem of players, each bringing unique strengths and capabilities to the table. As the demand for flexible, decentralized energy solutions continues to grow, competition in the VPP market is expected to intensify, driving further innovation and technological advancements across the industry.
Virtual Power Plant Market Company Share Analysis, 2023 (%)
Virtual Power Plant Market – Key Companies
Reason to Buy from us
Table of Contents
| 1. Introduction |
|---|
| 1.1. Research Methodology |
| 1.2. Scope of the Study |
| 2. Market Overview / Executive Summary |
| 2.1. Global Virtual Power Plant Market (2018 – 2022) |
| 2.2. Global Virtual Power Plant Market (2023 – 2029) |
| 3. Market Segmentation |
| 3.1. Global Virtual Power Plant Market by Source |
| 3.1.1. Renewable Energy |
| 3.1.2. Cogeneration |
| 3.1.3. Storage |
| 3.2. Global Virtual Power Plant Market by Technology |
| 3.2.1. Demand Response |
| 3.2.2. Supply Side |
| 3.2.3. Mixed Asset |
| 3.3. Global Virtual Power Plant Market by Offering |
| 3.3.1. Hardware |
| 3.3.2. Software |
| 3.3.3. Services |
| 3.4. Global Virtual Power Plant Market by Vertical |
| 3.4.1. Commercial |
| 3.4.2. Industrial |
| 3.4.3. Residential |
| 4. Regional Segmentation |
| 4.1. North America |
| 4.1.1. The U.S |
| 4.1.2. Canada |
| 4.1.3. Mexico |
| 4.2. South America |
| 4.2.1. Brazil |
| 4.2.2. Argentina |
| 4.2.3. Colombia |
| 4.2.4. Chile |
| 4.2.5. Rest of South America |
| 4.3. Asia Pacific |
| 4.3.1. China |
| 4.3.2. India |
| 4.3.3. Japan |
| 4.3.4. South Korea |
| 4.3.5. Rest of Asia Pacific |
| 4.4. Europe |
| 4.4.1. UK |
| 4.4.2. Germany |
| 4.4.3. Italy |
| 4.4.4. France |
| 4.4.5. Spain |
| 4.4.6. Rest of Europe |
| 4.5. The Middle East |
| 4.5.1. Turkey |
| 4.5.2. UAE |
| 4.5.3. Saudi Arabia |
| 4.5.4. Rest of the Middle East |
| 4.6. Africa |
| 4.6.1. Egypt |
| 4.6.2. South Africa |
| 4.6.3. Rest of Africa |
| 5. Value Chain Analysis of the Global Virtual Power Plant Market |
| 6. Porter Five Forces Analysis |
| 6.1. Threats of New Entrants |
| 6.2. Threats of Substitutes |
| 6.3. Bargaining Power of Buyers |
| 6.4. Bargaining Power of Suppliers |
| 6.5. Competition in the Industry |
| 7. Trends, Drivers and Challenges Analysis |
| 7.1. Market Trends |
| 7.1.1. Market Trend 1 |
| 7.1.2. Market Trend 2 |
| 7.1.3. Market Trend 3 |
| 7.1.4. Market Trend 4 |
| 7.1.5. Market Trend 5 |
| 7.2. Market Drivers |
| 7.2.1. Market Driver 1 |
| 7.2.2. Market Driver 2 |
| 7.2.3. Market Driver 3 |
| 7.2.4. Market Driver 4 |
| 7.2.5. Market Driver 5 |
| 7.3. Market Challenges |
| 7.3.1. Market Challenge 1 |
| 7.3.2. Market Challenge 2 |
| 7.3.3. Market Challenge 3 |
| 7.3.4. Market Challenge 4 |
| 7.3.5. Market Challenge 5 |
| 8. Regulatory Landscape |
| 9. Competitive Landscape |
| 9.1. Siemens AG |
| 9.2. Shell PLC |
| 9.3. Tesla Inc. |
| 9.4. Schneider Electric SE |
| 9.5. ABB Ltd. |
| 9.6. Company 6 |
| 9.7. Company 7 |
| 9.8. Company 8 |
| 9.9. Company 9 |
| 9.10. Company 10 |
Virtual Power Plant Market – Frequently Asked Questions (FAQs)
What is the current size of the global virtual power plant market?
The market size for the global virtual power plant market in 2024 is $2.75 Bn.
Who are the major vendors in the global virtual power plant market?
The major vendors in the global virtual power plant market are Siemens AG, Shell PLC, Tesla Inc., Schneider Electric SE, ABB Ltd.
Which segments are covered under the global virtual power plant market segments analysis?
This report offers in-depth insights into each source, technology, offering, vertical.