Virtual Power Plant Revenue is Growing

The total annual virtual power plant vendor revenue will grow from US$1.1 billion in 2014 to US$5.3 billion in 2023.
Published: Tue 01 Jul 2014

Virtual power plants are emerging as a successful way to manage distributed energy resource’s increasing two-way complexity.[Engerati-Denmark On Target for 85% Renewables by 2040.] Essentially, the virtual power plant can combine a rich diversity of independent resources into a network via sophisticated planning, scheduling, and bidding of distributed energy resources-based services, according to Navigant Research.

Business model for utilities

The research shows that virtual power plants are being driven by a number of trends of which two are the growing adoption of smart meters and other smart grid technologies, as well as the growth in variable renewable generation. The virtual power plant is also becoming a business model for utilities globally as they strive to keep prosumers as customers. [Engerati-The Virtual Power Plant-The Answer to Renewable Integration Business Models].

However, challenges to commercial rollouts continue to persist. The lack of reliance upon dynamic, real-time pricing and consumer resistance against the smart grid are examples.

"Virtual power plants represent a prime example of transactive energy, whereby new technologies -- such as demand response, solar photovoltaic systems, and advanced energy storage -- enable consumers to take a more active role in managing the energy they use," said Peter Asmus, principal research analyst with Navigant Research. "VPPs harness software and IT innovations to achieve the greatest possible profit for asset owners while at the same time maintaining the proper balance of the electricity grid."

The goal-a mixed asset virtual power plant

Navigant Research breaks down the virtual power plant market into three primary segments: demand response (DR), supply-side, and mixed asset virtual power plants. While supply-side systems are the most straightforward virtual power plants in concept, according to the report, demand response is the largest commercial virtual power plant segment in the US. According to Navigant, the ultimate goal is a mixed asset virtual power plant which combines distributed generation, demand response, and other resources to provide a synergistic sharing of grid resources to create more value and reduce capital costs.

Further reading

Navigant Research-Virtual Power Plants