Virtual Power Plant Market Global Opportunity Analysis and Industry Forecast 2026

A Virtual Power Plant is a decentralized cluster of small-scale power generating units that collectively act as a single power plant. It is an energy aggregator that gathers a portfolio of smaller generators and uses them as a combined flexible resource for power generation. The objective of a virtual power plant is to minimize the load on the grid by distributing the power generated by the individual units. It is also beneficial for maximizing the owner’s profit.

According to MarkNtel Advisors’ research report, “Global Virtual Power Plant Market Analysis, 2021,” the market is likely to grow at a CAGR of around 27% during 2021-26. The rising integration of renewable energy in the power generation mix, a paradigm shift from distributed generation toward centralized generation decreasing the overall carbon footing, and a slump in the cost of solar generation and energy storage are some of the driving factors influencing the growth of the Global Virtual Power Plant market.

Moreover, the launch of new VPPs by the key companies for the industrial & commercial sectors is also likely to propel the demand for VPP in the forthcoming years. For instance, ABB launched OPTIMAX for Industrials and Commercials and Virtual Power Plants in 2018, enabling industrial, commercial, and power generation companies to reduce energy costs & site emissions by optimizing the aggregation and dispatch of energy sources.

COVID-19 pandemic Negatively Impacted the Market growth

The sudden outbreak of the COVID-19 pandemic has adversely affected the entire global economy and has disrupted numerous businesses in various countries. Due to the imposition of lockdown across the globe, investments in energy grid projects declined. Also, the pandemic led to the decline in the electricity prices for most of the networks. However, power generation through renewable resources remained unchanged. As the lockdown got lifted, the government has started to reconsider its focus on renewable energy sources. Therefore, the market is likely to boost owing to the surge in investments to develop energy infrastructure.

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Market Segmentation

Industrial Accounted for the Largest Market Share

Based on the End-User, the market bifurcates into Residential, Commercial, and Industrial sectors. The industrial sector captured a significant market share in the Global Virtual Power Plant market in the previous few years. The escalating demand for energy from the power industry worldwide, an inclination of industries toward renewable energy, the proliferation of industries & municipalities generating their power, and active trading in electricity markets are the prime factors fueling the overall segment growth, cites MarkNtel Advisors in their research report, “Global Virtual Power Plant Market Analysis, 2021.”

Distributed Energy Generation System Dominated the Market

Based on the Source, the market segments into Distributed Energy Generation System and Energy Storage System. The Distributed Energy Generation System acquired the largest market share in the Global Virtual Power Plant market in the previous few years. Distributed Energy Generation System refers to the technology, which is beneficial for generating electricity at or near the place where it will be used, like combined heat & power and solar panels. The segment growth owes primarily to using renewable sources, such as solar energy, which is a cost-effective technology. In addition to this, Distributed Energy Generation System provides electricity during power outages. Hence, it is the highly preferred source.

Regional Landscape

Europe Attained the Highest Market Share

Geographically, Europe held the largest market share in the Global Virtual Power Plant market in the previous few years due to the abundant presence of leading market players and rising government focus on 100% green energy. In addition to this, mounting investments in renewable energy sources and energy storage systems are other critical aspects propelling the market growth in Europe.

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Christophe Rude

Christophe Rude

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