U.S. Leading the Global Virtual Power Plant Market Growth

by Manish Kumar Digital Analyst

In 1990, 17.067% of the energy consumed across the world was generated from renewable resources, and this share rose to 18.054% in 2015, the World Bank claims. Further, it is being estimated that renewable energy would account for almost 20% of electricity consumption by 2030. This clearly shows an increase in the production of renewable energy, on account of the concerns associated with the burning of fossil fuels. For instance, China has had plans to produce almost 200 gigawatts (GW) of solar power by 2020 end, while India is pursuing the production of 150 GW clean power by 2022 end.

 

Therefore, with the increase in the generation of renewable energy, the virtual power plant market is predicted to grow, from $1,975.1 million in 2017, to $5,510.2 million by 2023, at an 18.6% CAGR, during 2018–2023 (forecast period). A virtual power plant (VPP) is essentially a control system, which coordinates among different renewable energy plants to supply the optimum amount of energy as per requirement. As the electricity generated from renewable sources is not always reliable, utility firms often face challenges in its distribution.

 

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Here, VPPs are being used, as they help in the better management of the power supply, according to demand, by taking power from different sources. Primary and secondary balancing power sources and minute reserve sources are used to manage this demand–supply gap, which is why centralized grids are being transformed into decentralized ones, which can quickly adapt to the varying electricity demand and source power from wherever available and feasible.

 

Apart from the unreliability of renewable electricity, the power transmission infrastructure in most places around the world is either outdated or aging. In numerous places, the grid is not advanced enough to support the intermittent flow of power from alternative-energy plants. Further, such infrastructure regularly suffers malfunction and transmission losses, which cost utility companies a lot of money. VPPs solve the problem to quite an extent, by calculating the actual demand and rerouting the power from several sources to the grid, to meet it.

 

Such power distribution systems work on the supply side, demand response, or mixed assets technology, among which those based on demand response have been the most productive during 2013–2017. This is because of their large-scale usage in North America, which accounts for a significant share of the global energy consumption. In such a model, utility companies offer customers incentives or electricity at lower tariff, to encourage them to reduce their power consumption during periods of peak requirement, to better bridge the demand–supply gap.

 

Around the world, the largest usage of VPPs is seen in North America, where the electricity production from clean sources is increasing and smart grids are being developed. Within the region, the virtual power plants market in the U.S., where these two trends are the most visible, is larger. According to the U.S. Energy Information Administration, the country’s power generation capacity grew by 25 GW in 2017, with half of that accounted for by renewable sources. Additionally, that year, small-scale solar plants, capable of producing 3.5 GW energy, were commissioned in the nation.

 

Hence, as the share of renewable energy in the total electricity production increases, so would the installation of VPPs to managing the supply.

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Created on Feb 27th 2020 04:07. Viewed 319 times.

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