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Virtual Power Plant Market | Enabling Sustainable Energy Solutions

Energy, Power & Utilities

06, March 2024

A virtual power plant that combines solar, wind, and battery storage might manage over 100 MW of capacity, capable of generating hundreds of gigawatt-hours (GWh) annually. Evidently, the application of VPPs is a game-changer for industrial energy needs to reduce its environmental impact. Thus, emphasizing this potential, Triton’s analysts predict that the Global Virtual Power Plant Market is set to grow at 23.65% CAGR over the forecast period 2024-2032.

VPPs adapt in real-time by adjusting to energy generation, its storage, and mitigating risks, thereby ensuring uninterrupted production. Virtual power plants integrate renewable sources like solar and wind, reducing dependence on fossil fuels and lowering carbon footprints.

Sustainable and efficient energy management translates to lower costs since VPPs optimize energy use and curb reliability on the grid. Several countries in Asia, Europe, America, and Africa are facing power outages and interrupted energy production. As conventional power grids often struggle to meet the growing energy needs, creating cost-effective solutions is essential. This reflects the increasing demand for virtual power plants.

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Virtual Power Plant Market - Gaining Prominence in Europe


Virtual power plants stand at the forefront of innovation, empowering industries to meet their energy needs. Thus, to integrate diverse renewable energy sources and enhance grid stability, the European countries identified the transformative potential of VPP technology.

For instance, the EU’s ‘Horizon 2020’ program funded multiple VPP projects aiming for energy efficiency across member states. These projects demonstrate the EU’s strategic investment in future-proofing its energy needs.

Similarly, in October 2023, a Finnish telecom company named Elisa secured a €3.9m grant to deploy a ‘Distributed Energy Storage’ solution. With a 150 MWh capacity, this will be Europe’s largest distributed virtual power plant and one of the continent’s biggest battery storage systems, rivaling grid-scale installations.

Such similar initiatives reflect the visionary approach of European countries to adopt VPP technology as an innovative business model. Moreover, our analysts anticipate the fastest growth over the forecast years 2024-2032. In fact, their estimates suggest that the Europe Virtual Power Plant Market is expected to witness a CAGR of 23.91%.

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Virtual Power Plant Market - Recent Regional Projects


The installation of virtual power plants is gaining momentum owing to fluctuating energy needs. The major key players in this market are leveraging this opportunity to develop and strategize new VPP projects.

  • In France:
  • Huawei launched a smart virtual power plant program in October 2023, where carriers take advantage of current site resources and reap additional benefits. Thus, to encourage the commercial growth of telecom sites servicing VPPs, Huawei will collaborate with grid aggregators, industry standards bodies, and other stakeholders.

    The VPP smart gateway and lithium batteries form a robust hardware platform, assuring high concurrency, quick response, and utmost precision. It implements cloud-network synergy and intelligent scheduling based on big data analysis and prediction.

  • In Australia:
  • In October 2023, Enel X was awarded a contract to supply 120MW of flexible demand capacity to the WA Wholesale Energy Market under the Non-Co-optimised Essential System Services (NCESS) program for the capacity years 2024-2026.

    This agreement indicates the reintroduction of demand response, often known as demand side management. It facilitated commercial and industrial clients to reduce their electricity consumption during hours of peak demand.

  • In India:
  • Around September 2023, Cleantech Solar, a renewable energy solutions provider, announced a ‘Virtual Power Purchase Agreement (VPPA)’ in India. It involves developing an operational solar virtual power plant in India, with the power generated being supplied to the energy exchange.

    This project is registered under the International Renewable Energy Certificates (I-REC) mechanism and marks one of the initial operational VPPA installations in India. It aims to actively participate in India’s energy transformation, supporting the adoption of 100% green energy.

  • In the United States:
  • In August 2023, Xcel Energy launched a scheme for customers in Colorado, rewarding them for allowing the utility to use their battery storage systems to provide grid services. Residential and commercial clients are eligible for the US utility provider’s Renewable Battery Connect program, which offers $500/kW of storage for up to 50% of the equipment cost of a solar-charged battery storage system.

In conclusion,

Virtual power plants represent a revolutionary shift in the way industries approach energy management by enabling sustainability. Factors like technological advancements, policy initiatives by the government, and growing industry awareness are fostering rapid market growth. VPPs empower manufacturers to seek sustainable and efficient power solutions and explore a new era of industrial sustainability, resilience, and cost-effectiveness.

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FAQs:

Q.1) What is a virtual power plant?

A VPP uses software and communication technologies to optimize energy generation, storage, and consumption across the network.

Q.2) What are the core applications of a virtual power plant?

VPP software provides a data set regarding the energy consumption and charging patterns of every household. This data set can be later used to bill the consumers at varied rates or provide incentives.

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