Virtual power plant market set for growth

Using software systems, virtual power plants can combine a rich diversity of independent resources into a unified network via sophisticated planning, scheduling and bidding of distributed energy resource-based services.

Driven by the integration of variable generation resources — especially from wind and solar energy — a viable virtual power plant market is emerging and will see substantial growth, from a relatively small base, over the next several years.

According to a recent report from Navigant Research, annual worldwide revenue from Virtual power plants will grow from less than $1 billion in 2013 to $3.6 billion in 2020, under a base forecast scenario.

Under a more aggressive forecast scenario, virtual power plant vendor revenue could reach $4.3 billion by 2020.

Rate-basing utility prerogatives still offer deployment barriers for both Virtual power plants and the complementary market for microgrids. Although recent regulatory reforms are moving in the direction of a greater reliance on distributed energy resources, centralized fossil fuel power plants will still dominate electricity markets for quite some time. Compared to traditional coal and natural gas-fired plants, virtual power plants offer a low-cost platform to squeeze more value out of existing infrastructure assets and to reduce greenhouse gas emissions associated with peaking power plants.

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