The global virtual power plant market is projected to grow at a CAGR of 29.68% from 2016 to 2021. North America is estimated to be the largest market for virtual power plants, followed by Europe in 2016. This trend is expected to continue till 2021. The growth of the virtual power plant market is driven by increasing share of renewable energy in the power generation mix as well as shift from centralized to distributed generation and lowering costs for solar and energy storage.
The virtual power plant market is dominated by a few key demand response aggregators such as EnerNOC, Inc. (U.S.), Comverge, Inc. (U.S.), Flexitricity (U.K.), Limejump Ltd. (U.K.), among others. Also, there are few market giants in the virtual power plant market which includes, ABB Ltd. (Switzerland), General Electric Company (U.S.), Schneider Electric SE (France), and Siemens AG (Germany), among others.
Major strategies adopted by the players include contracts & agreements, new product development, expansions and investments, and mergers & acquisitions. Contracts and agreements was the most commonly adopted strategy from 2013 to 2016. Industry players also adopted new product development, which was the second most widely followed strategy, during the same period. A key integrated solution provider and a leading demand response aggregator has been highlighted in the paragraphs below.
Siemens AG is a manufacturing and engineering company. Its operations span the entire value chain, from power generation, transmission, and distribution to smart grid solutions. It conducts its operations through nine segments: power & gas, healthcare, energy management, digital factory, process industries & drives, mobility, building technologies, wind power & renewables, and financial services. The company offers virtual power plant and its solutions such as demand response management system, decentralized energy management, and decentralized energy management portal. These solutions fall under the smart grid solutions, which are a part of energy management division. It also includes microgrid and smart metering which are an integral part of smart grid solutions provided by the company. The company adopted contracts and agreements and new product development as its key strategies in order to strengthen its position. For instance, in November 2016, Siemens AG entered in an agreement with RWE (Germany) in order to build next generation virtual power plant with cost-effective solution to integrate producers, consumers, and storage units.
EnerNOC, Inc. is one of the leading providers of Energy Intelligence Software (EIS) and demand response solutions to the enterprises, utilities, and power grid operators. It operates through two distinct units, namely, software and demand response. It provides virtual power solutions through demand response as well as software solutions. The company caters to the needs of end-user industries such as manufacturing, Commercial real estate, government & education, healthcare, among others. The company uses contracts and agreements as their key strategy along with mergers and acquisitions to increase its revenue growth by tapping new markets. For instance, the company signed a contract to deliver demand response resources to FirstEnergy's utility plants (U.S.). This would help the utilities to meet its demand reduction targets in a cost-effective way. This would, in turn, help EnerNOC in growing the business for demand response programs in commercial and industrial energy sector to reduce energy consumption.
Virtual Power Plant Market by Enabling Technology (Demand Response, Distributed Generation, and Mixed Asset), End-Use Customer (Commercial & Industrial, and Residential), and by Region - Global Trends & Forecasts to 2021
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