A virtual power plant is a centralized control system that is connected to power generating and transmitting units. Owing to the connection to such units, VPP requires lesser capital and can integrate several distributed energy resources. Due to low capital investments, power deficit countries like India, Nigeria, and Indonesia are increasing their reliance on VPPs. To ensure the development of sustainable and smoothly integrated power systems, such developing countries have escalated their spending on the development of virtual power plant to create an adequate power infrastructure.
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Additionally, the rapid shift from non-renewable energy sources to renewable sources will fuel the growth of virtual power plant market at 18.6% CAGR during 2018–2023. The market stood at $1,975.1 million in 2017 and it is expected to reach $5,510.2 million by 2023. The development of non-conventional power plants will produce a large amount of energy, which will require an advanced power evacuation infrastructure to support the reliable flow of power. This will boost the creation of VPPs, which will ensure the incorporation of newly developed renewable power plants with power evacuation infrastructure.
Based on technology, the market is divided into demand response, supply side, and mixed asset. Amongst these, the demand response category recorded the highest growth in the virtual power plant market in the past. This is ascribed to the large-scale adoption of the demand response technology in North America, especially in the U.S., which is also the world’s biggest market for virtual power plants. Here, the soaring production of power from renewable energy projects is propelling the requirement for VPPs.
According to P&S Intelligence, the Asia-Pacific (APAC) and Latin America (LATAM) regions will also witness significant rise in the creation of VPPs, in the near future. This can be owed to the largescale adoption of smart energy management solutions and constant development of non-conventional power plants in these regions. Among APAC nations, China records the highest number of VPPs, on account of growth in the industrial sector and establishment of new energy power plants in the country.
Thus, the growing reliance on non-conventional energy sources, on account of soaring pollution levels, and the rising digitalization will fuel the development of VPPs in the coming years.
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