Report: Virtual Power Plant Capacity to Climb

   (BUSINESS WIRE) - 9/27/2010 - Virtual power plants (VPPs) utilize software systems to enable utilities to efficiently manage an increasing diversity of electricity generation, energy storage, and demand reduction assets.
   As the power generation mix becomes more complex over the next several years thanks to adoption of distributed generation, storage technologies, and demand response (DR) programs, VPPs will be a vital real-time management tool to make every megawatt count.
   According to a new report from Pike Research, the global VPP market will more than double in capacity over the next five years, rising from 19.4 gigawatts (GW) in 2009 to 41.1 GW by 2015, under a base case forecast scenario. By that year, the cleantech market intelligence firm forecasts that worldwide VPP revenues will reach $7.4 billion.
   “Virtual power plants enable utilities to stretch supply from power generation and demand response, without requiring any large-scale infrastructure upgrades,” Pike Research Senior Analyst Peter Asmus said. “This approach delivers greater value to the customer while also creating benefits to the host distribution utility as well as the transmission grid operator. When compared to the fossil fuel based centralized power plants that dominate electricity markets worldwide, one of the primary advantages of VPPs is that they can react quickly to changing customer load conditions, all in a dynamic and real-time fashion.”
    Pike Research divides the VPP universe into four distinct segments:
  • Demand Response-based VPPs: This is the largest commercial segment in the United States, which has the most mature DR market in the world.
  • Supply-side VPPs: Europe, particularly Germany, has led the world in this category, though most of the projects have been R and D pilots, with only a handful of VPPs in commercial operation.
  • Mixed asset VPPs: This is the ultimate goal of the VPP. This segment brings distributed generation and DR together to provide a synergistic sharing of grid resources to squeeze out more value, thereby reducing capital costs. Few of these projects are in commercial operation today.
  • Wholesale auction VPPs: Unique to Europe, VPP auctions have been used in the region as a condition of mergers, requiring asset owners to auction off base load and peaking capacity to bidders under short- and long-term contracts. Unlike the category of the supply-side VPP segment, these resources are typically traditional centralized power plants burning fossil fuels.
    Pike Research’s study, “Virtual Power Plantsm,” provides a comprehensive analysis of global market opportunities and growth prospects for virtual power plants including a detailed examination of business models, technology issues, and regulatory and policy factors. Key industry players are profiled, including SWOT analysis for utilities and technology providers active in the VPP sector.
   The report also features global market forecasts, segmented by region, for capacity and revenue in four key VPP segments through 2015. An Executive Summary of the report is available for free download on the firm’s website.