The capacity of renewable power projects is growing around
the world. In fact, the renewable sources of energy are the fastest-growing
energy resources and grew at a rate of 7.6%, in terms of capacity, in 2017 as
compared to 2016. Furthermore, the share of renewable sources of energy in
power generation is projected to reach 20% by the end of 2035. This expansion
in renewable energy projects is ascribed to the ambitious renewable energy
targets set by emerging economies including India and China. The development of
renewable power projects is expected to generate a large amount of distributed
energy that will need well developed energy evacuation infrastructure for
supporting reliable flow of electricity.
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It is due to factors like this that the requirement for
virtual power plants is growing, as they ensure the integration of newly
developed renewable energy projects with the power evacuation infrastructure.
Virtual power plant is an integrated system consisting of centralized control
system which is connected to power distribution, generation, and transmission
units that optimize, regulate, and manage the supply of electricity from
distributed power generation sources to consumers. As per a study conducted by
P&S Intelligence, in 2017, the global virtual power plant market
generated $1,975.1 million and is predicted to advance at a 18.6% CAGR during
the forecast period (2018–2023).
Virtual power plants are based on 3 types of technologies,
namely supply side, mixed asset, and demand response. Out of these, the demand
response technology was the most in demand during 2013–2017 and the situation
is projected to remain the same during the forecast period as well, in terms of
revenue generation. Under this model, incentives such as low tariff are offered
to the consumers of electricity by power generation utilities for reducing
their power consumption during peak hours. This is aids the effective
management of demand-supply scenario of power at grid level, at a certain point
of time.
A major driving factor the demand for virtual power plants
is the aging and inadequate power evacuation infrastructure. Power evacuation
infrastructure is characterized by distribution network and power transmission;
however, in most of the countries, power transmission network is obsolete and
not capable of accommodating the intermittent flow of electricity which is
supplied by renewable power projects. Furthermore, high transmission and
distribution losses and frequent network failure lead to revenue loss for power
utilities. The power transmission network is highly inadequate especially in
developing countries and is not capable of catering to the growing need for
energy, which is resulting in the rising requirement for virtual power plants.
A key trend being observed in the virtual power plant
market is the transition from centralized to decentralized power systems.
The increasing integration of renewable energy projects, such as wind power
projects and solar power plants, in the overall power infrastructure have posed
new technical challenges for power grids or power transmission networks.
Because of the intermittent nature of renewable power projects, the energy
produced from these sources is highly unpredictable, making it less viable for
traditional power grid network. Virtual power plant has the capability to
address this problem as it ensures a balance between demand and supply of
electricity.
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