Executive Summary:
Virtual Power Plants
Demand Response, Supply-Side, and Mixed Asset VPPs:
Global Market Analysis and Forecasts
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Published 2Q 2014
Peter Asmus
Principal Research Analyst
Mackinnon Lawrence
Research Director
Section 1
EXECUTIVE SUMMARY
1.1
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user/asset owner and the distribution utility through software and IT innovations. Without any
large-scale fundamental infrastructure upgrades, VPPs can stretch supplies from existing
generators and utility demand reduction programs (and other forms of DER). They deliver
greater value to the customer (e.g., lower costs and new revenue streams) while also creating
benefits for the host distribution utility (e.g., avoidance of capital investments in grid
infrastructure or peaking power plants), as well as the transmission grid operator (e.g.,
regulation ancillary services such as spinning reserves). As a result, VPPs deliver benefits to a
broad array of energy market stakeholders.
The primary goal of a VPP is to achieve the greatest possible profit for asset owners, while at
the same time maintaining the proper balance of the electricity grid. From the outside, the VPP
looks like a single power production facility that publishes one schedule of operation and can be
optimized from a single remote site. From the inside, the VPP can combine a rich diversity of
independent resources into a network via sophisticated planning, scheduling, and bidding of
DER-based services.
In this report, the VPP market is analyzed by way of three primary segments: DR, supply-side,
and mixed asset VPPs, with the last segment representing the end goal of this entire market.
Revenue forecasts, which track spending on software networking products and services,
represent just over a $1 billion market today, but are expected to reach more than $5.3 billion
over the next 10 years under a base scenario developed by Navigant Research.
Chart 1.1
Total Annual VPP Vendor Revenue by Region, Base Scenario, World Markets: 2014-2023
$6,000
North America
Europe
Asia Pacific
Latin America
Middle East & Africa
($ Millions)
$5,000
$4,000
$3,000
$2,000
$1,000
$2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
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Section 8
TABLE OF CONTENTS
Section 1 ........................................................................................................................................................... 1
Executive Summary .......................................................................................................................................... 1
1.1
Section 2 ........................................................................................................................................................... 3
Market Issues .................................................................................................................................................... 3
2.1
2.1.1
2.1.2
2.1.3.1 Case Study: Lessons Learned from Denmark on VPP and Microgrid Overlap ............................. 11
2.2
2.2.1
2.2.2
2.2.3
2.2.4
2.3
2.3.1
2.3.2
2.3.3
2.3.4
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2.3.5
2.3.6
2.4
2.4.1
2.4.2
2.4.3
2.4.4
2.4.4.1 Business Model Case Study: How Ventyx Leverages the Cloud for VPPs ................................... 30
Section 3 .......................................................................................................................................................... 31
Technology Issues ........................................................................................................................................... 31
3.1
3.2
DG .................................................................................................................................................... 32
3.2.1
3.2.2
3.3
3.3.1
3.3.2
3.4
DR .................................................................................................................................................... 38
3.4.1
3.4.2
3.5
3.5.1
3.5.2
3.6
3.6.1
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3.6.2
3.7
PEVs ................................................................................................................................................ 47
3.7.1
3.7.2
3.8
Section 4 .......................................................................................................................................................... 51
Key Industry Players ........................................................................................................................................ 51
4.1
4.2
Utilities ............................................................................................................................................. 51
4.2.1
4.2.2
4.2.3
RWE ........................................................................................................................................... 53
4.3
4.3.1
4.3.2
Bosch ......................................................................................................................................... 55
4.3.3
4.3.4
IBM ............................................................................................................................................. 57
4.3.5
4.3.6
Siemens ...................................................................................................................................... 58
4.4
4.4.1
4.4.2
4.4.3
4.4.4
4.4.5
Spirae ......................................................................................................................................... 62
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4.4.6
Ventyx/ABB ................................................................................................................................. 62
4.4.7
4.5
DR Aggregators ................................................................................................................................. 64
4.5.1
Comverge ................................................................................................................................... 64
4.5.2
Consert ....................................................................................................................................... 65
4.5.3
4.5.4
4.5.5
EnerNOC .................................................................................................................................... 67
Section 5 .......................................................................................................................................................... 69
Market Forecasts.............................................................................................................................................. 69
5.1
5.1.1
Scenarios .................................................................................................................................... 70
5.1.2
DR VPPs ........................................................................................................................................... 75
5.2.1
5.2.2
Europe ........................................................................................................................................ 76
5.2.3
5.2.4
5.2.5
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5.3
5.3.1
5.3.2
Europe ........................................................................................................................................ 79
5.3.3
5.3.4
5.3.5
5.4
5.4.1
5.4.2
Europe ........................................................................................................................................ 82
5.4.3
5.4.4
5.4.5
5.5
Section 6 .......................................................................................................................................................... 84
Company Directory .......................................................................................................................................... 84
Section 7 .......................................................................................................................................................... 86
Acronym and Abbreviation List ....................................................................................................................... 86
Section 8 .......................................................................................................................................................... 89
Table of Contents ............................................................................................................................................. 89
Section 9 .......................................................................................................................................................... 94
Table of Charts and Figures ............................................................................................................................. 94
Section 10 ........................................................................................................................................................ 97
Scope of Study ................................................................................................................................................. 97
Sources and Methodology ............................................................................................................................... 97
Notes ................................................................................................................................................................ 98
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Section 9
TABLE OF CHARTS AND FIGURES
Chart 1.1
Total Annual VPP Vendor Revenue by Region, Base Scenario, World Markets: 2014-2023............... 2
Chart 2.1
Chart 2.2
Chart 2.3
Annual Solar PV Installed Capacity and Revenue by Region, World Markets: 2011-2020 ................. 22
Chart 3.1
Installed Energy Storage Power Capacity in Microgrids by Region, World Markets: 2014-2024 ........ 46
Chart 5.1
Total Annual VPP Power Capacity by Scenario, World Markets: 2014-2023 .................................... 70
Chart 5.2
Total Annual VPP Power Capacity by Region, Base Scenario, World Markets: 2014-2023 ............... 71
Chart 5.3
Chart 5.4
Total Annual DR VPP Power Capacity by Region, Base Scenario, World Markets: 2014-2023 ......... 75
Chart 5.5
Total Annual DR VPP Vendor Revenue by Region, Base Scenario, World Markets: 2014-2023 ........ 75
Chart 5.6
Total Annual Supply-Side VPP Power Capacity by Region, Base Scenario, World Markets:
2014-2023 ................................................................................................................................... 78
Chart 5.7
Total Annual Supply-Side VPP Vendor Revenue by Region, Base Scenario, World Markets:
2014-2023 ................................................................................................................................... 80
Chart 5.8
Total Annual Mixed Asset VPP Power Capacity by Region, Base Scenario, World Markets:
2014-2023 ................................................................................................................................... 81
Chart 5.9
Total Annual Mixed Asset VPP Vendor Revenue by Region, Base Scenario, World Markets:
2014-2023 ................................................................................................................................... 81
Figure 2.1
Figure 2.2
Figure 2.3
Figure 2.4
Figure 2.5
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Figure 2.6
Figure 2.7
Figure 2.8
Figure 2.9
Figure 3.1
Key Sources of Flexible Consumption Candidates for VPPs, Denmark: 2015-2035 .......................... 32
Figure 3.2
Figure 3.3
Figure 3.4
Figure 3.5
Figure 3.6
Figure 4.1
Figure 4.2
Figure 4.3
Figure 4.4
Table 2.1
Table 2.2
Table 2.3
Table 2.4
Table 2.5
Table 3.1
Table 3.2
Table 3.3
Table 3.4
Table 3.5
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Table 3.6
Table 3.7
Table 3.8
Table 4.1
Table 4.2
Table 4.3
Table 4.4
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Section 10
SCOPE OF STUDY
Navigant Research has prepared this report to provide participants involved in the smart grid, microgrid,
nanogrid, and utility service markets with a market forecast of VPPs. This market forecast and analysis
reviews varying formats of VPPs being deployed throughout the world. The reports objective is to assess the
market for three different segments of VPPs: DR, supply-side, and mixed asset.
This report contrasts the VPP aggregation platform with microgrids, an alternative platform used to aggregate
distributed resources, including DR, renewable DG, advanced storage, smart inverters, and PEVs. Navigant
Research evaluates the likely business models for future VPPs and tracks the progress of key components that
may make up any such aggregation. Analysis on the major vendors, including utilities, large technology
players, pure software providers, and DR aggregators, is included.
The reports purpose is not to provide an exhaustive technical assessment of the technologies and industries
covered, but rather a strategic examination from an overall tactical business perspective. Navigant Research
strives to identify and examine new market segments to aid readers in the development of their business
models. Five major global regions are included for capacity and revenue forecasts that extend to 2023.
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NOTES
CAGR refers to compound average annual growth rate, using the formula:
CAGR = (End Year Value Start Year Value) (1/steps) 1.
CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given,
the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well.
Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and
sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2014
U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.
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Published 2Q 2014
Navigant Research has provided the information in this publication for informational purposes only. The
information has been obtained from sources believed to be reliable; however, Navigant Research does not
make any express or implied warranty or representation concerning such information. Any market forecasts or
predictions contained in the publication reflect Navigant Researchs current expectations based on market data
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