Chapter 1 Industry Overview
A virtual power plant (Virtual Power Plant, VPP) is an advanced energy solution that connects scattered small power production facilities (such as wind power, solar power, fuel cells) and power demand terminals (such as factories) through cloud data centers , commercial buildings, residential areas) to form an efficient, flexible and controllable power system. These small power facilities do not directly provide large-scale power, but when they are combined and intelligently dispatched by advanced software, they can provide a power supply comparable to traditional power plants.
Virtual power plants can not only optimize the use of energy and reduce carbon emissions, but also improve the stability and reliability of the grid. During the peak period of power demand or when the power grid fails, the virtual power plant can quickly adjust the power supply to ensure the stable operation of the power grid. In addition, virtual power plants can also sell excess electricity through the electricity market, helping power producers obtain higher returns.
Figure: Schematic diagram of virtual power plant operation mode
Source: 36 Krypton Research Institute of Qianji Investment Bank, an asset information network
According to the forecast of the Global Energy Internet Development Cooperation Organization, the maximum load in 2025 and 2030 will reach 1.57 billion kilowatts and 1.82 billion kilowatts respectively. According to China's "14th Five-Year Plan" Modern Energy System Plan, it is proposed that the power demand side response capacity should reach 3%-5% of the maximum power load in 2025. It is estimated that the adjustable load resource pool will account for the largest in 2025 and 2030 5% and 6% of the electricity load, the corresponding resource pool capacity is 78.50 and 109.2 million kilowatts respectively; the electricity consumption participating in the stabilization is 74.58 billion and 102.65 billion kilowatt hours respectively.
According to China's current subsidy policy, the peak-cutting subsidy is 5 yuan/kWh, and the valley-filling subsidy is 2 yuan/kwh. Based on an average of 3.5, the estimated market size in 2025 and 2030 is: 130.52 billion and 179.64 billion yuan, respectively.
1.1 Industry Classification
The global virtual power plant market is divided into distributed generation, demand response, and hybrid assets by technology; renewable energy, combined heat and power, and energy storage by source; and industrial, commercial, and residential by end user.
China's virtual power plants are mainly divided into three categories:
- Load type: The virtual power plant operator aggregates its bound market-oriented power users (including electric vehicles, adjustable loads, interruptible loads, etc.) Provide flexible response on the load side.
- Power-side virtual power plant: As the name suggests, a virtual power plant is established on the distributed power generation side.
- Source-network-load-storage integrated virtual power plant: gathers power generation sources and load electricity users, as a centralized power plant, participates in the power market as an independent market entity, and does not occupy the peak-shaving capacity of the system in principle. At present, most of the virtual power plants piloted in my country are load-type virtual power plants, and the virtual power plants piloted in northern Hebei are rare virtual power plants integrating source, network, load and storage in China.
Figure virtual power plant transaction mechanism
Source: Asset Information Network Qianji Investment Bank Soochow Securities
1.2 Global and Chinese industry development
The global virtual power plant (VPP) market is growing with a notable trend. According to business research firm, the virtual power plant market is also being driven by the increasing demand for renewable energy. The virtual power plant market size is expected to grow from US$1.9 billion in 2022 to US$2.3 billion in 2023, with a compound annual growth rate (CAGR) of more than 22%, and by 2027, the market size is expected to reach US$5 billion, with a CAGR of more than 20% .
It is worth noting that the virtual power plant market is actively adopting advanced technologies. To maintain their market position, key players in the industry are focusing on adopting advanced technologies. For example, in October 2022, AutoGrid Systems, a US-based virtual power plant provider, partnered with Mysa, a Canadian thermostat manufacturing startup, to develop a utility-scale virtual power plant using the AI-driven VPP platform and Mysa’s smart thermostat technology. . These virtual power plants can leverage their unique features, such as demand response resources, distributed generation, customer-owned flexible storage, etc., to monetize different energy markets and use them to generate revenue. Utilities and aggregators can add flexible capacity by optimizing assets and forecasting.
In terms of regional distribution, North America will be the largest region for the virtual power plant market in 2022, and the Middle East is expected to be the fastest growing region during the forecast period. Regions covered by the virtual power plant market include Asia Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa.
Figure: Development history of global virtual power plants
Source: Asset Information Network Qianji Investment Bank Northeast Securities
The development of virtual power plants is accelerating in China, and as a key means of supporting sustainable energy mixes, its influence in China is growing, especially in renewable energy systems, so virtual power plants are becoming more and more important. This type of power plant uses advanced technology and software systems to collect data on electricity generated from distributed sources such as rooftop solar installations, power storage systems, and electric vehicles. Instead of generating electricity, they manage the flow of energy and optimize power supply.
In Shanxi Province, the construction of 15 virtual power plants has been completed, and their daily electricity production can provide electricity to about 224,000 households during peak periods. These plants are built to optimize the energy system and ensure that the growing demand for clean, reliable and affordable electricity is met.
Recently, China's first virtual power plant industry standard research project has been approved by the government, which will provide technical standards for resource allocation and evaluation of virtual power plants. Last year, Shenzhen established China's first virtual power plant control center. At present, Jiangsu Province, Zhejiang Province, Shanghai and other places have also implemented the practice of virtual power plants.
Figure: Comparison of development stages of virtual power plants
Source: Asset Information Network Qianji Investment Bank Northeast Securities
Virtual power plants have become an important supplement to traditional power plants to ensure reliability and stability of energy supply. They collect energy available at the user end, such as rooftop solar installations, and supply it to other users in need, which makes them play an important role in driving the development of low carbon and energy efficiency.
In the past, fossil fuels such as coal were often the only source of electricity. Electricity supply management is to meet demand through the grid operator's dispatch center. However, as the focus of power generation shifts towards renewable energy sources such as solar and wind, the intermittent nature and not always availability of these sources when needed makes power supply management extremely difficult. In this case, virtual power plants complement traditional power plants by distributing electricity generated by distributed sources when demand exceeds supply.
According to estimates from Huaxi Securities, the market size for investment and construction of virtual power plants will exceed 30 billion yuan (about 4.38 billion U.S. dollars) by 2025.
Chapter 2 Business Model and Technology Development
2.1 Industry chain
The industrial chain of a virtual power plant is composed of upstream basic resources, midstream system platform and downstream power demand side. The development of distributed power, energy storage, and controllable loads together constitute the basic resources upstream of virtual power plants, which are mainly used in industries, buildings, and residential areas. In practice, various resources are mixed and mixed, and forms such as microgrid and local energy Internet are developed, which are used as the secondary control unit of the virtual power plant. Midstream resource aggregators mainly rely on technologies such as the Internet of Things and big data to integrate, optimize, dispatch, and make decisions on data information from various levels, and realize the core function of virtual power plants—coordinated control, which is a key link in the virtual power plant industry chain. Downstream of the industry chain are public utility companies (grid companies), energy retailers (power retail companies) and all entities participating in electricity market transactions, realizing participation in power trading, peak-shaving and frequency regulation, and demand-side response and gaining benefits.
Figure: Virtual Power Plant Industry Chain
Source: Asset Information Network Qianji Investment Bank Soochow Securities
upstream
The upstream basic resources of virtual power plants mainly include adjustable loads, distributed power sources and energy storage equipment. The key application fields of adjustable load mainly include industry, construction and residents, etc. The potential for load adjustment varies greatly in different application scenarios. Distributed power generation refers to the small generator sets installed at and near the user's site, including one or more combinations of small gas turbines, small photovoltaics, small wind power, hydropower, biomass, and fuel cells. Energy storage devices can be divided into mechanical energy storage, chemical energy storage, electromagnetic energy storage and phase change energy storage.
middle reaches
Midstream resource aggregators mainly rely on the Internet, big data, etc. to integrate, optimize, dispatch, and make decisions from data information at all levels, and enhance the unified coordination and control capabilities of virtual power plants, which is a key link in the virtual power plant industry chain.
downstream
The downstream of the industrial chain is the power demand side, which is composed of power grid companies, power sales companies and large users. Grid companies, as grid operators, are important buyers in the electricity market. Electricity sales companies include independent electricity sales companies, electricity sales companies with distribution network operation rights, and electricity sales companies in the grid field. Large users mainly refer to large industrial and commercial power users who can directly participate in electricity wholesale market transactions at the B end. Each province designs its own standards for large users in terms of electricity consumption, voltage level, and industry category.
2.2 Business model
Domestic: Pilot projects launched in various places, lack of top-level design
The integrated virtual power plant relies on distributed power sources, distributed loads and a mature power spot market. At present, most of the virtual power plants piloted in my country are load-type virtual power plants, and the grid connection of distributed power sources is still seriously insufficient. The essential reason is that (1) the local distribution network construction is not perfect, and (2) the market-oriented power trading mechanism is not yet perfect. , the profitability of virtual power plants is limited.
With the great development of our distributed wind power and distributed photovoltaics, the large investment in my country's distribution network is also expected to usher in a high increase. The power trading mechanism that undertakes power auxiliary services, peak regulation and frequency regulation is becoming more and more mature, and the top-level design is expected to accelerate.
Figure: Market-oriented Demand Response Trading Varieties
Source: Asset Information Network Qianji Investment Bank Soochow Securities
Take Guangzhou as an example. Guangdong's market-oriented demand response includes day-ahead invitation demand response, interruptible load trading, and direct-controlled adjustable load competitive allocation trading. A few days ago, the upper and lower limits of the demand-side response price for invitations are 3,500 yuan/MWh and 70MWh; the call prices for interruptible load transactions are 5,000 yuan/MWh and 70 yuan/MWh; Yuan/KW/month and 0 Yuan/KW/month.
Europe: Focus on distributed power generation resources, participate in power trading to obtain income
European virtual power plants focus on the power generation side, and aggregate resources to participate in power transactions or auxiliary services to reduce costs and increase efficiency. Europe leads the world in new energy power generation and installed capacity. At the beginning of the 20th century, Europe vigorously phased out and restricted coal power generation. At the same time, the cost of wind power, solar power and other renewable energy power generation continued to decline and gradually achieved grid parity. According to Eurostat, as of 2020, the EU's renewable energy generation accounted for 38%. Due to the relatively scattered power generation resources in Europe, early virtual power plants mainly focused on the power supply side, aggregating power generation resources, helping renewable energy to be stably connected to the grid, and coordinating power generation.
Figure: Composition of European Power Industry Chain
Source: Asset Information Network Qianji Investment Bank ClearEnergyWire
From the perspective of income, on the one hand, virtual power plants can help power generation companies reduce unnecessary power generation costs or losses caused by negative electricity prices, and obtain service fee sharing from them; on the other hand, virtual power plants can directly participate in power spot transactions and Ancillary services, optimize bilateral transactions, and obtain ancillary services and share of power transaction revenue.
United States: Focus on user-side resources and obtain compensation for auxiliary services
The U.S. virtual power plant was born out of demand-side response, focusing on the unified allocation of load-side resources. Since electricity prices in the United States have risen by 59% in the past 20 years, and the United States is rich in solar energy resources, under a large number of government subsidies and incentive policies, household photovoltaic systems have gradually become an alternative option for consumers to reduce electricity prices, thereby realizing self-consumption of electricity. . With the increase in demand for household photovoltaics, the United States has gradually begun to implement demand-side response to cope with the tight supply during peak electricity consumption, and gradually evolved demand-side response into a virtual power plant plan.
The specific manifestation is that energy retailers carry out virtual power plant plans, by providing low-cost energy storage batteries or cash in exchange for control of a part of household electricity, and providing electricity to retailers when necessary, retailers' virtual power plants aggregate these energy storage and use them During the peak period, it is provided to users in need, so as to obtain auxiliary service revenue.
2.3 Technology Development
The virtual power plants developed by various countries have their own characteristics, but after summarizing the operation mode and structure of virtual power plant projects in various countries, the core technologies used by virtual power plants in various countries have strong similarities. The technical support of the virtual power plant mainly includes:
- Metering technology: accurately measure the consumption of electricity, heat, gas, water, etc. on the user side, establish an accurate energy network supply and demand balance, and provide a basis for the scheduling and production of virtual power plants;
- Communication technology: the control center receives the status information of each subsystem, power market information, user-side information, etc., and makes decisions, dispatches, and optimizes based on these information; currently, it can use Internet, virtual private network, power line carrier, wireless communication, etc. On this basis, it is necessary to develop a communication protocol and a common platform dedicated to virtual power plants;
- Intelligent scheduling and decision-making technology: The overall planning and optimization of each subsystem is the key to realizing the consumption of distributed energy in virtual power plants and ensuring the safe, efficient, and stable operation of the power grid; the information that the control center needs to collect and process includes: user demand information, various Subsystem operation information, power grid scheduling information, electricity market price information, and information affecting distributed power plants such as weather, wind energy, and solar energy; according to the collected information, the control center needs to establish a complete mathematical model and optimization algorithm;
- Information security protection technology: There are interfaces between the virtual power plant and the industrial control system of each distributed energy station, the user-oriented power consumption information system, the open marketing information system, and the dispatching information system of the power grid. It is necessary to do a good job in system security protection and strengthening Boundary protection, improving internal security protection capabilities, and ensuring information system security; on the basis of current security protection technologies for industrial control systems and user-oriented power consumption information system protection technologies, develop large-scale integrated power consumption information systems that are compatible with virtual power plants Safety technology is also key to the development of future virtual power plants.
Figure: Key technologies and R&D exploration of virtual power plants
Source: Asset Information Network Qianji Investment Bank Northeast Securities
Through the statistics of the number of patents of various patent applicants in the domestic virtual power plant industry, the top companies are: Guodian Nanrui, Xuji Electric, Kelu Electronics, Easytech, Tread, Yuanguang Software, Wanliyang , Guodian Nanzi, Dongtu Technology, etc.
TOP 10 patents of listed companies
Source: Qianji Investment Bank iFinD
2.4 Policy Supervision
Administrative Supervision Department
(1) National Development and Reform Commission: Promote the implementation of the innovation-driven development strategy. Work with relevant departments to formulate plans and policies for promoting innovation and entrepreneurship, and propose policies for innovative development and fostering new kinetic energy for economic development. Work with relevant departments to plan and deploy major national science and technology infrastructure. Organize the formulation and promotion of the implementation of high-tech industries and strategic emerging industry development planning policies, and coordinate major issues such as industrial upgrading and the promotion and application of major technical equipment.
(2) National Energy Administration: Responsible for drafting energy development and relevant supervision and management laws and regulations for review and regulations, formulating and organizing the implementation of energy development strategies, plans and policies, promoting energy system reform, formulating relevant reform plans, and coordinating energy development and major issues in reform. Organize and promote the research and development of major energy equipment and related major scientific research projects, guide the progress of energy science and technology, the introduction, digestion and innovation of complete sets of equipment, organize and coordinate related major demonstration projects, and promote the application of new products, new technologies, and new equipment.
self-regulatory association
China Electricity Council: Carry out in-depth industry investigation and research, put forward policy and legislative suggestions for the reform and development of the power industry, participate in the formulation of power industry development plans, industrial policies, industry access conditions and system reforms; formulate and supervise the implementation of industry conventions Establish an industry self-discipline mechanism, promote the construction of integrity, standardize member behavior, coordinate member relations, and maintain industry order.
industry policy
Source: Asset Information Network Qianji Investment Bank
Chapter 3 Industry Valuation, Pricing Mechanism and Global Leading Enterprises
3.1 Comprehensive financial analysis and valuation methods of the industry
When investors conduct financial analysis of the virtual power plant industry, they can look at the following key aspects:
- Industry Growth: Investors should check out the growth trends of the industry. For example, the compound annual growth rate of the global virtual power plant market is more than 20%, and it is estimated that by 2027, the market size will reach 5 billion US dollars. In China, it is estimated that by 2025, the market size of virtual power plants will exceed 30 billion yuan (about 4.38 billion US dollars).
- Market Share: Investors should research each company's share in the virtual power plant market.
- Financial Health: Investors should assess the financial health of these companies. This includes key financial metrics such as revenue, profit, cash flow, liabilities and capital structure.
- Investment and R&D: A virtual power plant is a technology-intensive industry, therefore, investors need to consider the company's investment in new technology and product development.
- Policy and regulation: Virtual power plants are an industry highly influenced by policy and regulation. Investors need to understand the relevant policies and regulations, and the impact these policies and regulations may have on the company. For example, China has regulated the construction and operation of virtual power plants, and established a research project on industrial standards for virtual power plants.
- Risk assessment: Investors need to assess the risks that may affect the virtual power plant industry, including technical risks, market risks, policy risks, and financial risks.
Through these methods, investors can conduct a comprehensive financial analysis of the virtual power plant industry to make informed investment decisions.
Chart: Index Performance
Source: Qianji Investment Bank iFinD
The valuation method of the virtual power plant industry can choose the price-earnings ratio valuation method, PEG valuation method, price-to-book ratio valuation method, price-to-current ratio, P/S market-to-sales ratio valuation method, EV/Sales market-to-sales ratio valuation method, RNAV Revaluation net asset valuation method, EV/EBITDA valuation method, DDM valuation method, DCF discounted cash flow valuation method, NAV net asset value valuation method, etc.
3.2 Industry Development and Driving Factors
policy driven
Favorable policies come out frequently, and the electricity market is gradually liberalized. Liberalization of electricity market transactions is a general trend of national policies, such as the "Notice on Actively Promoting Electricity Market-oriented Transactions and Further Improving the Trading Mechanism" to promote the consumption of clean energy and support electricity users and clean electricity such as hydropower, wind power, solar power, and nuclear power. Energy power generation enterprises carry out market-oriented transactions.
At the same time, there are frequent favorable policies for virtual power plants. The "14th Five-Year Plan" Modern Energy System Planning (Fagai Energy [2022] No. 210) and other policy documents have proposed that my country will improve the construction and operation mechanism of the new power system, and improve the local deep utilization of renewable energy and The power grid system for wide-area transmission, improve the market mechanism that adapts to the new power system, improve the construction and operation mechanism of flexible power sources, and carry out demonstrations of virtual power plants that aggregate various resources.
Finally, carbon neutrality and carbon peaking promote the transformation of comprehensive energy service methods. 2021 is the first year of the "14th Five-Year Plan", and comprehensive energy services led by virtual power plants are expected to achieve leapfrog development.
technology driven
Digitization is an important basis for improving the power grid's capacity for accommodation. At this stage, the key to grid-connected new energy is the power grid's consumption capacity, the core of which lies in dispatching and regulation capacity and large-scale ultra-long-distance power transmission capacity, both of which cannot be separated from the assistance of digital means. Through digital technology, the coordinated optimization control of the entire power grid can be realized. Through the use of digital technology, virtual power plants are expected to become an important way to intelligently coordinate and improve efficiency of the power system together with energy storage.
The energy storage cloud network platform can realize multi-party participation, joint production and unified scheduling of energy storage and new energy power stations to achieve optimal allocation of resources. The energy storage cloud network platform realizes multi-party participation, joint production and unified scheduling of energy storage and new energy power stations to achieve optimal allocation of resources. Transform distributed energy storage resources or scattered and uncontrollable load resources into on-demand "virtual power plant" resources through the energy storage cloud network platform, and use the aggregation function of virtual power plants to form a large-scale response to "shaving peaks and filling valleys" , to maximize the utilization of energy storage resources.
3.3 Industry risk analysis and risk management
Table: Common Industry Risk Factors
Source: Asset Information Network Qianji Investment Bank
market competition risk
Although the number of specialized enterprises in the field of industry informatization is small, there are large enterprise groups with strong strength in the electric power industry. If the companies in the industry cannot continue to maintain their own technological and competitive advantages, the companies in the industry will face greater market competition risks.
Countermeasures: Companies in the industry should continue to promote technological innovation and breakthroughs, give full play to their own competitiveness, continue to maintain the momentum of innovation and development, and continue to increase the market share of core products. At the same time, companies in the industry will continue to expand the application fields of products, explore customer needs, and expand comprehensive energy service capabilities, so as to further consolidate the leading position of companies in the virtual power plant industry.
Industry Policy Change Risk
The industry is more susceptible to the impact of national policies. Although with the continuous advancement of the "dual carbon" policy, the power market still has broad room for development, but if there is a major adjustment in the national macroeconomic policy and reduced policy support, it will affect the virtual power industry. The scale of investment in the power plant industry and the slowdown in the overall market growth of the industry may have a certain impact on the business growth of companies in the industry.
Countermeasures: companies in the industry should establish a sound and rapid market policy analysis and monitoring mechanism, effectively capture policy trends, closely track market policy trends, attach importance to industry exchanges, and regularly report the monitored national policies, industry trends, and market information to the management of companies in the industry Provide prompts to help companies in the industry understand the latest developments in the industry in a timely and accurate manner and make business decisions.
The risk of core technology brain drain
The industry is a talent and technology-intensive industry, and the core management and technical backbone personnel are important factors for the industry's future product innovation and sustained profitability. In the face of fierce competition for talents, companies in the industry are facing great challenges in continuously attracting outstanding talents, building a talent development platform, and providing long-term incentives to maintain the stability of the talent team.
Countermeasures: Companies in the industry should attach great importance to human resource management. From the perspective of the company's development strategy, continue to optimize organizational capabilities and the construction of mechanisms and systems for talent selection, training, retention, and will implement equity incentive plans, innovate talent incentive mechanisms, and develop talents Enthusiasm and creativity, improve team cohesion and stability, and provide a broader career development platform for core talents.
The risk of weakening technological advantages
The technological development and innovation of the industry is rapid, product development is difficult, the cycle is long, the complexity is high, and the market competition is fierce. If companies in the industry cannot continue to make technological breakthroughs and maintain technological advantages, there will be risks of weakening their technological competitive advantages.
Countermeasures: Companies in the industry should attach great importance to the innovation and technology accumulation of related technologies, continuously increase R&D investment, and improve the company's R&D capabilities; strengthen technological innovation management, and consolidate the company's independent technology R&D by establishing laboratories, academician workstations and postdoctoral research workstations. At the same time, establish an industry-university-research cooperation system with colleges and universities, bring the research needs of the company's technical products into the research institutes, and incubate and apply the high-quality research results of colleges and universities, so as to continuously maintain and create the company's innovation advantages.
Risk of Intellectual Property Infringement
Industries rely heavily on intellectual property rights. If the intellectual property rights of companies in the industry are infringed, it will have an adverse impact on the company's intangible assets and company profits.
Countermeasures: Companies in the industry should actively take a number of countermeasures to increase intellectual property protection, including adopting strict confidentiality measures during the implementation of product application plans, signing confidentiality agreements with core technical personnel, and applying for intellectual property protection, etc.
3.4 Competitive Analysis - Using SWOT Model
Advantage
The virtual power plant can be used as a "positive power plant" to supply power to the system for peak regulation, and as a "negative power plant" to increase load consumption and cooperate with the system to fill valleys; it can quickly respond to instructions, cooperate to ensure the stability of the power grid and obtain economic compensation, or directly Like traditional power plants, it participates in electricity market transactions, electricity auxiliary service transactions, etc.
At the same time, it only needs to invest 50 billion to 60 billion yuan to achieve this goal through virtual power plants, which is 1/8-1/7 of the cost of thermal power plants. Its cost-effective advantage far exceeds that of traditional redundant system construction solutions, and its economic advantages are significant.
disadvantage
Compared with foreign countries, my country has only ushered in the era of parity in the photovoltaic industry in recent years, and the importance of virtual power plants has only recently become prominent. As an important configuration in the transformation of the new power system, virtual power plants have good development prospects, but the development of virtual power plants in my country is still in its infancy, and the market is mainly dominated by policies. However, the development of virtual power plants in Europe and the United States is relatively mature and has been fully commercialized. This is because virtual power plants account for the largest proportion of new energy power generation in Europe and have a good new energy foundation.
opportunity
From the perspective of demand, the popularity of virtual power plants is mainly caused by the aggravation of climate warming and the improvement of people's awareness of energy conservation. In recent years, as the average temperature has continued to rise, the controversy over the existence of climate warming is decreasing, and the repeated appearance of various abnormal weather has caused huge losses to people. In the face of the ever-increasing environment, "something must be done to curb this trend" has become the consensus of many people.
In this context, even if there are still many people who are not convinced that there is a causal relationship between carbon emissions and climate warming, they will become more supportive of energy-saving policies based on the viewpoint of "it is better to believe what is there than to believe what is not". The formation of this consensus has created a huge demand for energy saving and energy efficiency improvement. And the concept of virtual power plant is very suitable for this concept, so it ushered in a huge increase in demand.
From the perspective of supply, the popularity of virtual power plants is caused by the increase of power supply units and the enhancement of power deployment capabilities.
threaten
There are many technologies involved in the virtual power plant project, and some technical bottlenecks have not been well resolved yet. At the same time, the current willingness of power supply units to participate is not strong, so the power source of virtual power plants is still difficult to maintain stability. There are many reasons for this phenomenon.
On the one hand, compared with Europe, the United States and other countries, my country's electricity price is relatively low, so the main body of power supply, especially those with controllable loads, does not have too strong incentives for power supply. On the other hand, due to technical limitations, the power supply may cause certain damage to the equipment of the power supply subject itself. Finally, the development of virtual power plants may also damage the vested interests of some entities.
3.5 Key players
Major Chinese companies include Guodian Nanrui [600406.SH], Solar Energy [000591.SZ], Langxin Technology [300682.SZ], XJ Electric [000400.SZ], State Grid Xintong [600131.SH], Shaangu Power [601369.SH], Linyang Energy [601222.SH], EAST [300376.SZ], Terad [300001.SZ], Narada Power [300068.SZ], etc.
In the global market, major virtual power plant companies include ABB Limited, AGL Energy Limited, AutoGrid Systems, Robert Bosch Limited, Cpower Energy Management, Enbala Power Networks, Enel X Limited, Flexitricity Limited, General Electric Ltd., Hitachi Ltd., and International Business Machines Corporation.
Chapter 4 Future Outlook
The future development of the virtual power plant industry is expected to be very active. The global market size is expected to grow from USD 2.3 billion in 2023 to USD 5 billion in 2027, at a CAGR of over 20%. In China, it is estimated that by 2025, the market size of virtual power plants will exceed 30 billion yuan (about 4.38 billion US dollars). This growth is expected to be driven by several key trends.
First, the growing demand for renewable energy will drive the virtual power plant industry. Virtual power plants can optimize energy flow and increase the reliability and stability of electricity supply, especially in renewable energy systems. As the global demand for low-carbon energy increases, virtual power plants are expected to play an increasingly important role in the energy market.
Second, technological advancements will also drive the growth of the virtual power plant industry. For example, AI techniques are being used to develop more efficient virtual power plant platforms, which will enable utilities and aggregators to increase flexible capacity through asset optimization and forecasting.
In addition, government policies and regulations will also affect the future of the virtual power plant industry. For example, China has begun to regulate the construction and operation of virtual power plants, and has approved the research project of industrial standards for virtual power plants.
However, the future development of the virtual power plant industry also faces some challenges. For example, managing electricity supply can become very difficult due to the intermittent supply of renewable energy sources such as solar and wind power. In addition, the implementation of virtual power plant technology also requires significant investment, which may limit the growth of certain markets.
Overall, although there are some challenges, the future of the virtual power plant industry looks very bright and is expected to witness significant growth globally.
Cover Photo by Lukáš Kulla on Unsplash