Tuesday, August 02, 2016

The New Green Grid:  Utilities Deploy ‘Virtual Power Plants’

A combined wind and solar energy farm in Palm Springs, California. (Credit: Kevork Djansezian/Getty Images) Click to Enlarge.
Energy experts say that the ongoing response to California’s natural gas shortfall may serve as a high-profile test case for virtual power plants, an emerging field of clean energy that is projected to more than quintuple in size in the United States within a decade, rising from about 4,800 megawatts in capacity in 2014 to nearly 28,000 megawatts by 2023, according to Navigant Research, a consulting and market research firm.  Power providers in the U.S. and Europe are increasingly experimenting with these systems to help manage and harness the value of thousands of distributed energy systems – the various energy storage, efficiency, and renewable energy installations scattered across the grid. 

“There’s been a significant uptick in interest from utilities and other power-sector shareholders to deploy these solutions for their different needs,” Omar Saadeh, a senior analyst at GTM Research, said by phone from San Francisco. 

Propelling this demand overall is the nation’s ongoing shift away from a centralized electricity market — where hulking, fossil fuel-fired power plants send electrons across state borders via transmission lines — toward a network of localized and lower-carbon supplies, Saadeh said. “The whole notion that utilities are transitioning into a decentralized system is where this interest in virtual power plants and other technologies has really emerged,” he added. 

GTM Research projects that just the software component of virtual power plants – known as “distributed energy resource management systems” – will soon double in market value, from roughly $50 million in 2014 to $110 million in 2018.  Add in the renewable energy technology, batteries, and other components, and the virtual power plant market could grow from $1.5 billion in annual revenue in 2016 to a $5.3 billion market by 2023, with the U.S. taking $3.7 billion of that year’s total and Europe snagging $1.3 billion, Navigant projected in 2014.  Peter Asmus, principal research analyst for Navigant in San Francisco, said the market may actually be worth much more, given the recent growth in residential and commercial battery systems from companies such as LG Chem and Panasonic. 

Read more at The New Green Grid:  Utilities Deploy ‘Virtual Power Plants’

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