VPP Report

Virtual Power Plants (VPPs) leverage the full flexibility of decentralized assets by enabling them to participate in energy markets. Find out why this provides the key to unlocking net zero cost for energy.

Executive summary

The rise of Virtual Power Plants (VPPs)


VPP growth is being driven by the huge global surge in DERs, increasingly cost-effective IoT tech and liberalization of electricity markets.


VPPs simplify energy trading, optimize control of DERs, enable new revenue streams and make energy systems more sustainable and cost-effective.


The global virtual power plant market is expected to grow annually by 25.2% from US$4.3 billion in 2021 to US$10.7 billion in 2027


Assets are getting smaller and smaller, meaning small-scale residential VPPs are experiencing the largest growth.


The first step to VPPs is acquiring the ability to connect and control DERs


Our XENON VPP module offers the unique advantage of combining local optimization with monetization through a VPP.

The surge in DERs

The exponential rise in decentralized energy resources (DERs) makes balancing supply and demand a challenge. EVs, for example, are expected to grow almost 40-fold by 2035 and solar capacity should rise 34-fold by 2030. VPPs reduce the complexity of connecting small assets to markets and enable optimized control based on price incentives and/or grid operator needs.

Range of VPP use cases

Connecting and trading energy between power plants and wind or solar farms provides flexibility on a larger scale. In the eMobility landscape, integrating EVs into the grid, using them as batteries via V2G and aligning their charging behavior with other assets/energy prices reduces their cost due to optimized usage. VPPs in residential settings ensure the full capacity of assets is leveraged, while also maximizing financial value without affecting user comfort.

Key steps to implementation

The first step to a virtual power plant is acquiring the ability to connect and control distributed energy resources. Next, the assets must be connected to forecasting capabilities. Then, data - such as asset capacity and availability, price signals, constraints, set-point signals etc. - must be exchanged between assets, VPP operators and market actors. Managing and communicating with each DER in real time necessitates a complex control algorithm. 

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