White Paper - A new generation of Virtual Power Plants is set to transform the energy sector

15 October 2014

A White Paper from Machina Research examines the increasing criticality of Virtual Power Plants in managing electricity production and consumption. The White Paper identifies three main types of VPP, segments the market, and identifies Bosch and Siemens as market leaders in the space.

Machina Research has today released a White Paper looking at the evolution of Virtual Power Plants (VPPs). Deployments of VPPs have been in existence for more than three decades. However, we are starting to see, in Germany, Scandinavia, and North America, a new generation of VPPs emerging in response to changes in the energy market, new enabling technologies, and a realisation that just scaling up traditional VPP approaches will not address the requirements of customers. This new generation of VPP aims to manage an interconnected market of energy devices through the intelligent application of abstracted software tools and systems.

Machina Research has identified three different models of Virtual Power Plant, which are increasingly sophisticated in terms of the capabilities:

  • Operational Control Virtual Power Plant (VPP) model
  • Functional Management Virtual Power Plant (VPP) model
  • Smart Energy Market Enabler Virtual Power Plant (VPP) model

During the course of the research, Machina Research identified 23 different criteria that determine the level of sophistication of a VPP solution, including, for instance, the ability to cope with demand response, energy storage and energy trading, as well as data management, system agility and billing capabilities. Machina Research then compared the major VPP providers against the 23 criteria that we identified. Based on that analysis, Machina Research identified Bosch and Siemens as the leading VPP suppliers today.

Commenting on the White Paper, author Emil Berthelsen said: “Energy markets are long overdue a change in business and operating models, and a new generation of Virtual Power Plants are set to transform the status quo. This transformation will be driven by approaches very similar to those in the Internet of Things: millions of connected devices and intelligent software architectures. Utility providers, grid operators and energy brokers should embrace such change.”

Download the White Paper here.

About the White Paper

The White Paper aims to answer the following key questions: how is the electricity energy market transforming, how are VPPs changing to meet the opportunities enabled by these transformations, and which suppliers of next-generation VPP solutions are best placed to meet the varying needs of the market? Section 1 identifies the major changes happening in the energy market that are stimulating the demand for VPPs. Section 2 looks at the three main types of VPP. Section 3 examines Machina Research’s 23 criteria for comparing different VPP providers. Section 4 provides our views on the suppliers in the market today.

This White Paper is, first and foremost, relevant to utility and grid operators but it also highlights significant opportunities for energy brokers, governmental or semi-governmental authorities, and what could loosely be termed ‘stakeholder energy communities’.

About Machina Research

Machina Research is a technology research and consulting firm focused on the emerging opportunities associated with new forms of connected device. We provide market intelligence and strategic insight to help our clients maximise opportunities from these rapidly emerging markets. If your company is a mobile network operator, device vendor, infrastructure vendor, service provider or potential end user in the M2M, IoT, Big Data or mobile broadband space, we can help.


For further comments or more information on this press release, please contact: Emil Berthelsen, Principal Analyst, Machina Research.

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