In majority of the areas around the world, the power transmission infrastructure has become dated. Developed countries are switching to renewable energy due to rising concerns about the environment as well as depleting fossil fuel reserves. Though the conventional power transmission infrastructure is capable of integrating the energy generated by renewable energy plants, virtual power plants perform this task more efficiently. Further, the emerging economies face the problem of extreme power failures, and also, they are witnessing high power demand due to the improving economy, which is boosting the industries and living standards. In both the scenarios, the power transmission network is incapable of supplying the required amount of power. This can be taken care of by the inclusion of virtual power plants. They can help in solving such problems by accurately estimating the electricity demand and supply, and these plants can control the power generated by the renewable energy generation projects. They can further ensure the stability of the entire power transmission network by maintaining the continuous flow of electricity.

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Virtual power plants are an integrated system that have a main control system, which is connected to the power-generating, distributing, and transmitting units that help in regulating, optimizing, and managing the electricity supply from numerous electricity-generating sources to end users. Virtual power plants are based on different technologies, namely mixed asset, supply side, and demand response. During 2013–2017, the most amount power was supplied by the demand response model. In this model, end users can alter the electricity consumption depending on the electricity demand. Incentives, such as lower tariff are offered to consumers if they reduce the consumption during peak hours. This helps in managing the demand-supply scenario at the grid level at a time. Virtual power plants based on this model are extensively used in the North America, mainly the U.S. In the coming years, the virtual power plant market is expected to advance at a CAGR of 18.6%.

Virtual power plants help various sectors, such as residential, commercial, and industrial meet their energy requirements and also supply energy to electric vehicles. These plants supplied the maximum electricity to the industrial users in 2017. This was observed due to the rapid industrialization in developing countries, such as India, Brazil, Indonesia, and China. In the coming years, the fastest growth in demand in the virtual power plant market is predicted to be witnessed by electric vehicles, as to cut back on vehicular emission, governments are focusing on the utilization of clean energy for charging these vehicles, which can be supplied via these plants.



Majority of the developing nations suffer from inadequate power infrastructure and acute power shortages. In recent years, these countries have improved their economy massively, which is driven by heavy investments in the commercial and industrial sectors. The improving economy is leading to the high demand for electricity across various industries, which is resulting in more investments for the development of power projects based on renewable energy, such as wind and solar, along with smart grids, and the expansion of power transmission and distribution network. The huge inflow of investment in the energy sector is providing massive opportunities for innovative solutions, such as virtual power plants to integrate the sustainable energy with the conventional power transmission set ups without incurring the cost of updating the whole infrastructure.