A Juniper Research study projects that smart grids will underpin over 40% of global electricity distribution by 2030, a significant increase from less than 25% in 2024.
The report, "Smart Grid Market 2025-2030," identifies virtual power plants (VPPs) as a primary catalyst for this growth over the next five years.
VPPs aggregate decentralised energy sources like solar panels, wind turbines, and battery storage systems, offering a more stable and resilient energy supply compared to traditional, centralised power plants.
By decentralising energy distribution, VPPs enhance grid stability and resilience.
"VPPs will help balance supply and demand in real-time and make energy supply much more resilient to rapid changes in demand. This will become key as the global demand for energy increases," said Adam Wears, associate research analyst at Juniper Research. VPPs use AI and machine learning to adjust energy production and consumption in real time.
However, to maximise the impact of VPPs, interoperability is crucial. Juniper Research emphasises the need for vendors to develop interoperable platforms that orchestrate decentralised VPPs in real-time, fostering seamless integration between diverse energy sources .
This will help overcome the cost of integrating a wide array of market participants into a cohesive ecosystem. Standard protocols for data sharing, real-time visibility, and settlement are also essential for broader adoption.
To attract small-scale energy providers, Wears suggests introducing innovative pricing models such as time-of-use tariffs, real-time pricing, and capacity-based payments. Utilities and VPP providers also want smarter operations, better planning, and strong interoperability standards to scale VPPs.
While the smart grid market is poised for substantial growth, several challenges need to be addressed. These include high initial costs, cybersecurity risks, data privacy concerns, and the need for supportive government policies.
Overcoming these hurdles will be crucial for realising the full potential of smart grids and VPPs in creating a more sustainable and resilient energy future.
