Visiongain has published a new report entitled Virtual Power Plant (VPP) Market Report 2025-2035 (Including Impact of U.S. Trade Tariffs): Forecasts by Deployment Mode (On-Premises, Cloud-Based), by Component (Software, Hardware, Services), by Technology (Demand Response, Distributed Generation, Mixed Asset, Other), by End-user (Residential, Commercial, Industrial, Utility, Other), by Source (Solar PV, Wind Power, Combined Heat and Power (CHP) Units, Energy Storage Systems, Biomass, Other) AND Regional and Leading National Market Analysis PLUS Analysis of Leading Companies.

The global virtual power plant (VPP) market is estimated at US$2,672.9 million in 2025 and is projected to grow at a CAGR of 19.8% during the forecast period 2025-2035.

Impact of US Trade Tariffs

The global virtual power plant (VPP) market is a key pillar in the transition to decentralised, software-defined energy systems. By aggregating distributed energy resources (DERs) such as solar PV, battery storage, EVs, and smart appliances into flexible, dispatchable assets, VPPs offer utilities and grid operators improved reliability, demand-side management, and carbon reduction. However, the VPP ecosystem is expanding heavily and relies on imported technologies, including advanced inverters, battery management systems (BMS), smart meters, communication modules, and cloud-based grid orchestration software. The reintroduction of U.S. tariffs under the Trump 2025 regime including a blanket 10% import tariff and sectoral hikes (e.g., 25% on electronics, batteries, and control equipment) poses serious challenges to global VPP deployment. Moreover, retaliatory tariffs from China, the EU, and Japan on U.S.-exported grid software, control hardware, and IoT devices further strain the market. These trade disruptions threaten to increase CAPEX for new VPP projects by 8–15% in 2025–2027, leading to project delays, margin erosion, and reshoring or nearshoring pressures on the supply chain.

Advancements in Smart Grid and IoT Technologies

The evolution of smart grid infrastructure and Internet of Things (IoT) technologies enables real-time communication, monitoring, and control of distributed energy assets—functions critical to the success of VPPs. Without these capabilities, the aggregation and coordination of thousands of decentralised power units would be infeasible.

Advanced grid technologies allow for bi-directional communication between DERs and centralised control systems, enhancing the responsiveness and reliability of virtual power plants. Companies like AutoGrid and Siemens are at the forefront of integrating AI-driven analytics with IoT-based asset management. For example, AutoGrid’s flexibility management platform is used by utilities such as TotalEnergies and National Grid to create VPPs capable of dynamic demand response and load shifting. These technological enablers ensure that VPPs operate efficiently and are scalable across geographies and use cases..

How will this Report Benefit you?

Visiongain’s 426-page report provides 132 tables and 212 charts/graphs. Our new study is suitable for anyone requiring commercial, in-depth analyses for the virtual power plant (VPP) market, along with detailed segment analysis in the market. Our new study will help you evaluate the overall global and regional virtual power plant (VPP) market.

What are the Current Market Drivers?

Grid Decarbonization and Regulatory Support

Decarbonization goals are pushing utilities and governments to transition from fossil fuel-based power generation to cleaner alternatives. VPPs align perfectly with these objectives, offering a flexible and decentralised method to integrate renewable energy sources into the grid without compromising stability or reliability.

Regulatory frameworks in regions such as the European Union, North America, and parts of Asia-Pacific are evolving to recognise the value of demand-side flexibility and the role of aggregated DERs. For example, the U.S. Federal Energy Regulatory Commission (FERC) Order 2222 mandates that distributed energy resources must be allowed to participate in wholesale electricity markets, a ruling that significantly boosts the business case for VPPs. Similarly, in Germany, the Federal Network Agency supports aggregated DER participation in ancillary services through VPPs, further incentivizing their development.

Rising Energy Demand and Grid Resiliency Needs

Global energy demand continues to rise, driven by population growth, urbanisation, and the electrification of transport and heating. At the same time, extreme weather events and ageing infrastructure are stressing traditional power grids, prompting utilities to seek more resilient and adaptive solutions. Virtual power plants help address these challenges by providing dispatchable capacity from a distributed asset network.

During California’s recent heat waves, utilities including Pacific Gas and Electric (PG&E) leveraged VPPs to reduce peak demand and avoid blackouts by aggregating and controlling residential and commercial battery systems. Tokyo Electric Power Company (TEPCO) has adopted VPPs to enhance grid flexibility and support disaster response mechanisms in Japan. These cases highlight how VPPs are instrumental in managing load and improving energy security and system resilience.

Where are the Market Opportunities?

Integration with Electric Vehicles (EVs) and Vehicle-to-Grid (V2G) Technology

The proliferation of electric vehicles and the development of vehicle-to-grid (V2G) systems present a new frontier of opportunity for the VPP market. EV batteries, typically underutilised for large parts of the day, can be aggregated through VPP platforms to serve as mobile energy storage systems. This capability allows VPP operators to access gigawatts of flexible capacity that can be dispatched to the grid during peak demand periods or stored when renewable generation is abundant.

Companies such as Nuvve, Fermata Energy, and EDF are already piloting V2G-based VPPs, demonstrating how EVs can participate in ancillary services markets. In regions like California and the Netherlands, regulatory support for V2G integration is fostering the commercial viability of such projects. As global EV adoption accelerates—driven by both climate policy and consumer preference—the synergy between EVs and VPPs will unlock significant grid and market value.

Expansion of Real-Time Energy Markets and Demand Response Programs

The liberalisation of electricity markets and the rise of real-time energy pricing mechanisms enable VPPs to participate more actively in energy trading and demand response services. With the deployment of smart meters, sensors, and IoT-enabled DERs, VPPs can respond dynamically to price signals and grid conditions, creating opportunities to generate new revenue streams.

In the U.S., companies like AutoGrid and Enbala (acquired by Generac) have developed AI-driven VPP platforms that allow utilities to manage peak loads and defer infrastructure investments. Similarly, in the UK, National Grid’s Dynamic Containment and Firm Frequency Response programs offer VPPs a chance to bid flexible capacity into the grid. These evolving market designs are making it increasingly profitable for VPPs to monetise flexibility and provide critical services to grid operators..

Competitive Landscape

The major players operating in the virtual power plant (VPP) market are ABB Ltd., Cisco Systems Inc., Enel X, Engie SA, General Electric Company, LO3 Energy Inc., Next Kraftwerke, Power Energy Management, Schneider Electric SE, Siemens AG, Spirae Inc., Sunverge Energy Inc., Swell Energy Inc., Sympower, Tesla, Inc., These major players operating in this market have adopted various strategies comprising M&A, collaborations, investment in R&D, regional business expansion, partnerships, and new product launch.

Recent Developments

26 March 2025, Schneider Electric announced plans to invest over $700 million in the U.S. energy sector by 2027. This initiative aims to enhance energy infrastructure crucial for AI advancements, increase domestic manufacturing, and improve energy security. The expansion includes upgrading and opening facilities in Tennessee, Massachusetts, Texas, Missouri, Ohio, and the Carolinas, and is expected to create over 1,000 jobs. With a previous $440 million investment since 2020, Schneider’s U.S. investments will exceed $1 billion this decade.

25 March 2025, Schneider Electric partnered with NVIDIA to create “digital twins” of AI data centres, aiming to manage electricity usage more efficiently. These virtual replicas will help improve power consumption by allowing better designs and operations. This collaboration supports Schneider Electric’s expansion into data centres, further bolstered by their recent acquisition of liquid cooling technology provider Motivair.

01 March 2025  Merger: Toshiba Energy Systems & Solutions Corporation completed the absorption merger of Next Kraftwerke Toshiba Corporation (TNK). TNK was merged into Toshiba ESS, with Toshiba ESS as the surviving company and TNK as the dissolving company. This merger aimed to consolidate and strengthen Toshiba ESS’s capabilities in the VPP business.

Notes for Editors

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